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