Gary Gensler, chairman of the US Commodity Futures Trading
Commission, has warned lawmakers not to leave too many
loopholes in planned legislation on over the counter
Referring to the mandatory clearing of OTC trades, he said
he did not want exemptions that would unintentionally exempt
hedge funds, financial firms or other investment funds.
Gensler said: "Any clearing exemption for end users should
be very narrowly defined to only include non-financial entities
that use swaps incidental to their business to hedge actual
The CFTC chairman testified on October 7 before the House of
Representatives’ Committee on Financial Services,
which released a discussion draft of the OTC Derivative Markets
Act of 2009.
He voiced concerns about how this widened the definition of
"major swap participant" to include anyone using a swap for
risk management. "I am concerned that a great number of swaps
could be characterised as risk management, or hedging, swaps,"
Gensler pointed out: "The discussion draft shifts from the
presumption that all standardised derivatives must be cleared
to one where products would be cleared only if required by
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