In a speech to the Ontario Securities Commission’s (OSC) annual conference Tuesday, the head of the U.S. Commodity Futures Trading Commission (CFTC), Gary Gensler, will focus on the ongoing reform of the swaps markets in the wake of the global financial crisis.

Grounded by Hurricane Sandy, Gensler is to deliver his keynote address to the conference today by video link. However, the CFTC has already released a text of Gensler’s remarks.

In his prepared speech, Gensler says that, over the past three years, various countries have been undertaking reforms to bring transparency, oversight and competition to the swaps market.

For example, the CFTC is seeking central clearing of standardized swaps, starting with interest rate swaps in U.S. dollars, euros, British pounds and Japanese yen, as well as a number of credit default swap indices. Canadian dollar interest rate swaps were not included in the initial set to be centrally cleared, he notes, “though we will continue to consider, in consultation with regulators here in Canada, possibly including them at an appropriate time in the future.”

Also, as of October 12, “bright lights began to shine on the swaps market”, he says, when cleared interest rate and CDS transactions began to be reported to swap data repositories. And, by next year, “the public will benefit from real-time reporting for these transactions, as well as for uncleared swap transactions entered into by swap dealers.”

Finally, the process of registering swaps dealers has begun, he notes, adding that oversight of these firms “will promote transparency and lower their risk to the rest of the economy.” Gensler says many dealers are expected to register by January 1, including some Canadian firms.

Additionally, the CFTC is allowing for phased compliance by foreign swap dealers, he notes, which allows time for “appropriate implementation of substituted compliance, or allowing market participants to comply with Dodd-Frank through comparable and comprehensive foreign regulatory requirements.”

The CFTC will soon finalize its cross-border and phased-compliance plans, he says, and it’s working on a regulatory memorandum of understanding with the OSC.

“With Hurricane Sandy’s landfall this week, the U.S. will be working to rebuild from this natural disaster. Swaps market reform is about rebuilding from a different type of disaster, the man-made financial disaster of 2008,” Gensler says. “It’s about ensuring the public benefits from the lessons learned: transparency, oversight and competition must be brought to the swaps market. We continue to make significant progress with the OSC and other authorities here in Canada, as well as globally, on bringing this reform to the swaps market.”