FIA has filed comments with the US Commodity Future Trading Commission on a proposed rulemaking regarding governance requirements for Derivatives Clearing Organizations (DCOs).
The proposal is a welcome development to ensure an appropriate level of engagement with DCO’s stakeholders and provides several governance fora to consult and consider DCO’s stakeholders’ views and inputs on matters that could materially affect the risk profile of the DCO. FIA supports development of robust and transparent governance arrangements which promote DCOs’ engagement with their members and customers.
FIA commends the CFTC for its work, and FIA views the proposal as a positive development in enhancing governance of DCOs. The CFTC acknowledges that it is codifying much of the existing practices at the DCO’s Risk Management Committees (RMC). However, the proposal also establishes Risk Advisory Working Groups, which would add an additional forum for the market participants to provide feedback to the DCO.
FIA feels strongly that the Commission propose two additional areas for rule changes, as it notes in the consultation:
- market participant consultation prior to rule submission for self-certification and
- RMC member information sharing within the firm to obtain expert opinions.
Both would substantially improve DCOs’ governance as recommended by market participants in the Commission’s MRAC Subcommittee on CCP Risk and Governance.
