Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 2: Tim Steneveek on Bloomberg Radio.
Speaker 3: Well, the Commodity Futures Trading Commission is asking for public
Speaker 3: comment on allowing round the clock trading and derivatives markets.
Speaker 3: This is according to a statement put out earlier this week.
Speaker 3: The CFTC also wants input on offering perpetual futures. It's
Speaker 3: a type of contract that's popular outside the United States
Speaker 3: and gaining some traction in digital asset trading. So we
Speaker 3: want to talk about that. We want to talk about
Speaker 3: the overall massive derivatives market. Delighted to have with us
Speaker 3: in our Bloomberg News. DC Bureau is acting Chair of
Speaker 3: the CFTC, Carolyn Caroline Fam Chair Fam.
Speaker 2: So nice to have you with Tim and myself.
Speaker 3: Let's talk a little bit about the market volatility that
Speaker 3: we have seen over the last month or so. What
Speaker 3: have you seen in the derivatives market amid that volatility, trends, flows,
Speaker 3: oversized bets.
Speaker 2: What can you tell us sure?
Speaker 4: Of course, so one of the things that is really
Speaker 4: important to remember about the recent market volatility and all
Speaker 4: time highs as far as volume goes, is that the
Speaker 4: markets operated in a functional and liquid manner, so we
Speaker 4: were really pleased. Of course, all regulators were concerned about
Speaker 4: the market conditions. You had the very sharp spikes with
Speaker 4: the volatility, you had the record all time flows of volume,
Speaker 4: but the markets were resilient, there were adequate margin levels.
Speaker 4: You know, a lot of people have thought about what
Speaker 4: happened in March twenty twenty with the dash for cash,
Speaker 4: and we wanted to make sure that wouldn't happen again.
Speaker 4: So you saw the global regulatory community come together with
Speaker 4: some margin reform, and we're pleased to see that that
Speaker 4: all worked as planned and there were no significant operational issues.
Speaker 4: So I think relieved to see that the markets performed
Speaker 4: well throughout that volatility.
Speaker 1: No significant operational issues. That's certainly great news. Was anything close?
Speaker 1: Were there any issues of concern for you?
Speaker 4: No. We were in close contact with all market infrastructures
Speaker 4: and market participants throughout the market stress and market conditions,
Speaker 4: and we had no significant issues, no issues of concern whatsoever.
Speaker 3: Is there anything you are seeing or hearing? You know,
Speaker 3: this is certainly your world. I guess we're trying to
Speaker 3: gauge whether or not foreign investors are pulling back on
Speaker 3: US assets and dollar based assets, and I'm just curious
Speaker 3: in any of the trend flows are Again, this is
Speaker 3: your world, and as you talk to officials here in
Speaker 3: the United States when it comes to trading and investing,
Speaker 3: are you hearing or seeing any of that.
Speaker 4: Look, I think it's very tempting to chase the charts
Speaker 4: and to be very focused on sort of the you know,
Speaker 4: minute to minute, day to day, you know spikes, but
Speaker 4: that's just all part of market functioning. And I think
Speaker 4: what you're going to see, as it has been for decades,
Speaker 4: that the US is the world's reserve currency, that US
Speaker 4: treasuries are as safe haven, and in fact, the global
Speaker 4: financial system runs on US treasuries.
Speaker 2: So I'm confident that that will continue to be the case.
Speaker 1: Are you not concerned that the US is losing its
Speaker 1: status as a safe haven? Look what we saw with treasuries,
Speaker 1: Look what we've seen with the dollar in recent weeks.
Speaker 1: Is that something that's concerning to you?
Speaker 4: Again, I think it's important not to chase the charts
Speaker 4: and be focused on the minute to minute or the
Speaker 4: day to day. But if you look over all US
Speaker 4: markets have never been safer, sounder.
Speaker 2: Or healthier, all right.
Speaker 3: So one of the things we want to talk about,
Speaker 3: and we certainly set it up in our introduction to you,
Speaker 3: is about this twenty four to seven trading and the
Speaker 3: CFTC putting out requests for comment on potential uses and
Speaker 3: risks to allow for twenty four to seven trading in
Speaker 3: the derivatives market. I know you just made the outreach,
Speaker 3: but any comments, what are you hearing and kind of
Speaker 3: what is top of mind when you think about uses
Speaker 3: as well as risks.
Speaker 4: So I'm pleased to talk about this issue because it's
Speaker 4: something that we've been seeing in our markets for the
Speaker 4: past several years, but until recently, we did not have
Speaker 4: an administration and a policy that was pro innovation and
Speaker 4: pro growth, both in new products as well as in
Speaker 4: new markets. So again, the debate around twenty five four
Speaker 4: seven trading and extended trading hours or continuous trading hours
Speaker 4: has been very active for the past several years. But
Speaker 4: now we're finally moving from talk to action. We've had
Speaker 4: a number of exchanges in our markets show their interest
Speaker 4: and announce that they are looking at moving to twenty
Speaker 4: four to seven trading or twenty four to six trading
Speaker 4: or twenty four to five trading.
Speaker 2: And while that.
Speaker 4: Presents a lot of opportunities and there's a lot of benefits,
Speaker 4: particularly when you have an asset class that is liquid
Speaker 4: enough to support continuous trading or extended trading hours, we
Speaker 4: also have to make sure that we are prepared again
Speaker 4: from an operational perspective, because as we discussed with the
Speaker 4: recent market volatility, it's absolutely incumbent upon us as regulators
Speaker 4: to make sure that the markets are functioning well. So
Speaker 4: that's what this request for comment is. It's a thoughtful
Speaker 4: set of questions that seeks to understand the uses, benefits
Speaker 4: and also risks of extended trading hours or continuous trading hours.
Speaker 2: I'm really looking forward to the comments.
Speaker 4: Again, this is an area that's been very well debated
Speaker 4: for several years. I don't think we're going to see
Speaker 4: any surprises, and the safetyc has always been at the
Speaker 4: forefront of market innovation. We saw this with the creation
Speaker 4: of financial commodities and diritors based on interest rates in disease,
Speaker 4: and then again with all of the new and interesting
Speaker 4: asset classes, including crypto.
Speaker 1: Do you think it's a good idea? Do you think
Speaker 1: twenty four to seven trading of these products is a
Speaker 1: good idea.
Speaker 4: I think twenty four to seven trading is appropriate, but
Speaker 4: only when there is enough liquidity. So look at the
Speaker 4: FX market. The FX market is already trading on a
Speaker 4: continuous basis. There's no closing hours for the FX market.
Speaker 4: What we've seen in some of these announcements is that
Speaker 4: people are focused on the crypto asset class right now.
Speaker 4: That's also one that trades continuously today. So it doesn't
Speaker 4: change anything about the current market structure, just only that
Speaker 4: it's now happening in a regulated way with our futures products.
Speaker 2: So I think that's going to be very key.
Speaker 4: But again, we want to make sure we are thinking
Speaker 4: through all the possible issues, and we want to make
Speaker 4: sure we're doing so in an open and transparent way
Speaker 4: with lots of public engagement and public comment.
Speaker 3: How do you ensure CHEFAM that you know, what could
Speaker 3: be a lack of liquidity during the off hours, potentially,
Speaker 3: if it's twenty four to seven trading, that leads to
Speaker 3: maybe some severe disconnects in.
Speaker 2: The derivatives market.
Speaker 3: So I'm just curious, how do you make sure that
Speaker 3: doesn't happen.
Speaker 4: That's exactly the key point, because that's why it's so
Speaker 4: important to make sure there is sufficient liquidity. When you
Speaker 4: have something that already trades continuously, like FX or like crypto,
Speaker 4: it's less of a concern. But we are looking at
Speaker 4: everything from a very product specific perspective.
Speaker 2: We're looking at each individual product, what asset class it's
Speaker 2: based on. But obviously you would.
Speaker 4: Have concerns when you're looking at something that doesn't trade
Speaker 4: continuously today, something like ag futures for example. That is
Speaker 4: something that we would be extremely cautious about before we
Speaker 4: move to anything like this type of innovation.
Speaker 3: So it wouldn't be like across the board, there's very
Speaker 3: possible that there are carve outs right depending on the market.
Speaker 4: So this is again on a product by product based
Speaker 4: So we've had some exchanges that have self certified or
Speaker 4: have showed an interest to trade certain products, and these
Speaker 4: are all at this point in time based on the
Speaker 4: crypto asset class on a twenty four seven basis or
Speaker 4: twenty four six or twenty four to five. Some of
Speaker 4: this as future plans, so it's not actually live before
Speaker 4: the commission, but again it's something where we're looking at
Speaker 4: very specifically on that product basis. It's not going to
Speaker 4: be where all of a sudden it's a free for
Speaker 4: all in the market.
Speaker 1: You mentioned crypto, so let's go there. How is the
Speaker 1: CFTC going to work with the SEC? Of course, Paul
Speaker 1: Atkins was sworn in his chair this week. When it
Speaker 1: comes to cryptocurrency, what's the plan?
Speaker 4: I think what is great about this current administration is
Speaker 4: the clear vision that was expressed in the President's Executive
Speaker 4: Order on Digital Assets, the creation of the President's Working
Speaker 4: Group on Digital Asset Markets, and the open and continuous
Speaker 4: communication we have with all of the relevant stakeholders, including
Speaker 4: all the regulators. I've known Chairman Atkins for a long time.
Speaker 4: I'm really looking forward to working with the SEC under
Speaker 4: his leadership, and this really resets the CFTC and the
Speaker 4: SEC back to how it's always traditionally been between the
Speaker 4: two of us, where we work together on any issues
Speaker 4: of jurisdictional lines.
Speaker 2: And that's something that's gone.
Speaker 4: All the way back to at least the eighties, and
Speaker 4: it's something that I look forward to continuing as we
Speaker 4: move forward through creating more regulatory clarity in the United
Speaker 4: States for crypto.
Speaker 3: Hey, one thing we got to ask you doge, it's
Speaker 3: gone to the SEC, has it gone to the c FTC.
Speaker 4: There is no DOGE at the CFTC at this time,
Speaker 4: But that doesn't mean that we haven't been doing our
Speaker 4: own efforts to make sure that we're being gking the
Speaker 4: most return for the American taxpayer and that they're getting
Speaker 4: value out of their dollars. So my efficiency initiatives at
Speaker 4: the CFTC have already resulted in eighteen million dollars in savings.
Speaker 4: That's about five percent of our appropriated budget, about twelve
Speaker 4: percent of our non payroll budget. And I'm pleased to
Speaker 4: say that this year it looks like on an annualized basis,
Speaker 4: we'll be on track to save fifty million dollars and
Speaker 4: our budget is only three hundred and sixty five.
Speaker 2: What are you cutting? We have some contracts that are excessive.
Speaker 4: We have had contracts where I think, you know, just
Speaker 4: applying basic cost management principles, people didn't stop to think,
Speaker 4: do we really need five of the exact same contract
Speaker 4: for the exact same it service. So it is really
Speaker 4: just common sense reviewing our contracts, making sure that we
Speaker 4: are only paying for what we actually use and what
Speaker 4: we actually need.
Speaker 3: Is sometime like a redundancy a contract because to make
Speaker 3: sure that there's a backup program or that that wasn't
Speaker 3: the case.
Speaker 2: No, that's not the case.
Speaker 4: Let me give you an example, one point four million
Speaker 4: dollars on a focus group for consumer fraud. We all
Speaker 4: know that consumer fraud is bad. That is money that
Speaker 4: could be better put towards upgrading our technology.
Speaker 1: For example, Hey, before we let you go, I just
Speaker 1: wanted to ask another crypto question. We learned yesterday that
Speaker 1: the president is set to have dinner with the top
Speaker 1: two hundred and twenty holders of the trump a Mean coin.
Speaker 1: The issuers of the cryptocurrency announced yesterday. We saw this
Speaker 1: on social I'm curious, just as a regulator, how you
Speaker 1: look at the relationship that the president has with this
Speaker 1: digital asset, and as a as a person who is
Speaker 1: in charge of essentially creating policy on this stuff.
Speaker 2: Our job is.
Speaker 4: To make sure that we have markets that are safe
Speaker 4: and that are sound, and that we preserve market integrity,
Speaker 4: and that we make sure that most of all, in
Speaker 4: looking at market integrity, that the markets are well functioning
Speaker 4: and that there is an actual connection to the fundamentals
Speaker 4: that are underlying the market. So for us that is,
Speaker 4: of course, across the entire market. There's no distinction for
Speaker 4: anything else.
Speaker 1: Does it make your job more difficult?
Speaker 2: My job is difficult every day. It doesn't make any difference.
Speaker 3: All Right, We're going to leave it there. Listen, Thank
Speaker 3: you so much, really appreciate your time. We've been talking
Speaker 3: with Caroline fam she's the acting chair of the Commodity
Speaker 3: Futures Trading Commission. Joining us from the News Bureau of Washington,
Speaker 3: DC for Blueberg News