FIA responds to CFTC Request for Information on climate-related financial risk

Submission highlights highlights important role of markets in the transition to a lower carbon economy

7 October 2022

FIA has responded to the US Commodity Futures Trading Commission (CFTC) Request for Information (RFI), which sought public comment on climate-related financial risk to better inform its understanding and oversight of climate-related financial risk as pertinent to the derivatives markets and underlying commodities markets. 

FIA’s response, developed based on feedback from clearing firms, exchanges, commodity end-users and others, addresses core risk management issues related to the listed derivatives markets. The FIA submission focuses on specific topics outlined in the RFI related to data, scenario analysis and stress testing, risk management, product innovation, voluntary carbon markets, digital assets, public-private partnerships, and capacity and coordination.  

In the response, FIA welcomes the goal of the RFI, and other actions taken by the Commission, to promote public dialogue toward better understanding climate-related financial risk related to derivatives markets and underlying commodities markets and urges the CFTC to focus on its jurisdictional remit in weighing action on climate-related matters.

The letter highlights that derivatives markets are naturally innovative and have already positively influenced sustainable finance strategies around the globe through their support of new products and trading venues. The letter emphasizes the innovation of FIA’s members (such as derivatives exchanges listing of products critical to a clean energy transition) as well as FIA engagement in projects like the Taskforce on Scaling Voluntary Carbon Markets, among others.

Should the CFTC decide to take action specific action, the letter encourages the Commission to closely coordinate with other financial regulators, both in the US and internationally, to foster market clarity and not harm private sector led efforts that seek to help the transition to a lower carbon economy.

Download FIA's full response to the CFTC RFI.

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