1 00:00:02,360 --> 00:00:06,680 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:06,800 --> 00:00:10,280 Speaker 2: Well, the Commodity Futures Trading Commission is asking for public 3 00:00:10,280 --> 00:00:13,080 Speaker 2: comment on allowing round the clock trading and derivatives markets. 4 00:00:13,160 --> 00:00:15,760 Speaker 2: This is according to a statement put out earlier this week. 5 00:00:15,800 --> 00:00:20,440 Speaker 2: The CFTC also wants input on offering perpetual futures. It's 6 00:00:20,480 --> 00:00:23,639 Speaker 2: a type of contract that's popular outside the United States 7 00:00:23,680 --> 00:00:26,720 Speaker 2: and gaining some traction in digital asset trading. So we 8 00:00:26,760 --> 00:00:28,560 Speaker 2: want to talk about that. We want to talk about 9 00:00:28,560 --> 00:00:31,720 Speaker 2: the overall massive derivatives market. Delighted to have with us 10 00:00:32,360 --> 00:00:35,920 Speaker 2: in our Bloomberg News. DC Bureau is acting chair of 11 00:00:35,960 --> 00:00:40,239 Speaker 2: the CFTC, Carolyn Caroline Fam Chair FAM. So nice to 12 00:00:40,280 --> 00:00:43,480 Speaker 2: have you with Tim and myself. Let's talk a little 13 00:00:43,479 --> 00:00:46,400 Speaker 2: bit about the market volatility that we have seen over 14 00:00:46,440 --> 00:00:47,479 Speaker 2: the last month or so. 15 00:00:48,120 --> 00:00:50,560 Speaker 1: What have you seen in the derivatives. 16 00:00:50,000 --> 00:00:54,920 Speaker 2: Market amid that volatility, trends, flows, oversized bets. 17 00:00:55,360 --> 00:00:58,440 Speaker 1: What can you tell us sure of course. 18 00:00:58,440 --> 00:01:00,960 Speaker 3: So one of the things that is really important to 19 00:01:00,960 --> 00:01:04,240 Speaker 3: remember about the recent market volatility and all time highs 20 00:01:04,280 --> 00:01:06,800 Speaker 3: as far as volume goes, is that the markets operated 21 00:01:07,160 --> 00:01:10,680 Speaker 3: in a functional and liquid manner. So we were really 22 00:01:10,720 --> 00:01:14,399 Speaker 3: pleased of course, all regulators were concerned about the market conditions. 23 00:01:14,440 --> 00:01:15,399 Speaker 1: You had the very. 24 00:01:15,600 --> 00:01:18,760 Speaker 3: Sharp spikes with the volatility, you had the record all 25 00:01:18,840 --> 00:01:22,360 Speaker 3: time flows of volume, but the markets were resilient, there 26 00:01:22,400 --> 00:01:25,360 Speaker 3: were adequate margin levels. You know, a lot of people 27 00:01:25,440 --> 00:01:28,200 Speaker 3: have thought about what happened in March twenty twenty with 28 00:01:28,280 --> 00:01:31,319 Speaker 3: the dash for cash, and we wanted to make sure 29 00:01:31,360 --> 00:01:33,800 Speaker 3: that wouldn't happen again. So you saw the global regulatory 30 00:01:33,800 --> 00:01:36,680 Speaker 3: community come together with some margin reform, and we're pleased 31 00:01:36,720 --> 00:01:38,960 Speaker 3: to see that that all worked as planned and there 32 00:01:38,959 --> 00:01:42,399 Speaker 3: were no significant operational issues. So I think relieved to 33 00:01:42,440 --> 00:01:46,000 Speaker 3: see that the markets performed well throughout that volatility. 34 00:01:45,560 --> 00:01:49,760 Speaker 4: No significant operational issues. That's certainly great news. Was anything close? 35 00:01:49,800 --> 00:01:53,120 Speaker 4: Were there any issues of concern for you? 36 00:01:53,160 --> 00:01:56,360 Speaker 3: No, we were in close contact with all market infrastructures 37 00:01:56,360 --> 00:02:00,720 Speaker 3: and market participants throughout the market stress and market conditions, 38 00:02:00,720 --> 00:02:04,600 Speaker 3: and we had no significant issues, no issues of concern whatsoever. 39 00:02:05,440 --> 00:02:07,720 Speaker 2: Is there anything you are seeing or hearing? You know, 40 00:02:07,720 --> 00:02:09,480 Speaker 2: this is certainly your world. I guess we're trying to 41 00:02:09,760 --> 00:02:14,720 Speaker 2: gauge whether or not foreign investors are pulling back on 42 00:02:14,960 --> 00:02:18,000 Speaker 2: US assets and dollar based assets, and I'm just curious 43 00:02:18,080 --> 00:02:20,240 Speaker 2: in any of the trend flows are Again, this is 44 00:02:20,280 --> 00:02:24,840 Speaker 2: your world, and as you talk to officials here in 45 00:02:24,880 --> 00:02:27,360 Speaker 2: the United States when it comes to trading and investing, 46 00:02:27,680 --> 00:02:29,280 Speaker 2: are you hearing or seeing any of that. 47 00:02:31,000 --> 00:02:33,560 Speaker 3: Look, I think it's very tempting to chase the charts 48 00:02:33,600 --> 00:02:35,960 Speaker 3: and to be very focused on sort of the you know, 49 00:02:36,120 --> 00:02:38,520 Speaker 3: minute to minute, day to day, you know spikes, But 50 00:02:38,560 --> 00:02:40,880 Speaker 3: that's just all part of market functioning. And I think 51 00:02:41,040 --> 00:02:43,919 Speaker 3: what you're going to see, as it has been for decades, 52 00:02:44,280 --> 00:02:47,360 Speaker 3: that the US is the world's reserve currency, that US 53 00:02:47,400 --> 00:02:49,800 Speaker 3: treasuries are as safe haven, and in fact, the global 54 00:02:49,840 --> 00:02:53,440 Speaker 3: financial system runs on US treasuries. So I'm confident that 55 00:02:53,520 --> 00:02:54,399 Speaker 3: will continue to be the case. 56 00:02:54,440 --> 00:02:56,960 Speaker 4: Are you not concerned that the US is losing its 57 00:02:57,000 --> 00:02:59,960 Speaker 4: status as a safe haven? Look what we saw with treasuries, 58 00:03:00,040 --> 00:03:02,160 Speaker 4: Look what we've seen with the dollar in recent weeks. 59 00:03:02,520 --> 00:03:04,560 Speaker 4: Is that something that's concerning to you? 60 00:03:06,000 --> 00:03:08,160 Speaker 3: Again, I think it's important not to chase the charts 61 00:03:08,200 --> 00:03:10,320 Speaker 3: and be focused on the minute to minute or the 62 00:03:10,400 --> 00:03:13,320 Speaker 3: day to day. But if you look over all, US 63 00:03:13,320 --> 00:03:15,560 Speaker 3: markets have never been safer, sounder. 64 00:03:15,240 --> 00:03:16,360 Speaker 1: Or healthier, all right. 65 00:03:16,440 --> 00:03:17,919 Speaker 2: So one of the things we want to talk about 66 00:03:17,919 --> 00:03:20,320 Speaker 2: and we certainly set it up in our introduction to 67 00:03:20,360 --> 00:03:22,359 Speaker 2: you is about this twenty four to seven trading and 68 00:03:22,760 --> 00:03:27,080 Speaker 2: the CFTC putting out requests for comment on potential uses 69 00:03:27,120 --> 00:03:29,600 Speaker 2: and risks to allow for twenty four to seven trading 70 00:03:29,639 --> 00:03:32,400 Speaker 2: in the derivatives market. I know you just made the outrage, 71 00:03:32,560 --> 00:03:35,000 Speaker 2: but any comments, what are you hearing and kind of 72 00:03:35,000 --> 00:03:37,200 Speaker 2: what is top of mind when you think about uses 73 00:03:37,240 --> 00:03:38,240 Speaker 2: as well as risks. 74 00:03:39,800 --> 00:03:42,040 Speaker 3: So I'm pleased to talk about this issue because it's 75 00:03:42,040 --> 00:03:43,600 Speaker 3: something that we've been seeing in our markets for the 76 00:03:43,640 --> 00:03:46,480 Speaker 3: past several years. But until recently, we did not have 77 00:03:47,400 --> 00:03:50,760 Speaker 3: an administration and a policy that was pro innovation and 78 00:03:50,840 --> 00:03:53,360 Speaker 3: pro growth, both in new products as well as in 79 00:03:53,440 --> 00:03:56,880 Speaker 3: new markets. So again, the debate around twenty four to 80 00:03:56,920 --> 00:04:00,400 Speaker 3: seven trading and extended trading hours or continuous trading hours 81 00:04:00,400 --> 00:04:03,120 Speaker 3: has been very active for the past several years. But 82 00:04:03,280 --> 00:04:07,000 Speaker 3: now we're finally moving from talk to action. We've had 83 00:04:07,000 --> 00:04:10,960 Speaker 3: a number of exchanges in our markets show their interests 84 00:04:10,960 --> 00:04:12,920 Speaker 3: and announce that they are looking at moving to twenty 85 00:04:12,920 --> 00:04:14,960 Speaker 3: four to seven trading or twenty four to six trading 86 00:04:15,040 --> 00:04:16,360 Speaker 3: or twenty four to five trading. 87 00:04:16,640 --> 00:04:17,240 Speaker 1: And while that. 88 00:04:17,200 --> 00:04:19,760 Speaker 3: Presents a lot of opportunities, and there's a lot of benefits, 89 00:04:20,040 --> 00:04:22,400 Speaker 3: particularly when you have an asset class that is liquid 90 00:04:22,520 --> 00:04:26,080 Speaker 3: enough to support continuous trading or extended trading hours. We 91 00:04:26,120 --> 00:04:27,880 Speaker 3: also have to make sure that we are prepared again 92 00:04:27,920 --> 00:04:30,560 Speaker 3: from an operational perspective, because you know, as we discussed 93 00:04:30,560 --> 00:04:34,080 Speaker 3: with the recent market volatility, it's absolutely incumbent upon us 94 00:04:34,160 --> 00:04:36,560 Speaker 3: as regulators to make sure that the markets are functioning well. 95 00:04:36,800 --> 00:04:39,279 Speaker 3: So that's what this request for comment is. It's a 96 00:04:39,279 --> 00:04:42,240 Speaker 3: thoughtful set of questions that seeks to understand the uses, 97 00:04:42,680 --> 00:04:46,320 Speaker 3: benefits and also risks of extended trading hours or continuous 98 00:04:46,360 --> 00:04:46,919 Speaker 3: trading hours. 99 00:04:46,960 --> 00:04:48,480 Speaker 1: I'm really looking forward to the comments. 100 00:04:48,480 --> 00:04:51,679 Speaker 3: Again, this is an area that's been very well debated 101 00:04:51,680 --> 00:04:53,800 Speaker 3: for several years. I don't think we're going to see 102 00:04:53,839 --> 00:04:56,240 Speaker 3: any surprises, and the safetc. Has always been at the 103 00:04:56,279 --> 00:04:59,000 Speaker 3: forefront of market innovation. You know, we saw this with 104 00:04:59,080 --> 00:05:02,920 Speaker 3: the creation of financial commodities and diritors based on interest 105 00:05:03,000 --> 00:05:06,240 Speaker 3: rates in disease, and then again with all of the 106 00:05:06,480 --> 00:05:08,480 Speaker 3: new and interesting asset classes, including crypto. 107 00:05:08,960 --> 00:05:10,440 Speaker 4: Do you think it's a good idea? Do you think 108 00:05:10,480 --> 00:05:12,720 Speaker 4: twenty four to seven trading of these products is a 109 00:05:12,720 --> 00:05:13,640 Speaker 4: good idea? 110 00:05:14,640 --> 00:05:16,960 Speaker 3: I think twenty four to seven trading is appropriate, but 111 00:05:17,080 --> 00:05:19,200 Speaker 3: only when there is enough liquidity. So look at the 112 00:05:19,279 --> 00:05:21,440 Speaker 3: FX market. The FX market is already trading on a 113 00:05:21,480 --> 00:05:25,400 Speaker 3: continuous basis. There's no closing hours for the FX market. 114 00:05:26,040 --> 00:05:28,800 Speaker 3: What we've seen in some of these announcements is that 115 00:05:28,839 --> 00:05:31,360 Speaker 3: people are focused on the crypto asset class right now. 116 00:05:31,400 --> 00:05:34,280 Speaker 3: That's also one that trades continuously today. So it doesn't 117 00:05:34,400 --> 00:05:38,839 Speaker 3: change anything about the current market structure, just only that 118 00:05:38,920 --> 00:05:44,160 Speaker 3: it's now happening in a regulated way with our futures products. 119 00:05:44,200 --> 00:05:46,000 Speaker 1: So I think that's going to be very key. 120 00:05:46,040 --> 00:05:48,440 Speaker 3: But again, we want to make sure we are thinking 121 00:05:48,480 --> 00:05:50,360 Speaker 3: through all the possible issues, and we want to make 122 00:05:50,400 --> 00:05:52,760 Speaker 3: sure we're doing so in an open and transparent way 123 00:05:52,800 --> 00:05:55,200 Speaker 3: with lots of public engagement and public comment. 124 00:05:55,440 --> 00:05:59,320 Speaker 2: How do you ensure CHEFAM that what could be a 125 00:05:59,400 --> 00:06:04,120 Speaker 2: lack of during the off hours potentially if it's twenty 126 00:06:04,120 --> 00:06:07,080 Speaker 2: four to seven trading, that leads to maybe some severe 127 00:06:07,200 --> 00:06:12,120 Speaker 2: disconnects in the derivatives market. So I'm just curious, how 128 00:06:12,160 --> 00:06:13,920 Speaker 2: do you make sure that doesn't happen. 129 00:06:15,760 --> 00:06:19,120 Speaker 3: That's exactly the key point, because that's why it's so 130 00:06:19,120 --> 00:06:21,599 Speaker 3: important to make sure there is sufficient liquidity when you 131 00:06:21,640 --> 00:06:25,000 Speaker 3: have something that already trades continuously like FX or like crypto, 132 00:06:25,360 --> 00:06:27,320 Speaker 3: it's less of a concern. But we are looking at 133 00:06:27,320 --> 00:06:30,440 Speaker 3: everything from a very product specific perspective. We're looking at 134 00:06:30,480 --> 00:06:33,320 Speaker 3: each individual product, what asset class it's based on. But 135 00:06:33,440 --> 00:06:35,840 Speaker 3: obviously you would have concerns when you're looking at something 136 00:06:36,120 --> 00:06:39,719 Speaker 3: that doesn't trade continuously today, something like ag futures for example, 137 00:06:39,760 --> 00:06:42,120 Speaker 3: That is something that we would be extremely cautious about 138 00:06:42,279 --> 00:06:45,560 Speaker 3: before we move to anything like this type of innovation. 139 00:06:45,640 --> 00:06:47,280 Speaker 2: So it wouldn't be like across the board, there's very 140 00:06:47,320 --> 00:06:50,480 Speaker 2: possible that there are carve outs right depending on the market. 141 00:06:51,880 --> 00:06:54,200 Speaker 3: So this is again on a product by product based 142 00:06:54,520 --> 00:06:57,400 Speaker 3: So we've had some exchanges that have self certified or 143 00:06:57,440 --> 00:07:01,000 Speaker 3: have showed an interest to trade certain products, and these 144 00:07:01,040 --> 00:07:03,040 Speaker 3: are all at this point in time based on the 145 00:07:03,040 --> 00:07:05,599 Speaker 3: crypto asset class on a twenty four to seven basis 146 00:07:05,640 --> 00:07:08,000 Speaker 3: or twenty four six or twenty four to five. Some 147 00:07:08,080 --> 00:07:10,440 Speaker 3: of this as future plans, so it's not actually live 148 00:07:10,600 --> 00:07:13,480 Speaker 3: before the commission, but again it's something where we're looking 149 00:07:13,520 --> 00:07:16,240 Speaker 3: at very specifically on that product basis. It's not going 150 00:07:16,280 --> 00:07:17,960 Speaker 3: to be where all of a sudden it's a free 151 00:07:17,960 --> 00:07:18,680 Speaker 3: for all in the market. 152 00:07:19,080 --> 00:07:21,040 Speaker 4: You imnagined crypto, so let's go there. How is the 153 00:07:21,080 --> 00:07:23,800 Speaker 4: CFTC going to work with the SEC? Of course, Paul 154 00:07:23,840 --> 00:07:27,440 Speaker 4: Atkins was sworn in his chair this week. When it 155 00:07:27,480 --> 00:07:29,360 Speaker 4: comes to cryptocurrency, what's the plan? 156 00:07:31,240 --> 00:07:34,440 Speaker 3: I think what is great about this current administration is 157 00:07:34,440 --> 00:07:37,120 Speaker 3: the clear vision that was expressed in the President's Executive 158 00:07:37,200 --> 00:07:40,119 Speaker 3: Order on Digital Assets, the creation of the President's Working 159 00:07:40,120 --> 00:07:42,480 Speaker 3: Group on Digital Asset Markets, and the open and continuous 160 00:07:42,480 --> 00:07:45,320 Speaker 3: communication we have with all of the relevant stakeholders, including 161 00:07:45,360 --> 00:07:48,800 Speaker 3: all the regulators. I've known Chairman Atkins for a long time. 162 00:07:49,080 --> 00:07:51,840 Speaker 3: I'm really looking forward to working with the SEC under 163 00:07:51,840 --> 00:07:56,120 Speaker 3: his leadership, and this really resets the CFTC and the 164 00:07:56,160 --> 00:07:59,200 Speaker 3: SEC back to how it's always traditionally been between the 165 00:07:59,200 --> 00:08:01,800 Speaker 3: two of us, where we work together on any issues 166 00:08:02,120 --> 00:08:06,040 Speaker 3: of jurisdictional lines. And that's something that's gone all the 167 00:08:06,080 --> 00:08:08,560 Speaker 3: way back to at least the eighties, and it's something 168 00:08:08,600 --> 00:08:10,679 Speaker 3: that I look forward to continuing as we move forward 169 00:08:10,720 --> 00:08:15,679 Speaker 3: through creating more regulatory clarity in the United States for crypto. 170 00:08:15,920 --> 00:08:17,800 Speaker 2: Hey, one thing we got to ask you, Doge it's 171 00:08:17,840 --> 00:08:20,560 Speaker 2: gone to the SEC? Has it gone to the c FTC? 172 00:08:22,680 --> 00:08:25,320 Speaker 3: There is no DOGE at the CFTC at this time, 173 00:08:25,400 --> 00:08:27,160 Speaker 3: but that doesn't mean that we haven't been doing our 174 00:08:27,200 --> 00:08:30,120 Speaker 3: own efforts to make sure that we're being making the 175 00:08:30,200 --> 00:08:33,000 Speaker 3: most returned for the American taxpayer and that they're getting 176 00:08:33,080 --> 00:08:37,040 Speaker 3: value out of their dollars. So my efficiency initiatives at 177 00:08:37,080 --> 00:08:41,040 Speaker 3: the CFTC have already resulted in eighteen million dollars in savings. 178 00:08:41,320 --> 00:08:45,319 Speaker 3: That's about five percent of our appropriated budget, about twelve 179 00:08:45,400 --> 00:08:47,720 Speaker 3: percent of our non payroll budget. And I'm pleased to 180 00:08:47,760 --> 00:08:50,679 Speaker 3: say that this year it looks like on an annualized basis, 181 00:08:50,960 --> 00:08:53,400 Speaker 3: we'll be on track to save fifty million dollars and 182 00:08:53,440 --> 00:08:55,400 Speaker 3: our budget is only three hundred and sixty five. 183 00:08:55,480 --> 00:08:56,240 Speaker 2: What are you cutting? 184 00:08:57,960 --> 00:09:00,960 Speaker 3: We have some contracts that are accessed. We have had 185 00:09:01,000 --> 00:09:03,839 Speaker 3: contracts where I think, you know, just applying basic cost 186 00:09:03,880 --> 00:09:06,560 Speaker 3: management principles, people didn't stop to think, do we really 187 00:09:06,559 --> 00:09:08,840 Speaker 3: need five of the exact same contract for the exact 188 00:09:08,840 --> 00:09:12,120 Speaker 3: same IT service. So it is really just common sense 189 00:09:12,280 --> 00:09:16,319 Speaker 3: reviewing our contracts, making sure that we are only paying. 190 00:09:16,000 --> 00:09:18,440 Speaker 1: For what we actually use and what we actually need. 191 00:09:18,679 --> 00:09:21,640 Speaker 2: Is sometime like a redundancy a contract because to make 192 00:09:21,640 --> 00:09:24,400 Speaker 2: sure that there's a backup program or that's that wasn't 193 00:09:24,400 --> 00:09:24,800 Speaker 2: the case. 194 00:09:26,000 --> 00:09:27,199 Speaker 1: No, that's not the case. 195 00:09:27,960 --> 00:09:30,200 Speaker 3: Let me give you an example, one point four million 196 00:09:30,280 --> 00:09:34,160 Speaker 3: dollars on a focus group for consumer fraud. 197 00:09:34,240 --> 00:09:36,320 Speaker 1: We all know that consumer fraud is bad. 198 00:09:36,480 --> 00:09:38,760 Speaker 3: That is money that could be better put towards upgrading 199 00:09:38,760 --> 00:09:39,480 Speaker 3: our technology. 200 00:09:39,480 --> 00:09:40,040 Speaker 1: For example. 201 00:09:40,880 --> 00:09:42,400 Speaker 4: Hey, before we let you go, I just wanted to 202 00:09:42,440 --> 00:09:45,600 Speaker 4: ask another crypto question. We learned yesterday that the president 203 00:09:45,640 --> 00:09:47,480 Speaker 4: is set to have dinner with the top two hundred 204 00:09:47,480 --> 00:09:50,480 Speaker 4: and twenty holders of the Trump Mean coin. The issuers 205 00:09:50,480 --> 00:09:53,679 Speaker 4: of the cryptocurrency announced yesterday. We saw this on social 206 00:09:54,840 --> 00:09:57,120 Speaker 4: I'm curious, just as a regulator, how you look at 207 00:09:57,160 --> 00:10:00,800 Speaker 4: the relationship that the president has with this digital asset 208 00:10:01,400 --> 00:10:05,480 Speaker 4: and as a person who is in charge of essentially 209 00:10:05,520 --> 00:10:06,840 Speaker 4: creating policy on this stuff. 210 00:10:08,440 --> 00:10:09,320 Speaker 1: Our job is. 211 00:10:09,200 --> 00:10:11,280 Speaker 3: To make sure that we have markets that are safe 212 00:10:11,280 --> 00:10:14,000 Speaker 3: and that are sound, and that we preserve market integrity, 213 00:10:14,280 --> 00:10:17,880 Speaker 3: and that we make sure that most of all, in 214 00:10:17,920 --> 00:10:21,600 Speaker 3: looking at market integrity, that the markets are well functioning 215 00:10:21,640 --> 00:10:25,280 Speaker 3: and that there is an actual connection to the fundamentals 216 00:10:25,320 --> 00:10:28,520 Speaker 3: that are underlying the market. So for us, that is 217 00:10:28,559 --> 00:10:31,880 Speaker 3: of course across the entire market. There's no distinction for 218 00:10:32,160 --> 00:10:32,840 Speaker 3: anything else. 219 00:10:33,120 --> 00:10:34,600 Speaker 4: Does it make your job more difficult. 220 00:10:36,440 --> 00:10:39,679 Speaker 3: My job is difficult every day. It doesn't make any difference. 221 00:10:40,440 --> 00:10:41,640 Speaker 1: All right, we're going to leave it there. 222 00:10:41,679 --> 00:10:44,960 Speaker 2: Listen, thank you so much, really appreciate your time. We've 223 00:10:45,000 --> 00:10:47,480 Speaker 2: been talking with Caroline fam she's the acting chair of 224 00:10:47,520 --> 00:10:49,319 Speaker 2: the Commodity Futures Trading Commission.