The US Senate Agriculture Committee held a hearing on 8 March featuring Rostin Behnam, chairman of the US Commodity Futures Trading Commission, to discuss the agency's current and future priorities.
In his opening statement, Behnam highlighted the resilience of derivatives market over the past several years of market volatility. He also announced plans for an aggressive regulatory agenda including a "vote on at least 30 to 35 of the anticipated proposals in addition to all of the rules and orders proposed last year."
Additionally, Behnam highlighted the recent cyber-related incident on ION Cleared Derivatives and stated the CFTC is "developing rule proposals to address cybersecurity and related risk, to further identify potential weaknesses with respect to third-party service providers."
Behnam fielded questions from legislators on a wide range of topics, including cyber risks, retail market participation, digital assets, and climate-related financial risks.
Sen. Debbie Stabenow (D-Mich.), chair of the Ag Committee, asked Behnam about cyber risks in financial markets, noting that third-party service providers don't currently have to comply with the CFTC's cyber security requirements. Behnam said they are in the process of updating the Commission's cyber rules, and that this will include a guidance for third-party service providers. Behnam also said Congress Committee may want to consider expanding the CFTC's authority over third-party service providers.
Stabenow and other senators also questioned Behnam growth in retail and crypto market participation to ensure the CFTC's customer protections are suitable for this group of investors. There were also discussions about the regulatory interplay between the CFTC and the US Securities and Exchange Commission, and enforcement in related markets.
Ranking Member Sen. John Boozman (R-Ark.) said that he was pleased with Behnam's pledge to codify no-action relief into formal rules, particularly "where no-action letters have been repeatedly extended." Boozeman also asked Behnam to further explore block trade reporting thresholds to ensure they avoid unintended consequences for liquidity and increased transaction costs.
Legislators also questioned Behnam about financial risks related to climate change and the growth of voluntary carbon markets, among other areas.
The US Senate Agriculture Committee has oversight over the CFTC and the agency regularly appears before legislators to discuss its agendas and priorities. The hearing was the first time this year Behnam has been called before US lawmakers to testify.
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