(Adds details from interview)
By Douwe Miedema
WASHINGTON, July 31 The new head of the U.S.
derivatives regulator on Thursday pledged he would be a tough
cop now that the agency has largely finished a raft of new rules
to oversee the $710 trillion global swaps market.
Tim Massad, who took the helm at the Commodity Futures
Trading Commission in June, also said he would tweak any rules
designed to rein in Wall Street firms if they made it harder for
others, such as energy companies that use derivatives to hedge
risk, to access the market.
"One of my priorities will be to make sure these markets
still work very well for the commercial companies, the
non-financial companies, who had nothing to do with the crisis
and who rely on this market very heavily," Massad said.
"You're going to see us make some changes and do some
tinkering," he said in a public interview with Politico in his
first major appearance since he took the job.
Under Massad's predecessor, Gary Gensler, the CFTC has
written a raft of new rules for the swaps market, which stood at
the center of the 2007-09 financial collapse. Swaps had been
unregulated since their inception in the 1980s.
Massad also said that he would work with foreign regulators
to harmonize rules globally, an issue that caused a row between
U.S. and foreign regulators under Gensler.
Bankers and their lobbyists are keen for any sign that
Massad will ease up on Gensler's tough stance, but he said the
changes would not amount to a "wholesale revision."
A former lawyer who oversaw the U.S. government's $700
billion bank bailout program, Massad said it was time to make
sure that banks lived by the new rules.
"We'll be very aggressive in our compliance and
enforcement," Massad said. He mentioned enforcement first when
asked to list his top priorities on the job.
This week, the CFTC fined JPMorgan Chase & Co
$650,000 for inaccurate reporting on futures positions.
The CFTC is litigating a number of high-profile cases that
may go to trial, including a lawsuit against former New Jersey
Governor Jon Corzine, whom it accuses of failing to oversee
staff at MF Global, which he headed, when it collapsed in one of
the largest U.S. bankruptcies.
The agency is probing whether banks were trying to dodge
part of the new U.S. rules for swaps trading by shifting them to
units abroad that are not guaranteed by the parents, or by
taking away the guarantee in individual trades.
"We'll see what we get from that and then decide what
actions to take," Massad said.
Massad said he would work with foreign regulators to
coordinate rules so that agencies around the world could rely on
each other to supervise local entities of foreign banks and
their trading with local clients.
Gensler had a notoriously difficult relationship with
foreign regulators, particularly those in Europe.
(Reporting by Douwe Miedema; Editing by Doina Chiacu and Lisa