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Comment for General CFTC Public Roundtable Discussion on Dodd-Frank Implementation

  • From: Philip Merrill
    Organization(s):
    Sagacious LLC

    Comment No: 42326
    Date: 5/2/2011

    Comment Text:

    Let's say there are multiple SDR's reporting to the CFTC and the SEC. How is that information relevant to control risk in the market place?

    The overall objective should be to reduce Systemic Risk. That is that the market has a whole remains liquid or solvent after some participants are liquidated or go bankrupt.

    Risk measurement is currently done on a firm by firm basis. As such the overall firm exposure must be viewed entirely. The firms risk the net exposure to all transactions including Cash and Futures transactions. Can the firm cover the current and projected future value of that net exposure is a basic question.

    Regulators (Treasury, Federal Reserve, CFTC, SEC...) should be able to look at all the firms capital verses risk and determine the health of the overall market and be able to then take action to protect the market from firms that could fail.

    This will be difficult to do effectively with just Swap data and reliance on the clearing process which is not complete and transparency of the Swap transactions alone.

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