Deregulating futures trades wins backing of Greenspan

February 22, 1997|By BLOOMBERG NEWS

CORAL GABLES, Fla. -- Federal Reserve Chairman Alan Greenspan yesterday applauded efforts in Congress to reduce U.S. government regulation of derivatives and financial futures markets.

The central bank chairman offered what may be crucial backing for futures markets in Chicago and New York that are seeking legislation they say will help them recapture business lost to less-regulated over-the-counter markets and overseas exchanges.

Greenspan spoke favorably of legislation introduced by Sen. Richard G. Lugar, the Indiana Republican who chairs the Senate Agriculture Committee, which would substantially deregulate U.S. futures and options trading.

"What it endeavors to do is show that by its very nature regulation has become increasingly obsolete," Greenspan said of the legislation, though he added, "I don't want to specifically endorse any legislative language."

The measure "does put on the table a review of the underlying structure" of futures industry regulation, he said in remarks to a conference on financial market regulation sponsored by the Federal Reserve Bank of Atlanta. "What is clear from history is that the markets will continue to change and that regulations must continue to change."

Through his support, Greenspan also came to the aid of banks, securities firms and other investors who are seeking clarity about who regulates the $63.7 billion OTC market in specialized financial contracts.

"There appears to be no need for government regulation of off-exchange derivative transactions between institutional counter parties," Greenspan said. "Private market regulation appears to be achieving public policy objectives quite effectively and efficiently."

Greenspan's remarks echoed favorable comments by the U.S. Treasury.

Pub Date: 2/22/97

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