Market Realignment the "Natural Order of Things"

Financial markets' swaps-to-futures shift is "an inevitable consequence" of Dodd-Frank reform, U.S. Commodity Futures Trading Commission Chairman Gary Gensler said at a January 31 industry conference hosted by the regulator.

"Now that the entire derivatives marketplace - both futures and swaps - has comprehensive oversight, it's the natural order of things for some realignment to take place," Gensler said during opening remarks at the conference, according to the Futures Industry Association's eMarketBeat newsletter.

The "Futurization of Swaps" public roundtable, held at CFTC headquarters in Washington, D.C., featured comments from a wide range of market participants on the shift of over-the-counter markets to futures exchanges and the implications for several CFTC rules that are nearly finalized.

CME Group Chief Operating Officer Bryan Durkin, one of several panelists at the conference, noted the recent conversion of energy swaps to futures was only the latest step in an evolution that took place over many years. With respect to regulation, there are "very distinct" differences between futures contracts and swaps, he said. "The rules are not necessarily the same and nor should they be."

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