Opening remarks of Walt Lukken, President and CEO of FIA, at the 2026 FIA Global Cleared Markets Conference in Boca Raton, Florida. As prepared for delivery.
Welcome to Boca 51!
As we begin the conference, I want to acknowledge the difficult situation in the Middle East and its impact on many lives. Our hearts go out to those affected. We are all hoping for a speedy resolution to the conflict.
Such events underscore the importance of our risk management markets and the dialogue we will have over the next three days.
To help frame the week, I want to discuss another unexpected event that offers some lessons for our industry. And as you saw from the opening video, it has brought me a great deal of joy.
And that’s Indiana University’s undefeated college football season. Us Hoosiers aren’t accustomed to winning national championships. Or for that matter, winning at all!
For those not from America, Indiana University was the most losing football program of all-time. IU won the College National Championship in January after just two seasons under Head Coach Curt Cignetti.
The story of the Indiana football team has captured the imagination of many sports fans. It’s a real-life Ted Lasso story. How did Coach Cignetti do it?
Analysts are debating this; football coaches are trying to replicate it.
All I know is that this underdog story was one of the most improbable and inspiring seasons that anyone can remember.
As I’ve reflected on this winning formula, I’ve drawn some parallels to our markets.
Markets are also a team sport. They have rules, referees and individual participants that take on various roles to the benefit of the whole. Markets also require leadership.
Coach Cignetti brought three foundational ingredients to Indiana that turned this losing program into a National Champion. These ingredients apply equally to successful markets.
Those are trust, fairness and integrity.
Trust in Teams and Markets
Another word for trust might be belief or faith. You can’t have success unless you change the belief system of an organization. People must have a mindset that they can win. For Indiana, this involved erasing 75 years of low expectations.
But the coach set clear standards for his players, held them accountable and never wavered from his winning game plan. And his team trusted him and fought for his vision.
Markets also require trust, and there are no shortcuts. Markets cannot survive without participants believing that the system is fair and devoid of self-dealing. When markets lose trust, investors flee, credit dries up, and panic instills. Trust lives at the center of strong markets and football teams alike.
Fairness in the Game
The second ingredient is fairness. Fairness rewards merit, demands accountability, and despises favoritism.
Coach Cignetti created an environment where players were rewarded for talent and performance, not star ratings or expectations. This environment of accountability brought the team together as a unit, allowing them to thrive in big moments.
Like coaches, markets also have a privileged responsibility under law to create a fair and accountable marketplace for investors. Fair markets give participants confidence that prices are discovered efficiently, and that rules are applied equally and free of conflicts.
Foundational Integrity
Now the last critical ingredient for football teams and markets alike is integrity. Team integrity is about the depth of character of individual players. Individuals with strong character make good decisions during challenging times and always advance the team over self.
Coach Cignetti recruited high EQ athletes with deep experience who developed a resilient brotherhood with their teammates. If one athlete went down, others would step up.
Market integrity also favors the collective good over the health of any one participant. Markets gain their financial strength through an orchestrated series of individual responsibilities that protect the marketplace from a meltdown.
The system’s integrity is built to withstand the failure of any one participant, just like a team. And like human integrity, market integrity has been honed from the lessons learned from past crises.
Responsible Innovation
At a time when finance is innovating at breakneck speed, it’s hard to keep pace. We often lose sight of where we are on the journey. It is exactly at these times that trust, fairness and integrity should lead us.
Our industry instinctually supports responsible innovation. Just look at our history. But I want to emphasize the word “responsible.” We must act sensibly as we embrace innovation.
And these three themes of trust, fairness and integrity provide us with a north star for guiding us to responsible innovation and strong markets.
To prove my point, let’s revisit a time when our financial system lacked these ingredients – the 2008 financial crisis.
After the failures of Bear Stearns, Lehman and AIG, people lost trust in the financial system and the institutions that represented it. Remember Occupy Wall Street? Ordinary citizens saw the system as rigged. No one would lend money. The markets froze up. Trust was gone.
It took a massive amount of taxpayer funds and regulation to build back trust in the system. A decade and a half later, we’re still digging out from those regulatory reactions.
And you know what, Wall Street deserved it. The financial system violated the trust of the society it was meant to serve.
Our markets – the cleared derivatives markets – were seen as the model for reform because our markets worked. They were trusted. And we must work every day to keep up this confidence.
Our industry, not the public sector, must be the stewards of our markets. It falls to us. We must nurture and protect the system. Because if we don’t, history will repeat itself.
So, let’s follow Coach Cignetti’s lead and go back to the basics.
Here’s my suggested playbook:
The Playbook for Trust, Fairness and Integrity
First, sound markets must have clear and consistent rules. We instinctively know these common sense principles, which are reflected in law:
Markets should be open, transparent and competitive
Markets should protect against fraud and manipulation
Markets should safeguard customer assets and manage systemic risk
Markets should avoid conflicts of interest
These form the foundation of what constitutes trusted and fair markets.
Our Playbook should start by enacting a sound regulatory framework for digital assets. This will instill trust, promote competition, and offer consumers innovative products for decades to come.
Most importantly, we will unlock responsible innovation that will revolutionize finance and modernize our markets. FIA urges Congress to reach a sensible agreement and finalize market structure legislation that puts strong regulatory standards in place.
Second, we need to bring legal clarity to prediction markets. If we step back and set aside the current politics around event contracts, we should admire the innovative nature of these markets. When I ran the CFTC in 2008, we issued the first request for information on event markets due to their pioneering nature.
The reason this product has taken off is simple: it’s easy to understand, incredibly accessible, and the information “discovered” by these markets has proven pinpoint accurate. These markets have truly shown the “wisdom of crowds.”
I’m encouraged that CFTC Chair Selig has pledged to launch a rulemaking process to establish clarity on the regulatory boundaries of these markets. There are many unique aspects of prediction markets that need guidance, like the strain these markets place on the self-certification process and the need to address head-on concerns around insider trading.
I applaud those prediction markets that have begun to exercise strong surveillance and enforcement actions around insider trading, and I look forward to hearing from some of these leaders tomorrow.
As we continue to fill out our Playbook, we should tackle the transition to 24/7 trading.
Last week, FIA published its 24/7 markets paper that identifies many of the challenges and offers some solutions. Most importantly, FIA proposes aligning clearing with trading as the markets move to 24/7. This will ensure extended trading hours won’t increase customer or market risk. And I look forward to our 24/7 roundtable tomorrow for more insights.
Lastly, our Playbook must tackle the new clearing models coming out. As markets evolve, we should ensure these new models provide customers and the marketplace with the same levels of protection as traditional structures.
The CFTC has taken the lead on this issue and asked the industry for feedback on the various new direct clearing models. On this journey, we must not stifle responsible innovation. But we should speak clearly if innovative models change the risk profile of the markets or its participants.
In the traditional structure, clearing members stand as the first and last layer of defense in protecting customers and the markets. Importantly, clearing members contribute their own capital to the clearinghouse default fund – which represents 97 percent of the financial resources backstopping the clearing system globally.
If new direct clearing models remove this intermediation layer, those safeguards and resources will need replacing.
FIA has suggested a simple approach.
For exchanges offering fully collateralized and pre-funded products, direct clearing models are appropriate because the leverage and customer risk in the system is negligible. Clearing for direct models more closely resembles settlement, and customer losses are limited to what they put up.
But when exchanges offer margined products where leverage could lead to exponential customer losses, we believe an FCM should be in the chain, given its significant customer protection and risk management responsibilities.
This is a fair, simple and clean approach that supports the development of innovative models without having to rebuild the protections inherent in the existing system.
And when these new market models stack various registrations within one legal structure, it is common sense that exchanges have strong rules to manage these inherent conflicts. Just look at FTX’s collapse. I’m glad Congress has included language in its crypto market structure bill that requires the CFTC to provide such guidance on market conflicts.
So, that’s my playbook.
If we can courageously tackle these challenges – from crypto legislation to prediction markets to innovative clearing models – and do so using our guiding principles of trust, fairness and integrity, the sky is the limit for our industry.
In my thirty years in this business, this is one of the most exciting times to be in our industry. Just look around at the new energy, the new companies, and the fresh ideas.
For years, we were considered the stepchild of finance. I would go to cocktail parties and people’s eyes would glaze over when I described what I did.
Not today, my friends.
Our markets, from traditional derivatives to crypto to event contracts, are now in the starting lineup of finance and stand ready to shape our future.
To channel Teddy Roosevelt, credit goes to those who bravely enter the arena and directly take on the challenges ahead. Folks, it’s up to us.
So, let’s follow Coach Cignetti’s game plan and continue to instill trust, fairness and integrity in supporting our markets. And if we do, it will be a winning formula!
