(As prepared for Delivery)
Welcome to the 35th Annual Futures and Options Expo. Or as my wife calls it, the “Week My Freakin’ Husband Skipped Halloween.” Or as Emma Davey calls it, the “Week Britain Almost Lost its Freakin’ Mind.”
FIA is pleased to be back in Chicago once again—the birthplace of the modern derivatives industry. While FIA does events all around the world from London to Laguna Beach, from Singapore to Frankfurt to Boca and beyond, this week always feels like coming home for us.
As we gather today, there is uncertainty all around us.
I think it is fair to say that we are experiencing the highest level of political uncertainty in the last 50 years. Whether it’s the heightened political tensions in the US, the fears around Brexit, or the unrest in Hong Kong, there appears to be growing anxiety around the world.
Every day our newspapers are filled with stories of political strife. In fact, the University of Chicago, Northwestern and Stanford have produced an index measuring this uncertainty which hit a record high in August. If I were a trader, I would not be shorting this index.
Like you, FIA closely monitors these political events with great interest. How will these events affect our families? Where is this all heading? Truthfully, none of us know.
But it is exactly at these times that FIA can play a pivotal role in clarifying uncertainty for our industry and remain a steady and respected voice. We do not wait for events to unfold. We proactively work with regulators to help our member companies anticipate and adjust to this ever-changing world.
Brexit is a timely case in point. Last year, FIA helped persuade the EU to grant a one-year relief for UK clearinghouses so that they could continue functioning cross-border.
But this relief expires in March 2020. As a result, in the coming days, we will be requesting an extension to ensure our markets continue to function in this transition period.
Brexit is an all-too-real reminder why cross border recognition is so vital to our global marketplace.
Right now, you can trade, clear and settle trades anytime and anywhere around the world because customers demand it. Last year, I showed you results from our survey indicating global exchanges have up to ninety percent of their volumes coming from outside their home jurisdictions.
That’s why it is critical that regulations take into account the cross-border nature of our industry.
Thankfully, the international regulatory community has developed a “trust but verify” regulatory system that enables authorities to recognize foreign laws and regulations when they are deemed “equivalent.”
This cooperation between regulators has worked remarkably well over the last 40 years, including during times of distress. When I was acting CFTC chair and commissioner, I can tell you that it worked.
However, we are at a crossroads on whether regulators will reaffirm this approach or take a more direct regulatory path. Both the EU and US have proposals that will shape this debate in the coming months. It’s extremely important we get this right because it could set a precedent for how our markets develop cross-border for years to come.
But why should we care about any of this? Why do my friends’ eyes glaze over when I talk about what I do for a living? Why do derivatives markets matter?
They matter because a thriving derivatives market is an essential lubricant for global growth.
Derivatives are important tools for main-street businesses to hedge unwanted price risk and free-up capital for investments.
These users of derivatives are the same companies that employ millions of workers in manufacturing, energy, finance and agriculture and form the backbone of our global economy.
That’s why our markets matter.
As they say, ‘Necessity is the Mother of Invention,’ and our markets are constantly evolving and adapting to meet customer and societal demands. There are examples everywhere.
- With the LIBOR transition, we’ve seen the development of SOFR, SONIA and AMERIBOR futures;
- With climate change concerns, we’ve seen the launch of LNG, lithium and ESG futures;
- And as technology advances, we’ve seen the rise of blockchain, AI, Cloud and digital assets.
The only constant is change and FIA stands ready to help our members manage through it.
How do we help? First by being your voice. Advocacy has been central to FIA’s DNA for more than 50 years, especially over the last decade of post-crisis reforms.
FIA has worked tirelessly to inform regulators around the world of better ways to approach problems and implement laws.
But advocacy is only half the picture. FIA does so much more—whether it’s:
- Developing standards and best practices;
- Implementing operational efficiencies;
- running industry business continuity exercises, or;
- Offering solutions through FIA Tech.
In other words, FIA is a solutions organization with a growing toolbox at your disposal.
And, those solutions are focused on our members. Our members are where we find our priorities, where we gain our culture and how we measure our success.
FIA’s solutions-based approach helps us to begin dialogues on topics of importance – whether regulation, technology or even generational change. One important example is the diversity initiative that we announced this past March at Boca.
Through this effort, FIA has begun a conversation with the industry about how to provide an on-ramp for the next generation of diverse talent. I want to thank Alicia Crighton of the FIA board for helping lead this initiative. Starting at IDX in London and continuing here in Chicago, we are recognizing a diverse group of ‘rising stars.’
These outstanding individuals are participating in a career development session aimed at giving them the tools to succeed and connecting them with other next gen leaders. Change will not come overnight, but we are committed to advancing this important initiative.
And that brings me to this year’s conference. Just as our markets are constantly evolving, Expo is evolving as well. This year FIA has begun a multiyear process to enrich the Expo experience for our members.
You will notice the improved Expo layout so attendees can easily access and enjoy the keynotes speeches, break-out programming, trade show exhibitors and Innovators Pavilion – all in one conveniently stacked format. Part of this integrated experience is the Expo Learning Lab in the Blue Hall with more compact presentations, workshops and training sessions.
We’ll be using the Learning Lab for a live edition of the FIA Speaks podcast where I’ll talk to RJO CEO Gerry Corcoran and his son Pat, the business manager for Chance the Rapper, about their respective career paths.
Before we kick off, I want to thank a variety of people that make Expo a success every year.
We want to thank all our sponsors and exhibitors who have traveled far and wide to be with us.
And, thanks to the Exhibits and Sponsor Advisory Council for helping us with these new ideas for Expo.
I also want to thank CME Group for hosting the Expo Opening Reception last night. We appreciate their ongoing support of FIA and Expo. I also want to express my appreciation for their work in developing Futures Fundamentals. This partnership, which includes CME, FIA, NFA and IFM, aims to build a better understanding of futures and cleared derivatives.
I am pleased to announce that ICE has joined this initiative.
This year’s programming is as engaging as ever, kicking off with CFTC Chairman Tarbert, who will preview his agenda in a few moments. We are also honored to have Illinois Governor JB Pritzker tomorrow morning for a one-on-one conversation with DRW founder Don Wilson.
And our luncheon keynote speaker today will be Doris Kearns Goodwin, best-selling author on presidential leadership, including Abraham Lincoln.
We also invite you to visit our Innovators Pavilion located this year in the Green Hall where 20 fintech startups will demonstrate their products and inventions. I will be announcing the FIA Innovator of the Year tomorrow from this stage at 8:30 a.m. right before the Governor’s interview.
And finally, we invite you to the Great Chicago Steak Out tonight. This annual charitable event has raised more than $4 million for the Food Depository.
It is now my pleasure to introduce the Honorable Heath Tarbert, the 14th chair of the Commodity Futures Trading Commission. Chairman Tarbert, who started in July, brings a wealth of knowledge, having served as the Assistant Secretary for International Markets and Acting-Undersecretary of International Affairs at Treasury.
In these roles, Chairman Tarbert served as the G-7 and G-20 Deputy Finance Minister, a member of the Financial Stability Board, and the co-chair of both the US-EU Financial Regulatory Forum and the US-UK Financial Regulatory Working Group.
A week after Chairman Tarbert took office, he published an op-ed noting that derivatives markets touch all corners of the real economy. This isn’t news to those in this room, but it’s heartening to have a Chairman that elevates the importance of the industry and the Commission to all Americans. We are very pleased that Chairman Tarbert chose FIA Expo as a place to make one of his first major addresses.
Please help me in welcoming Chairman Heath Tarbert to FIA Expo.