WEBVTT - CFTC Chair Caroline Pham Talks Markets 0:00:02.360 --> 0:00:06.680 Bloomberg Audio Studios, podcasts, radio news. 0:00:06.800 --> 0:00:10.280 Well, the Commodity Futures Trading Commission is asking for public 0:00:10.280 --> 0:00:13.080 comment on allowing round the clock trading and derivatives markets. 0:00:13.160 --> 0:00:15.760 This is according to a statement put out earlier this week. 0:00:15.800 --> 0:00:20.440 The CFTC also wants input on offering perpetual futures. It's 0:00:20.480 --> 0:00:23.639 a type of contract that's popular outside the United States 0:00:23.680 --> 0:00:26.720 and gaining some traction in digital asset trading. So we 0:00:26.760 --> 0:00:28.560 want to talk about that. We want to talk about 0:00:28.560 --> 0:00:31.720 the overall massive derivatives market. Delighted to have with us 0:00:32.360 --> 0:00:35.920 in our Bloomberg News. DC Bureau is acting chair of 0:00:35.960 --> 0:00:40.239 the CFTC, Carolyn Caroline Fam Chair FAM. So nice to 0:00:40.280 --> 0:00:43.480 have you with Tim and myself. Let's talk a little 0:00:43.479 --> 0:00:46.400 bit about the market volatility that we have seen over 0:00:46.440 --> 0:00:47.479 the last month or so. 0:00:48.120 --> 0:00:50.560 What have you seen in the derivatives. 0:00:50.000 --> 0:00:54.920 Market amid that volatility, trends, flows, oversized bets. 0:00:55.360 --> 0:00:58.440 What can you tell us sure of course. 0:00:58.440 --> 0:01:00.960 So one of the things that is really important to 0:01:00.960 --> 0:01:04.240 remember about the recent market volatility and all time highs 0:01:04.280 --> 0:01:06.800 as far as volume goes, is that the markets operated 0:01:07.160 --> 0:01:10.680 in a functional and liquid manner. So we were really 0:01:10.720 --> 0:01:14.399 pleased of course, all regulators were concerned about the market conditions. 0:01:14.440 --> 0:01:15.399 You had the very. 0:01:15.600 --> 0:01:18.760 Sharp spikes with the volatility, you had the record all 0:01:18.840 --> 0:01:22.360 time flows of volume, but the markets were resilient, there 0:01:22.400 --> 0:01:25.360 were adequate margin levels. You know, a lot of people 0:01:25.440 --> 0:01:28.200 have thought about what happened in March twenty twenty with 0:01:28.280 --> 0:01:31.319 the dash for cash, and we wanted to make sure 0:01:31.360 --> 0:01:33.800 that wouldn't happen again. So you saw the global regulatory 0:01:33.800 --> 0:01:36.680 community come together with some margin reform, and we're pleased 0:01:36.720 --> 0:01:38.960 to see that that all worked as planned and there 0:01:38.959 --> 0:01:42.399 were no significant operational issues. So I think relieved to 0:01:42.440 --> 0:01:46.000 see that the markets performed well throughout that volatility. 0:01:45.560 --> 0:01:49.760 No significant operational issues. That's certainly great news. Was anything close? 0:01:49.800 --> 0:01:53.120 Were there any issues of concern for you? 0:01:53.160 --> 0:01:56.360 No, we were in close contact with all market infrastructures 0:01:56.360 --> 0:02:00.720 and market participants throughout the market stress and market conditions, 0:02:00.720 --> 0:02:04.600 and we had no significant issues, no issues of concern whatsoever. 0:02:05.440 --> 0:02:07.720 Is there anything you are seeing or hearing? You know, 0:02:07.720 --> 0:02:09.480 this is certainly your world. I guess we're trying to 0:02:09.760 --> 0:02:14.720 gauge whether or not foreign investors are pulling back on 0:02:14.960 --> 0:02:18.000 US assets and dollar based assets, and I'm just curious 0:02:18.080 --> 0:02:20.240 in any of the trend flows are Again, this is 0:02:20.280 --> 0:02:24.840 your world, and as you talk to officials here in 0:02:24.880 --> 0:02:27.360 the United States when it comes to trading and investing, 0:02:27.680 --> 0:02:29.280 are you hearing or seeing any of that. 0:02:31.000 --> 0:02:33.560 Look, I think it's very tempting to chase the charts 0:02:33.600 --> 0:02:35.960 and to be very focused on sort of the you know, 0:02:36.120 --> 0:02:38.520 minute to minute, day to day, you know spikes, But 0:02:38.560 --> 0:02:40.880 that's just all part of market functioning. And I think 0:02:41.040 --> 0:02:43.919 what you're going to see, as it has been for decades, 0:02:44.280 --> 0:02:47.360 that the US is the world's reserve currency, that US 0:02:47.400 --> 0:02:49.800 treasuries are as safe haven, and in fact, the global 0:02:49.840 --> 0:02:53.440 financial system runs on US treasuries. So I'm confident that 0:02:53.520 --> 0:02:54.399 will continue to be the case. 0:02:54.440 --> 0:02:56.960 Are you not concerned that the US is losing its 0:02:57.000 --> 0:02:59.960 status as a safe haven? Look what we saw with treasuries, 0:03:00.040 --> 0:03:02.160 Look what we've seen with the dollar in recent weeks. 0:03:02.520 --> 0:03:04.560 Is that something that's concerning to you? 0:03:06.000 --> 0:03:08.160 Again, I think it's important not to chase the charts 0:03:08.200 --> 0:03:10.320 and be focused on the minute to minute or the 0:03:10.400 --> 0:03:13.320 day to day. But if you look over all, US 0:03:13.320 --> 0:03:15.560 markets have never been safer, sounder. 0:03:15.240 --> 0:03:16.360 Or healthier, all right. 0:03:16.440 --> 0:03:17.919 So one of the things we want to talk about 0:03:17.919 --> 0:03:20.320 and we certainly set it up in our introduction to 0:03:20.360 --> 0:03:22.359 you is about this twenty four to seven trading and 0:03:22.760 --> 0:03:27.080 the CFTC putting out requests for comment on potential uses 0:03:27.120 --> 0:03:29.600 and risks to allow for twenty four to seven trading 0:03:29.639 --> 0:03:32.400 in the derivatives market. I know you just made the outrage, 0:03:32.560 --> 0:03:35.000 but any comments, what are you hearing and kind of 0:03:35.000 --> 0:03:37.200 what is top of mind when you think about uses 0:03:37.240 --> 0:03:38.240 as well as risks. 0:03:39.800 --> 0:03:42.040 So I'm pleased to talk about this issue because it's 0:03:42.040 --> 0:03:43.600 something that we've been seeing in our markets for the 0:03:43.640 --> 0:03:46.480 past several years. But until recently, we did not have 0:03:47.400 --> 0:03:50.760 an administration and a policy that was pro innovation and 0:03:50.840 --> 0:03:53.360 pro growth, both in new products as well as in 0:03:53.440 --> 0:03:56.880 new markets. So again, the debate around twenty four to 0:03:56.920 --> 0:04:00.400 seven trading and extended trading hours or continuous trading hours 0:04:00.400 --> 0:04:03.120 has been very active for the past several years. But 0:04:03.280 --> 0:04:07.000 now we're finally moving from talk to action. We've had 0:04:07.000 --> 0:04:10.960 a number of exchanges in our markets show their interests 0:04:10.960 --> 0:04:12.920 and announce that they are looking at moving to twenty 0:04:12.920 --> 0:04:14.960 four to seven trading or twenty four to six trading 0:04:15.040 --> 0:04:16.360 or twenty four to five trading. 0:04:16.640 --> 0:04:17.240 And while that. 0:04:17.200 --> 0:04:19.760 Presents a lot of opportunities, and there's a lot of benefits, 0:04:20.040 --> 0:04:22.400 particularly when you have an asset class that is liquid 0:04:22.520 --> 0:04:26.080 enough to support continuous trading or extended trading hours. We 0:04:26.120 --> 0:04:27.880 also have to make sure that we are prepared again 0:04:27.920 --> 0:04:30.560 from an operational perspective, because you know, as we discussed 0:04:30.560 --> 0:04:34.080 with the recent market volatility, it's absolutely incumbent upon us 0:04:34.160 --> 0:04:36.560 as regulators to make sure that the markets are functioning well. 0:04:36.800 --> 0:04:39.279 So that's what this request for comment is. It's a 0:04:39.279 --> 0:04:42.240 thoughtful set of questions that seeks to understand the uses, 0:04:42.680 --> 0:04:46.320 benefits and also risks of extended trading hours or continuous 0:04:46.360 --> 0:04:46.919 trading hours. 0:04:46.960 --> 0:04:48.480 I'm really looking forward to the comments. 0:04:48.480 --> 0:04:51.679 Again, this is an area that's been very well debated 0:04:51.680 --> 0:04:53.800 for several years. I don't think we're going to see 0:04:53.839 --> 0:04:56.240 any surprises, and the safetc. Has always been at the 0:04:56.279 --> 0:04:59.000 forefront of market innovation. You know, we saw this with 0:04:59.080 --> 0:05:02.920 the creation of financial commodities and diritors based on interest 0:05:03.000 --> 0:05:06.240 rates in disease, and then again with all of the 0:05:06.480 --> 0:05:08.480 new and interesting asset classes, including crypto. 0:05:08.960 --> 0:05:10.440 Do you think it's a good idea? Do you think 0:05:10.480 --> 0:05:12.720 twenty four to seven trading of these products is a 0:05:12.720 --> 0:05:13.640 good idea? 0:05:14.640 --> 0:05:16.960 I think twenty four to seven trading is appropriate, but 0:05:17.080 --> 0:05:19.200 only when there is enough liquidity. So look at the 0:05:19.279 --> 0:05:21.440 FX market. The FX market is already trading on a 0:05:21.480 --> 0:05:25.400 continuous basis. There's no closing hours for the FX market. 0:05:26.040 --> 0:05:28.800 What we've seen in some of these announcements is that 0:05:28.839 --> 0:05:31.360 people are focused on the crypto asset class right now. 0:05:31.400 --> 0:05:34.280 That's also one that trades continuously today. So it doesn't 0:05:34.400 --> 0:05:38.839 change anything about the current market structure, just only that 0:05:38.920 --> 0:05:44.160 it's now happening in a regulated way with our futures products. 0:05:44.200 --> 0:05:46.000 So I think that's going to be very key. 0:05:46.040 --> 0:05:48.440 But again, we want to make sure we are thinking 0:05:48.480 --> 0:05:50.360 through all the possible issues, and we want to make 0:05:50.400 --> 0:05:52.760 sure we're doing so in an open and transparent way 0:05:52.800 --> 0:05:55.200 with lots of public engagement and public comment. 0:05:55.440 --> 0:05:59.320 How do you ensure CHEFAM that what could be a 0:05:59.400 --> 0:06:04.120 lack of during the off hours potentially if it's twenty 0:06:04.120 --> 0:06:07.080 four to seven trading, that leads to maybe some severe 0:06:07.200 --> 0:06:12.120 disconnects in the derivatives market. So I'm just curious, how 0:06:12.160 --> 0:06:13.920 do you make sure that doesn't happen. 0:06:15.760 --> 0:06:19.120 That's exactly the key point, because that's why it's so 0:06:19.120 --> 0:06:21.599 important to make sure there is sufficient liquidity when you 0:06:21.640 --> 0:06:25.000 have something that already trades continuously like FX or like crypto, 0:06:25.360 --> 0:06:27.320 it's less of a concern. But we are looking at 0:06:27.320 --> 0:06:30.440 everything from a very product specific perspective. We're looking at 0:06:30.480 --> 0:06:33.320 each individual product, what asset class it's based on. But 0:06:33.440 --> 0:06:35.840 obviously you would have concerns when you're looking at something 0:06:36.120 --> 0:06:39.719 that doesn't trade continuously today, something like ag futures for example, 0:06:39.760 --> 0:06:42.120 That is something that we would be extremely cautious about 0:06:42.279 --> 0:06:45.560 before we move to anything like this type of innovation. 0:06:45.640 --> 0:06:47.280 So it wouldn't be like across the board, there's very 0:06:47.320 --> 0:06:50.480 possible that there are carve outs right depending on the market. 0:06:51.880 --> 0:06:54.200 So this is again on a product by product based 0:06:54.520 --> 0:06:57.400 So we've had some exchanges that have self certified or 0:06:57.440 --> 0:07:01.000 have showed an interest to trade certain products, and these 0:07:01.040 --> 0:07:03.040 are all at this point in time based on the 0:07:03.040 --> 0:07:05.599 crypto asset class on a twenty four to seven basis 0:07:05.640 --> 0:07:08.000 or twenty four six or twenty four to five. Some 0:07:08.080 --> 0:07:10.440 of this as future plans, so it's not actually live 0:07:10.600 --> 0:07:13.480 before the commission, but again it's something where we're looking 0:07:13.520 --> 0:07:16.240 at very specifically on that product basis. It's not going 0:07:16.280 --> 0:07:17.960 to be where all of a sudden it's a free 0:07:17.960 --> 0:07:18.680 for all in the market. 0:07:19.080 --> 0:07:21.040 You imnagined crypto, so let's go there. How is the 0:07:21.080 --> 0:07:23.800 CFTC going to work with the SEC? Of course, Paul 0:07:23.840 --> 0:07:27.440 Atkins was sworn in his chair this week. When it 0:07:27.480 --> 0:07:29.360 comes to cryptocurrency, what's the plan? 0:07:31.240 --> 0:07:34.440 I think what is great about this current administration is 0:07:34.440 --> 0:07:37.120 the clear vision that was expressed in the President's Executive 0:07:37.200 --> 0:07:40.119 Order on Digital Assets, the creation of the President's Working 0:07:40.120 --> 0:07:42.480 Group on Digital Asset Markets, and the open and continuous 0:07:42.480 --> 0:07:45.320 communication we have with all of the relevant stakeholders, including 0:07:45.360 --> 0:07:48.800 all the regulators. I've known Chairman Atkins for a long time. 0:07:49.080 --> 0:07:51.840 I'm really looking forward to working with the SEC under 0:07:51.840 --> 0:07:56.120 his leadership, and this really resets the CFTC and the 0:07:56.160 --> 0:07:59.200 SEC back to how it's always traditionally been between the 0:07:59.200 --> 0:08:01.800 two of us, where we work together on any issues 0:08:02.120 --> 0:08:06.040 of jurisdictional lines. And that's something that's gone all the 0:08:06.080 --> 0:08:08.560 way back to at least the eighties, and it's something 0:08:08.600 --> 0:08:10.679 that I look forward to continuing as we move forward 0:08:10.720 --> 0:08:15.679 through creating more regulatory clarity in the United States for crypto. 0:08:15.920 --> 0:08:17.800 Hey, one thing we got to ask you, Doge it's 0:08:17.840 --> 0:08:20.560 gone to the SEC? Has it gone to the c FTC? 0:08:22.680 --> 0:08:25.320 There is no DOGE at the CFTC at this time, 0:08:25.400 --> 0:08:27.160 but that doesn't mean that we haven't been doing our 0:08:27.200 --> 0:08:30.120 own efforts to make sure that we're being making the 0:08:30.200 --> 0:08:33.000 most returned for the American taxpayer and that they're getting 0:08:33.080 --> 0:08:37.040 value out of their dollars. So my efficiency initiatives at 0:08:37.080 --> 0:08:41.040 the CFTC have already resulted in eighteen million dollars in savings. 0:08:41.320 --> 0:08:45.319 That's about five percent of our appropriated budget, about twelve 0:08:45.400 --> 0:08:47.720 percent of our non payroll budget. And I'm pleased to 0:08:47.760 --> 0:08:50.679 say that this year it looks like on an annualized basis, 0:08:50.960 --> 0:08:53.400 we'll be on track to save fifty million dollars and 0:08:53.440 --> 0:08:55.400 our budget is only three hundred and sixty five. 0:08:55.480 --> 0:08:56.240 What are you cutting? 0:08:57.960 --> 0:09:00.960 We have some contracts that are accessed. We have had 0:09:01.000 --> 0:09:03.839 contracts where I think, you know, just applying basic cost 0:09:03.880 --> 0:09:06.560 management principles, people didn't stop to think, do we really 0:09:06.559 --> 0:09:08.840 need five of the exact same contract for the exact 0:09:08.840 --> 0:09:12.120 same IT service. So it is really just common sense 0:09:12.280 --> 0:09:16.319 reviewing our contracts, making sure that we are only paying. 0:09:16.000 --> 0:09:18.440 For what we actually use and what we actually need. 0:09:18.679 --> 0:09:21.640 Is sometime like a redundancy a contract because to make 0:09:21.640 --> 0:09:24.400 sure that there's a backup program or that's that wasn't 0:09:24.400 --> 0:09:24.800 the case. 0:09:26.000 --> 0:09:27.199 No, that's not the case. 0:09:27.960 --> 0:09:30.200 Let me give you an example, one point four million 0:09:30.280 --> 0:09:34.160 dollars on a focus group for consumer fraud. 0:09:34.240 --> 0:09:36.320 We all know that consumer fraud is bad. 0:09:36.480 --> 0:09:38.760 That is money that could be better put towards upgrading 0:09:38.760 --> 0:09:39.480 our technology. 0:09:39.480 --> 0:09:40.040 For example. 0:09:40.880 --> 0:09:42.400 Hey, before we let you go, I just wanted to 0:09:42.440 --> 0:09:45.600 ask another crypto question. We learned yesterday that the president 0:09:45.640 --> 0:09:47.480 is set to have dinner with the top two hundred 0:09:47.480 --> 0:09:50.480 and twenty holders of the Trump Mean coin. The issuers 0:09:50.480 --> 0:09:53.679 of the cryptocurrency announced yesterday. We saw this on social 0:09:54.840 --> 0:09:57.120 I'm curious, just as a regulator, how you look at 0:09:57.160 --> 0:10:00.800 the relationship that the president has with this digital asset 0:10:01.400 --> 0:10:05.480 and as a person who is in charge of essentially 0:10:05.520 --> 0:10:06.840 creating policy on this stuff. 0:10:08.440 --> 0:10:09.320 Our job is. 0:10:09.200 --> 0:10:11.280 To make sure that we have markets that are safe 0:10:11.280 --> 0:10:14.000 and that are sound, and that we preserve market integrity, 0:10:14.280 --> 0:10:17.880 and that we make sure that most of all, in 0:10:17.920 --> 0:10:21.600 looking at market integrity, that the markets are well functioning 0:10:21.640 --> 0:10:25.280 and that there is an actual connection to the fundamentals 0:10:25.320 --> 0:10:28.520 that are underlying the market. So for us, that is 0:10:28.559 --> 0:10:31.880 of course across the entire market. There's no distinction for 0:10:32.160 --> 0:10:32.840 anything else. 0:10:33.120 --> 0:10:34.600 Does it make your job more difficult. 0:10:36.440 --> 0:10:39.679 My job is difficult every day. It doesn't make any difference. 0:10:40.440 --> 0:10:41.640 All right, we're going to leave it there. 0:10:41.679 --> 0:10:44.960 Listen, thank you so much, really appreciate your time. We've 0:10:45.000 --> 0:10:47.480 been talking with Caroline fam she's the acting chair of 0:10:47.520 --> 0:10:49.319 the Commodity Futures Trading Commission.