jill sommers cftc mike

https://en.wikipedia.org/wiki/Jill_E._Sommers#:_{:text=Sommers%20was%20sworn%20in%20as,Senate%20on%20October%208%2C}%202009

Jill E. Sommers was sworn in as a commissioner of the Commodity Futures Trading Commission on August 8, 2007 to a term that expired April 13, 2009. She was nominated on July 20, 2009 by President Barack **Obama**to serve a five-year second term.,^[1] andconfirmed by the United States Senate on October 8, 2009.^[2]

Commission posts

Global Markets Advisory Committee

On February 4, 2008 the commission appointed Sommers to serve as chairman and designated federal official of the Global Markets Advisory Committee, which meets periodically to discuss issues of concern to exchanges, firms, market users and the commission regarding the regulatory challenges of a global marketplace.^[3]

Financial Literacy and Education Commission

She also serves as the commission designee to the Financial Literacy and Education Commission, which is chaired by the secretary of the treasury and was established to improve the financial literacy and education of U.S. citizens.

Career

Commissioner Sommers has worked in the commodity futures and options industry in a variety of capacities throughout her career. In 2005 she was the policy director and head of government affairs for the International Swaps and Derivatives Association, where she worked on a number of over-the-counter derivatives issues.

Prior to that, Sommers worked in the Government Affairs Office of the Chicago Mercantile Exchange (CME), where she was instrumental in overseeing regulatory and legislative affairs for the exchange. During her tenure with the CME, she had the opportunity to work closely with congressional staff drafting the Commodity Futures Modernization Act of 2000.

Sommers started her career in Washington in 1991 as an intern for Senator Robert J. Dole (R-KS), working in various capacities until 1995. She later worked as a legislative aide for two consulting firms specializing in agricultural issues, Clark & Muldoon, P.C. and Taggart and Associates.

api has very deep bench like 100 directors 2014, how did he get gig? boenner mafia

http://web.archive.org/web/20180501212515/http://www.investmentcouncil.org/the-council/staff/mike-sommers-2/

Mike Sommers is the President and Chief Executive Officer of the American Investment Council. Prior to joining the AIC,Sommers spent two decades in public service in both the U.S. House of Representatives and the White House.

From Congress to the West Wing, Sommers crafted and executed a wide range of political and legislative strategies centered on the nation’s most pressing issues. Speaker of the House Paul Ryan called him “one of the best people I have come across in public service” and “smart, steady and with unquestioned integrity.” House Democratic Whip Steny Hoyer said he is “well known and well liked on both ends of Pennsylvania Avenue and incredibly talented both as a manager and policy expert.”

Most recently, Sommers was Chief of Staff to Speaker of the House John A. Boehner (R-OH). In this capacity, he was the top staffer in the House of Representatives and advised the Speaker and House leadership on all matters before the Congress. Sommers has been at the center of every major policy dispute in the last decade and successfully negotiated bipartisan compromises on landmark legislation, including the Trouble Asset Relief Program (TARP) in 2008, the resolution of the fiscal cliff in 2013, the Bipartisan Budget Agreement of 2015 and trade promotion authority in 2015.

Roll Call, the newspaper of Capitol Hill, named Sommers one of the top staffers on Capitol Hill for each of the past 10 years and in 2015 named him one of the top 50 staffers in the last 50 years. Sommers has been profiled in Politico, The Hill and National Journal. In 2005, he was selected by his peers to head of the Republican Chiefs of Staff association.

Prior to being named Chief of Staff to the Speaker, Sommers served Boehner in other capacities, including Deputy Chief of Staff, Policy Director, Legislative Director and Press Secretary.

Sommers also served as Special Assistant to President George W. Bush at the National Economic Council at the White House in 2005. In this capacity, he advised the President on agriculture, trade and food policy.

A native of Naperville, Illinois, Sommers is a graduate of the honors program at Miami University in Oxford, Ohio. While an undergraduate at Miami, he was awarded the President’s Distinguished Service Medal – the highest honor given to a Miami undergraduate.

He is married to Jill Sommers, a former Commissioner at the Commodity Futures Trading Commission (CFTC). They have three children and live in Alexandria, Virginia.

The Commodity Futures Modernization Act of 2000 (CFMA) is United States federal legislation that ensured financial products known as over-the-counter (OTC) derivatives remained unregulated. It was signed into law on December 21, 2000 by President Bill Clinton. It clarified the law so most OTC derivative transactions between "sophisticated parties" would not be regulated as "futures" under the Commodity Exchange Act of 1936 (CEA) or as "securities" under the federal securities laws.

Instead, the major dealers of those products (banks and securities firms) would continue to have their dealings in OTC derivatives supervised by their federal regulators under general "safety and soundness" standards. The Commodity Futures Trading Commission's (CFTC) desire to have "functional regulation" of the market was also rejected. Instead, the CFTC would continue to do "entity-based supervision of OTC derivatives dealers".^[1] The CFMA's treatment of OTC derivatives such as credit default swaps has become controversial, as those derivatives played a major role in the financial crisis of 2008 and the subsequent 2008–2012 global recession.^[2][3]

Introduction

Before and after the CFMA, federal banking regulators imposed capital and other requirements on banks that entered into OTC derivatives.^[4] The U.S. Securities and Exchange Commission (SEC) and CFTC had limited "risk assessment" authority over OTC derivatives dealers affiliated with securities or commodities brokers and also jointly administered a voluntary program under which the largest securities and commodities firms reported additional information about derivative activities, management controls, risk and capital management, and counterparty exposure policies that were similar to, but more limited than, the requirements for banks.^[5] Banks and securities firms were the dominant dealers in the market, with commercial bank dealers holding by far the largest share.^[6] To the extent insurance company affiliates acted as dealers of OTC derivatives rather than as counterparties to transactions with banks or security firm affiliates, they had no such federal "safety and soundness" regulation of those activities and typically conducted the activities through London-based affiliates.^[7]

The CFMA continued an existing 1992 preemption of state laws enacted in the Futures Trading Practices Act of 1992 which prevented the law from treating eligible OTC derivatives transactions as gambling or otherwise illegal.^[8] It also extended that preemption to security-based derivatives that had previously been excluded from the CEA and its preemption of state law.^[9]

The CFMA, as enacted by President Clinton, went beyond the recommendations of a Presidential Working Group on Financial Markets (PWG) report titled "Over-the Counter Derivatives and the Commodity Exchange Act" (the "PWG Report").^[10]

President's Working Group on Financial Markets, November 1999:

Although hailed by the PWG on the day of congressional passage as "important legislation" to allow "the United States to maintain its competitive position in the over-the-counter derivative markets", by 2001 the collapse of Enron brought public attention to the CFMA's treatment of energy derivatives in the "Enron Loophole." Following the Federal Reserve's emergency loans to "rescue" American International Group (AIG) in September, 2008, the CFMA has received even more widespread criticism for its treatment of credit default swaps and other OTC derivatives.^[a]

In 2008 the "Close the Enron Loophole Act" was enacted into law to regulate more extensively "energy trading facilities."^[13][b] On August 11, 2009, the Treasury Department sent Congress draft legislation to implement its proposal to amend the CFMA and other laws to provide "comprehensive regulation of all over-the counter derivatives." This proposal was revised in the House and, in that revised form, passed by the House on December 11, 2009, as part of H.R. 4173 (Dodd–Frank Wall Street Reform and Consumer Protection Act). Separate, but similar, proposed legislation was introduced in the Senate and still awaiting Senate action at the time of the House action.^[c]

Background to the CFMA

OTC derivatives regulation before the CFMA

Exchange trading requirement

The PWG Report was directed at ending controversy over how swaps and other OTC derivatives related to the CEA. A derivative is a financial contract or instrument that "derives" its value from the price or other characteristic of an underlying "thing" (or "commodity"). A farmer might enter into a "derivative contract" under which the farmer would sell from next summer's harvest a specified number of bushels of wheat at a specified price per bushel. If this contract were executed on a commodity exchange, it would be a "futures contract."^[d]

Before 1974, the CEA only applied to agricultural commodities. "Future delivery" contracts in agricultural commodities listed in the CEA were required to be traded on regulated exchanges such as the **Chicago Board of Trade**.^[14]

The Commodity Futures Trading Commission Act of 1974 created the CFTC as the new regulator of commodity exchanges. It also expanded the scope of the CEA to cover the previously listed agricultural products and "all other goods and articles, except onions, and all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in." Existing non-exchange traded financial "commodity" derivatives markets (mostly "interbank" markets) in foreign currencies, government securities, and other specified instruments were excluded from the CEA through the "Treasury Amendment", to the extent transactions in such markets remained off a "board of trade." The expanded CEA, however, did not generally exclude financial derivatives.^[14][15]

After the 1974 law change, the CEA continued to require that all "future delivery" contracts in commodities covered by the law be executed on a regulated exchange. This meant any "future delivery" contract entered into by parties off a regulated exchange would be illegal and unenforceable. The term "future delivery" was not defined in the CEA. Its meaning evolved through CFTC actions and court rulings.^[16]

Not all derivative contracts are "future delivery" contracts. The CEA always excluded "forward delivery" contracts under which, for example, a farmer might set today the price at which the farmer would deliver to a grain elevator or other buyer a certain number of bushels of wheat to be harvested next summer. By the early 1980s a market in interest rate and currency "swaps" had emerged in which banks and their customers would typically agree to exchange interest or currency amounts based on one party paying a fixed interest rate amount (or an amount in a specified currency) and the other paying a floating interest rate amount (or an amount in a different currency). These transactions were similar to "forward delivery" contracts under which "commercial users" of a commodity contracted for future deliveries of that commodity at an agreed upon price.^[17]

Based on the similarities between swaps and "forward delivery" contracts, the swap market grew rapidly in the United States during the 1980s. Nevertheless, as a 2006 Congressional Research Service report explained in describing the status of OTC derivatives in the 1980s: "if a court had ruled that a swap was in fact an illegal, off-exchange futures contract, trillions of dollars in outstanding swaps could have been invalidated. This might have caused chaos in financial markets, as swaps users would suddenly be exposed to the risks they had used derivatives to avoid."^[18]

"Legal certainty" through regulatory exemptions

To eliminate this risk, the CFTC and the Congress acted to give "legal certainty" to swaps and, more generally, to the OTC derivatives market activities of "sophisticated parties."...

Chicago Mercantile Exchange (CME) (often called "the Chicago Merc", or "the Merc") is a global derivatives marketplace based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an agricultural commodities exchange. Originally, the exchange was a non-profit organization. The Merc demutualized in November 2000, went public in December 2002, and merged with the Chicago Board of Trade in July 2007 to become a designated contract market of the CME Group Inc., which operates both markets. The chairman and chief executive officer of CME Group is Terrence A. Duffy, Bryan Durkin is president.^[1]

On August 18, 2008, shareholders approved a merger with the New York Mercantile Exchange (NYMEX) and COMEX. CME, CBOT, NYMEX, and COMEX are now markets owned by CME Group. After the merger, the value of the CME quadrupled in a two-year span, with a market cap of over $25 billion.^[2]

Today, CME is the largest options and futures contracts open interest (number of contracts outstanding) exchange of any futures exchange in the world. The Merc trades several types of financial instruments: interest rates, equities, currencies, and commodities.

CME also pioneered the CME SPAN software that is used around the world as the official performance bond (margin) mechanism of 50 registered exchanges, clearing organizations, service bureaus, and regulatory agencies throughout the world.

Trading platforms

Trading is conducted in two methods; an open outcry format and the CME Globex Trading System which is an electronic trading platform. More than 90 percent of total volume at the exchange occurs electronically on CME Globex.

Open outcry

Operating during regular trading hours (RTH), the open outcry method consists of floor traders standing in a trading pit to call out orders, prices, and quantities of a particular commodity or its derivatives. Different colored jackets are worn by the traders to indicate what firm they are a part of. In addition, complex hand signals (called Arb) are used. These hand signals were first used in the 1970s. Today, however, headsets are also used by the brokers to communicate with the traders. The pits are areas of the floor that are lowered to facilitate communication, somewhat like a miniature amphitheater. The pits can be raised and lowered depending on trading volume. To an onlooker, the open outcry system can look chaotic and confusing, but in reality, the system is a tried and true method of accurate and efficient trading. An illustrated project to record the hand signal language used in CME's trading pits has been compiled.^[3]

CME Group to Permanently Close Most Open Outcry Trading Pits; Eurodollar Options Pit will Remain Open. https://www.cmegroup.com/media-room/press-releases/2021/5/04/cme_group_to_permanentlyclosemostopenoutcrytradingpitseurodollar.htmlCME Group recently announced that it will permanently close most of its physical trading pits, including those for grain trading. They had been closed since March 2020 due to the outbreak of the COVID-19 pandemic. https://www.world-grain.com/articles/15264-cme-permanently-closes-open-outcry-trading#:~:text=Photo%3A%20Adobe%20stock.&text=CHICAGO%2C%20ILLINOIS%2C%20US%20%E2%80%94%20CME,of%20the%20COVID%2D19%20pandemic.

Electronic trading

Operating virtually around the clock, today the CME Globex Trading System is at the heart of CME. Proposed in 1987, it was introduced in 1992 as the first global electronic trading platform for futures contracts. This fully electronic trading system allows market participants to trade from booths at the exchange or while sitting in a home or office thousands of miles away. On 19 October 2004, the one billionth (1,000,000,000) transaction was recorded.

When CME Globex was first launched, it used Reuters' technology and network.^[4] September 1998 saw the launch of the second generation of CME Globex using a modified version of the NSC^{[clarification} ^needed] trading system, developed by Paris Bourse for the MATIF (now Euronext).^[5]

Traders connect to CME Globex via Market Data Protocol (MDP) and iLink 2.0 for order routing.

Mergers and acquisitions

On October 17, 2006, the Chicago Mercantile Exchange announced the purchase of the Chicago Board of Trade for $8 billion in stock, rejoining the two financial institutions as CME Group Inc. CBOT formerly used outsourced technology platforms but has moved over to CME's Globex trading system. This will provide much of the merger's anticipated savings. The merger will also strengthen the combined group's position in the global derivatives market.^[6] The merger agreement was modified on December 20, 2006,^[7] May 11, 2007,^[8] June 14, 2007,^[9] and on July 6, 2007.^[10] The merger agreement was passed by shareholders of both CME and the Chicago Board of Trade on July 9, 2007.^[11] The merger officially closed on July 12, 2007, after which the Chicago Board of Trade shares (old symbol: BOT) stopped trading and were converted into CME shares as agreed, and the overarching holding company began life as CME Group, a CME/Chicago Board of Trade Company.^[12] On January 13, 2008, electronic trading at the Chicago Board of Trade shifted onto CME Globex.^[13]

On March 17, 2008, the New York Mercantile Exchange (NYMEX) accepted an offer from CME Group, the parent of the Chicago Mercantile Exchange, to purchase NYMEX for $8.9 billion in cash and CME Group Stock.^[14] The acquisition was formally completed on August 22, 2008, and the NYMEX systems were fully integrated by September 30, 2009.^[15]

Investigation

In 1984, the CME was investigated by the U.S. Government Accountability Office. During this investigation, it was realized that the open-outcry system could be abused. The GAO noted that the exchange made attempts to cut down on malpractice, but that it is likely that illegal activity still occurs.^[16]

Products

...

International Swaps and Derivatives Association (ISDA /:{ˈɪzdə:(style="border-bottom:1px dotted"):}:/) is a trade organization of participants in the market for over-the-counter derivatives.

Headquartered in New York City with offices in Brussels, London, New York, Singapore, Washington, D.C. and Tokyo, it has created a standardized contract (the ISDA Master Agreement) to enter into derivatives transactions. In addition to legal and policy activities, ISDA manages FpML (Financial products Markup Language), an XML message standard for the OTC Derivatives industry. ISDA has more than 925 members in 75 countries; its membership consists of derivatives dealers, service providers and end users.^[1]

History

ISDA was initially created in 1985^[2] as the International Swap Dealers Association and subsequently changed its name switching "Swap Dealers" to "Swaps and Derivatives". This change was made to focus more attention on their efforts to improve the more broad derivatives markets and away from strictly interest rate swap contracts.

In 2009 a New York Times article mentioned that in 2005 the ISDA allowed rule changes to CDO payouts (Pay as You Go) that would benefit those who bet against (shorted) mortgage-backed securities, like Goldman Sachs, Deutsche Bank, and others.^[3]

ISDA has offices in Brussels, London, New York, Singapore, Washington D.C, and Tokyo. It has more than 800 member firms from six continents. The current Chief Executive Officer is Scott O'Malia, who joined ISDA in 2009.

ISDA Master Agreement

Main article: ISDA Master Agreement

The ISDA Master Agreement is typically used between a derivatives dealer and its counterparty when discussions begin surrounding a derivatives trade. There are two basic forms of Master Agreement: single jurisdiction/currency and multiple jurisdiction/currency. One of these documents is generally combined with a Schedule to set out the basic trading terms between the parties; each subsequent trade is then recorded in a Confirmation which references the Master Agreement and Schedule.^[4] The terms of the Schedule are often negotiated, and many firms have preferred versions of the Schedule.^[5]

According to Financial Times reporter Stacy-Marie Ishmael, the Master Agreement is "fundamental to, and provides a template for, the derivatives market."^[6]

ISDA has also drafted a Tahawwut Master Agreement in cooperation with the International Islamic Financial Market, with the aim of standardizing derivatives transactions under Islamic law.^[7]

Versions

The ISDA Master Agreement was first published in 1992, and a second edition was published in 2002. The second edition was drafted in response to market difficulties in the late 1990s, and could be adopted either in a unified form or as standard form amendments to the first edition. Key changes in the second edition include:^[8][9]

Shortening the grace period for payment defaults from three business days to one business day [Refer Section 5 (a)(i) of 2002 version]
Introduction of a force majeure provision as a termination event
Introduction of a set-off provision [Included in the 2002 version in Section 6(f)]
Conformation of jurisdiction clause to the Brussels Regime
Introduction of Close-out Amount

On April 8, 2009, ISDA introduced further compulsory modifications known as the "Big Bang Protocol." The key changes introduced by this protocol include:^[10]

Introduction of "auction settlement" to eliminate the need for credit event protocols to settle CDS transactions
Automatic incorporation of Determinations Committee resolutions into the terms of standard CDS contracts
"Look back" provisions, also known as "backstop dates," which institute a common standard effective date for CDS transactions

The Protocol also introduced more standardized terms in order to limit the scope of negotiation in individual CDS transactions, thus making individual contracts more fungible in trading.^[11]

ISDA's report commissioned by the "UK Financial Services Authority on behalf of the international group of OTC derivative supervisors asked ISDA in October 2009 to conduct a broad market review of bilateral collateralization practices for OTC derivatives to facilitate better understanding of current market practice, especially as it relates to the different types of counterparties active in the market."(ISDA 2010, p. 2)^[12]

Netting

Possibly the most important aspect of the ISDA Master Agreement is that the Master Agreement and all the Confirmations entered into under it form a single agreement. This is very important (especially for regulated financial companies) as it allows the parties to an ISDA Master Agreement to aggregate the amounts owing by each of them under all of the Transactions outstanding under that ISDA Master Agreement and replace them with a single net amount payable by one party to the other. Netting, dealt with under section 2(c) of the ISDA Master Agreement, allows the parties to net out amounts payable on the same day and in the same currency.

The more important use of netting is close-out netting under Section 6(e) of the ISDA Master Agreement. Pursuant to this section, when an ISDA Master Agreement (or, more accurately the outstanding Transactions under it) is terminated (normally following a credit event of some kind), the value of each of the Terminated Transactions is assessed (there are several ways this can be done, but the most usual measure is to determine how much it would cost for a party to enter into a Transaction having commercial terms identical to the Terminated Transaction with an independent third party - this is called the Settlement Amount) and converted into the Termination Currency (which should have been specified in the schedule to the ISDA Master Agreement) and any outstanding Unpaid Amounts are taken into account. The Settlement Amounts (which may be positive or negative depending which party is 'in-the-money' with respect to a particular Terminated Transaction) and unpaid amounts (again positive or negative, depending on who owes them) are added up and a single figure in the Termination Currency is determined payable by one party or the other. The enforceability of the close-out netting provisions is absolutely vital to financial institutions active in the derivatives market since the ability to net allows them to allocate capital only against the net figure they would have to pay on close-out of an ISDA Master Agreement rather than the gross amount. ISDA has obtained legal opinions from all important jurisdictions confirming the effectiveness of the close-out netting provisions in those jurisdictions. Members of ISDA are entitled to rely on these opinions.^[citation ^needed]

ISDA also produces a model "Netting Act" which can be adopted by jurisdictions where close-out netting does not work effectively at present.^[13]

Credit support annex (CSA)

ISDA also produces a credit support annex which further permits parties to an ISDA Master Agreement to mitigate their credit risk by requiring the party which is 'out-of-the-money' to post collateral (usually cash, government securities or highly rated bonds) corresponding to the amount which would be payable by that party were all the outstanding Transactions under the relevant ISDA Master Agreement terminated. Collateral other than cash is usually discounted for risk, that is, the pledgor would have to post collateral in excess of the potential settlement amount.^[citation ^needed]

ISDAFIX

Main article: ISDAfix

From 1998 until August 2014, ISDA was responsible for releasing a series of interest rate swap reference rates for four currencies (Euros, British pounds, Swiss francs, U.S. dollars) under the name ISDAfix. Following rate manipulation scandals, these rates are now administered by the Intercontinental Exchange (ICE). Further, the Swiss francs rate is no longer reported.^[14][15]

Credit events and determinations committees

ISDA has five Determinations Committees, each having jurisdiction over a specific region of the world (the Americas, Asia excluding Japan, Australia/New Zealand, EMEA and Japan). Each committee consists of ten voting dealers and five voting non-dealer asset managers. The committees make official, binding determinations regarding the existence of "credit events" and "succession events" (such as mergers), which may trigger obligations under a credit default swap contract.^[11]

Since July 2009, the primary means of resolving a credit event is auction settlement, where holders of applicable instruments (as decided by the relevant determinations committee) auction their instruments to potential buyers at a set price.^[11]

In March 2012, ISDA issued a statement declaring that Greece, through passing legislation that forces losses on all its private creditors, has triggered the payment on default insurance contracts, thus instigating a credit event.^[16] The ISDA said the use of "collective action clauses (CACs) to amend the terms of Greek law-governed bonds issued by The Hellenic Republic such [as] the right of all holders of the Affected Bonds to receive payments has been reduced."^[16]

Definitions

ISDA also creates industry standards for derivatives and provides legal definitions of terms used in contracts. An example is the 1999 ISDA Credit Derivatives Definitions, which provide basic definitions for credit default swaps, total return swaps, credit linked notes and other credit derivative transactions.^[4]

A controversy resulted over the definition of a "restructuring event" in connection with the August 2000 restructuring of USD 2.8 billion of debt by an insurance company. This prompted complaints from protection sellers in credit default swaps, who had to compensate for an event that was seen as normal in the credit business. There was also a fear of a conflict of interest, since protection buyers had nothing to lose by agreeing to restructuring. (Protection buyers included some of the insurance company's lenders.)^[citation ^needed]