The head of a major regulatory agency proposed a new plan for regulation of derivatives markets on Thursday.

Gary Gensler, chairman of the Commodity Futures Trading Commission, testified on Capitol Hill  before the Senate Agriculture Committee, laying out regulation reforms of over-the counter derivatives and the dealers who handle them. 

Gensler’s proposed regulations for derivatives dealers include:

• Full regulation of any firm that creates large exposures to counterparties
• Position limits
• Capital requirements
• Initial margin requirements
• Business conduct rules
• Reporting and record-keeping requirements

Proposed regulations for the derivatives markets themselves  include:

• Requirements for regulated exchange trading and clearing
• All derivatives that can be, should be moved into central clearing houses, brought onto regulated exchanges or regulated electronic trading systems
• Clearing houses should feature margin requirements and risk controls
• Audit trails of all transactions are to be available to regulators
• Imposition of record-keeping and reporting requirements for swaps