Milling & Baking News - June 16, 2009 - 29

Washington

Gensler urges Congress to extend
C.F.T.C. authority to derivatives
WASHINGTON - Gary Gensler,
chairman of the Commodity Futures
Trading Commission, on June 4 urged
Congress to enact legislation creating a
comprehensive regulatory framework
governing all over-the-counter (O.T.C.)
derivative dealers and the markets in
which derivatives are traded.
"This is vitally important for the future of our economy and the welfare of
the American people," Mr. Gensler told
members of the Senate Committee on
Agriculture, Nutrition and Forestry. The
agriculture committee oversees
the C.F.T.C., and the committee's chairman, Senator
Tom Harkin of Iowa, earlier this year introduced
legislation that would
require all O.T.C. futures
contracts to be traded on
regulated exchanges.
Mr. Gensler said the proposed comprehensive regulatory framework must apply to all
dealers and all derivatives, both present
and future products, and should include
interest rate swaps, currency swaps,
commodity swaps, credit default swaps
and equity swaps. The framework also
must apply to customized as well as
standardized derivatives.
Four principal objectives for his
proposed new regulatory regime for
O.T.C. derivatives were outlined by Mr.
Gensler: lowering systemic risks; promoting the transparency and efficiency
of markets; promoting market integrity
by preventing fraud, manipulation, and
other market abuses, and by setting position limits; and protecting the public
from improper marketing practices.
Mr. Gensler said lowering systemic
risk would require a framework that
sets capital requirements for derivative dealers, creates initial margin
requirements for derivative dealers
whether they deal in standardized or
customized swaps, requires centralized clearing of standardized swaps
and develops and enforces business
conduct standards for dealers.
Mr. Gensler pointed to several elements that should be part of the new
regulatory framework to promote
market transparency and efficiency.
All O.T.C. transactions, both standardized and customized, must be
reported to a regulated trade repository or central clearinghouse, Mr.
Gensler stated. Clearinghouses and
trade repositories would be required
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to make aggregate data on open positions and trading volumes known to
the public. Clearinghouses and trade
repositories also would be required to
make data on any individual counterparty's trade and positions available
on a confidential basis to the C.F.T.C.
and other regulators.
The framework must require centralized clearing of standardized swaps,
Mr. Gensler said. Standardized products must be moved onto regulated
exchanges and regulated, transparent
trade execution systems. There
also must be timely reporting
of trades and prompt dissemination of prices and
other trade information.
Mr. Gensler said it was
important that tailored or
customized swaps that
are not able to be cleared
or traded on an exchange
still be "sufficiently regulated." He said regulations should
ensure customized derivatives are not
used solely as a means to avoid the
clearing requirement.
Objective criteria should be established to enable regulators to determine whether, in fact, a swap is standardized, Mr. Gensler said.
"For example, there should be a
presumption that if an instrument is
accepted for clearing by a fully regulated clearinghouse, then it should be
required to be cleared," he said.
Additional criteria that should be
considered when determining whether a contract should be considered a
standardized swap might include the
volume of transactions in the contract
and the similarity of the terms in the
contract to terms in standardized contracts, Mr. Gensler said.
To promote market integrity, Mr.
Gensler asked Congress to provide
the C.F.T.C. with clear, unimpeded authority to impose recordkeeping and
reporting requirements and to prevent
fraud, manipulation and other types
of market abuses. He also asked Congress to provide the C.F.T.C. with authority to set position limits for O.T.C.
derivatives, including aggregate position limits across markets.
To protect the public against improper marketing practices, Mr. Gensler said business conduct standards
must be applied to derivatives dealers
regardless of the type of instrument involved. MBN

The Road From
Garments To Bagels
Paved With Success

I
I
oe Puiia began his professional career
Jgarment
when he joined father, Vito, in the
industry. As the industry began

to send work overseas, the two sought
new business opportunities.
In February 1989, they opened J. P. Bagel
Express in Hoboken, New Jersey, which
was an immediate success. In June
1989, Joe's brother Jerry opened a
similar business called Bagel Stop in
Vernon, Connecticut. In 1990, Joe moved
to South Windsor, Connecticut to join
Jerry in opening a second Bagel Stop.
Today, Joe and Jerry own the Bagel Stop
Production Company that supplies a
variety of baked goods to Joe and Jerry's
´
newer company, Between Rounds Cafes.
Combining several marketing concepts,
´ offer bagels,
Between Rounds Cafes
gourmet sandwiches, salads and gourmet
coffee. Joe and Jerry have a total of six
Between Rounds locations in two states,
offer catering services for large events
and are building a franchise business.
Joe recognizes that a business needs to
change in order to grow. ''If you are not
competitive in a crowded market, you
will lose customers to the next guy," he
said. ''I believe our success comes from
our ability to stay competitive, and the
work ethic we learned from our father."
Joe relies on International® Bakers
Services (IBS) to stay competitive.
''IBS is the most professional company in
terms of meeting their customers' needs,
said Joe. ''They also let their customers
know they are appreciated." For their
famous bagels, Between Rounds uses
Blueberry Flavor, Maple Flavor, Apple
Cinnamon Flavor and seasonally,
International's Pumpkin Pie Spice Blend.
If you want flavors that help you
compete in a crowded market, rely on
International® Bakers Services.
Contact us toll-free at (800) 345-7175,
by fax at (574) 287-7161, or in writing at
1902 North Sheridan Ave., South Bend,
Indiana 46628. We have the flavors your
customers deserve.
Milling & Baking News

June 16, 2009 / 29

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - June 16, 2009

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