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