Keynote Address of CFTC Commissioner J. Christopher Giancarlo at The Global Forum for Derivatives Markets, 35th Annual Burgenstock Conference, Geneva, Switzerland

The Looming Cross-Atlantic Derivatives Trade War: “A Return to Smoot-Hawley”

 

September 24, 2014

 

 

Hello ladies and gentlemen. Thank you for your warm welcome. It is a pleasure to be with you today.

 

Thank you, Walt, for your kind introduction. I am honored to give this keynote address.

 

Let me start by saying that my remarks reflect my own views and do not necessarily constitute the views of the Commodity Futures Trading Commission (CFTC), my fellow CFTC Commissioners, or of the CFTC staff.

 

Today marks the fifth anniversary of the Pittsburgh G-20 Summit. At that critical meeting a year after the financial crisis, global leaders agreed to work together to support economic recovery through a “Framework for Strong, Sustainable and Balanced Growth.”1 The G-20 leaders agreed upon three fundamental principles2 for over-the-counter (OTC) derivatives markets: One, when possible, trading all standardized OTC derivative contracts on regulated trading platforms; Two, moving many bilateral swaps to central counterparties (CCPs) for clearing; and Three, reporting swap trades to trade repositories.3 To achieve these common goals, the Pittsburgh participants pledged to work together to “implement global standards” in financial markets, while rejecting “protectionism.”4

 

So here we are today, five years after Pittsburgh at this important gathering of major participants and regulators in the global derivatives markets. Let us ask ourselves: Are we fully honoring the commitment to coordinate our efforts to reform the derivatives markets? Are we avoiding protectionism? Or are we, in fact, building a new 21st century protectionism around regional financial markets, especially in swaps and futures?

 

I am afraid many of you, based on your participation in the markets, already know the answers to those questions, and they do not inspire confidence for the future. But let us examine the state of each common goal from that G-20 summit in Pittsburgh.

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