FIA submits comments to CFTC on self-regulatory process and affiliations

29 September 2023

The Futures Industry Association (FIA) has responded to a request for comment by the US Commodity Futures Trading Commission regarding the impact of affiliations between certain CFTC-regulated entities, and the potential conflicts of interest that could arise under the current self-regulatory process.

In its comments, FIA voiced support for the CFTC’s self-regulatory framework but said review of the self-regulatory process is needed whether or not the CFTC permits affiliations between registered entities. In particular, FIA pointed to a need for additional governance and oversight of the Joint Audit Committee (JAC) program to ensure its effectiveness and fairness in light of the significant changes to market structure that have occurred since its formation. Indeed, FIA’s letter argued that a revived JAC program could improve regulatory outcomes in the near term as well as under affiliated entity scenarios that may present in the future.

FIA stressed the importance to customer protection and self-regulatory oversight provided by the checks and balances of the existing tiered system of CFTC registration. "FIA is concerned that collapsing this existing multi-tiered ecosystem—with its inherent checks and balances—without proper analysis could undo the foundation on which the self-regulatory structure is premised.” FIA said.

FIA reiterated its commitment to preserving the integrity of the supervisory responsibilities of DCMs, DCOs, and SEFs as well as the ability of firms to participate and innovate in U.S. derivative markets and to further engaging with the CFTC and industry on these important topics.

Read FIA's full response here.

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