The US Commodity Futures Trading Commission (CFTC) held the second meeting of the Global Markets Advisory Committee (GMAC), on 17 July, under the sponsorship of Commissioner Caroline Pham.
In her opening statement, Commissioner Pham reiterated her previous statement that “global collaboration and coordination are critical to promoting regulatory cohesion and financial stability, and mitigating market fragmentation and systemic risk.” Pham noted that she scoured the globe to cultivate a “historically wide reaching” set of GMAC members and subcommittee members.
The meeting took place at the New York Stock Exchange, and its significant agenda included a discussion about US Treasury market reforms, with a focus on the potential impact to derivatives markets from proposed changes being considered by the SEC, and the CFTC’s upcoming changes to swap block thresholds, including a discussion around the challenges these changes could pose to market liquidity and execution quality. The meeting also featured a discussion about real-world use-cases for the tokenization of financial products and services, as well as applications of tokenization in non-financial activities.
The meeting also featured updates from the GMAC’s three advisory committees – the Global Market Structure Subcommittee, the Technical Issues Subcommittee, and the Digital Assets Markets Subcommittee.
GMAC Subcommittee Workstreams
Allison Lurton, FIA’s General Counsel and Chief Legal Officer, and Tara Kruse, ISDA’s Global Head of Infrastructure, Data, and Non-Cleared Margin, are co-chairing the GMAC Technical Issues Subcommittee and presented a summary about the workstreams they plan to tackle including:
- Providing recommendations to improve international standardisation of reporting to trading market oversight;
- Providing recommendations to improve efficiencies in post-trade processing including supporting FIA’s Derivatives Market Institute for Standards (DMIST) indicatives;
- Providing recommendations for global coordination of market events such as closures and drills; and
- Identifying other infrastructure issues that impact cross-border activity and access to markets.
Michael Winnike, BlackRock’s Head of US Market Structure, and co-chair of the Global Market Structure Subcommittee, previewed the workstreams his subcommittee plans to undertake including:
- Providing recommendations that FIA is currently considering for global standards for market volatility and risk controls, focusing on what are the correct guardrails that exchanges can implement to protect market participants while balancing the need for price discovery;
- Reviewing the US Treasury market reforms being contemplated by the SEC and the impact on derivatives markets;
- Providing recommendations for improving liquidity across several asset classes related to clearing;
- Examining the role of derivatives in proper asset liability management and whether there are barriers to participation in these markets; and
- Providing recommendations for international alignment of trading and clearing obligations to address market fragmentation including swap execution facility and multilateral trading facility requirements.
Caroline Butler, BNY Mellon’s Global Head of Digital Assets and Sandy Kaul, Franklin Templeton’s Head of Digital and Industry Advisory Services, as co-chairs of the Digital Assets Markets Subcommittee previewed their workstreams including:
- Focusing on tokenization infrastructure and setting forth principles that might guide the use of blockchains, tokens and other innovations in a regulated investment ecosystem;
- Defining common taxonomy and a det of definitions that can help to level-set discussions about elements of the new ecosystem;
- Assessing what changes might be required to existing practices for tokenized asset markets;
- Developing a framework on how financial system participants might harmonize activities across centralized and decentralized participants; and
- Exploring how utility tokens and NFTs that can blend financial, commercial, and social terms might impact investment portfolios.
Statements and additional documents
