NEW YORK ( TheStreet) -- The Commodities Futures Trading Commission (CFTC) has opened an investigation into the $2 billion loss sustained by JPMorgan Chase's ( JPM) Chief Investment Office from he trading of credit derivative products, the regulator confirmed on Tuesday. Testifying before the Senate Banking Committee on derivatives reform, CFTC Chairman Gary Gensler said he was unable to discuss the specifics of the investigation, but said the incident served as a stark reminder of the interconnectedness of the world and how losses sustained by overseas subsidiaries can cause U.S. banks to absorb losses and "wreak havoc" on the American Public. "As a U.S. bank, it JPMorgan is an entity with direct access to the Federal Reserve's discount window and federal deposit insurance," Gensler said. The CFTC has made progress in implementing swaps market reforms under Dodd Frank that aim at increasing public market transparency, standardizing swaps by moving them to centralized clearing and regulating swap dealers and participants, the chairman said. The CFTC has so far finalized 33 rules and has another 20 more to go. The CFTC also is working with regulators to complete the Volcker rule . "In adopting the Volcker rule, Congress prohibited banking entities from proprietary trading, an activity that may put taxpayers at risk. At the same time, Congress permitted banking entities to engage in certain activities, such as market making and risk mitigating hedging. One of the challenges in finalizing a rule is achieving these multiple objectives," Gensler said. The recent disclosure of JPMorgan's trading loss, which the bank attributed to poorly executed hedges, has increased calls by policymakers to toughen the Volcker rule, which makes exemptions for certain legitimate hedging activities. "It's critical that we do not retreat from reforms that will bring greater transparency and competition to the swaps market, lower costs for companies and their customers, and protect the public from the risks of these international markets," Gensler said in concluding remarks. SEC Chairman Mary Schapiro was also testifying before the Committee Tuesday. Her prepared remarks made no mention, however, of JPMorgan's trading losses. Shares of JPMorgan were up as much as 6% in forenoon trading Tuesday, rebounding from Monday's decline. --Written by Shanthi Bharatwaj in New York >To contact the writer of this article, click here: Shanthi Bharatwaj. >To follow the writer on Twitter, go to http://twitter.com/shavenk. >To submit a news tip, send an email to: firstname.lastname@example.org.