CFTC committee discusses market risk issues

MRAC explores CCP governance and market structure, among other topics

10 July 2023


The US Commodity Futures Trading Commission held a meeting of its Market Risk Advisory Committee (MRAC) on 10 July, discussing wide-ranging issues including CCP risk and governance, interest rate benchmark reform, market structure issues, and climate-related market issues.

FIA's board chair, Alicia Crighton of Goldman Sachs, presided over the meeting as chair of the MRAC. Crighton previewed that she expects MRAC to hold another public meeting in late September.

While the MRAC has no formal rulemaking authority, the committee is formed of public policy experts and market participants including exchanges and clearing firms to help guide work at the agency.

"This meeting is an opportunity to roll up our sleeves and begin to chart a course for the development and completion of the important work that the MRAC Subcommittees will explore," said Commissioner Kristin N. Johnson, the CFTC sponsor of the MRAC. "I am hopeful for an open and meaningful discussion among MRAC members regarding the critical issues facing our markets."

Some of the most relevant discussions at the meeting included:

CCP risk and governance – The MRAC's CCP Risk and Governance Subcommittee provided an overview of three areas that will be the focus of its work and discussions. These included CCP resolution and recovery issues; margin and collateral guidelines including margin procyclicality; and technology and operations issues including oversight of third-party service providers. In regard to CCP issues, it was noted that a previous MRAC subcommittee offered recommendations and reports to the CFTC in 2021 regarding margin methodology and risk governance and that future discussions could build on this prior work.

Market structure – A separate MRAC subcommittee on market structure provided an update on various workstreams including block implementation rules, concentration among Futures Commission Merchants (FCMs) and related clearing capacity, US Treasury market reform, and post-trade risk reduction, among other issues.

Interest rate benchmark reform – MRAC members discussed achievements in the transition away from LIBOR and the movement towards the Secured Overnight Financing Rate (SOFR). A subcommittee on this work, which has functioned since 2018, was formally sunset now that the final tenors of USD LIBOR have ceased publication on 30 June.

Climate-related market risk – A roundtable on climate and sustainable finance discussed issues including progress in voluntary carbon markets. The MRAC also looked ahead to the upcoming Voluntary Carbon Markets Convening on 19 July.

Future of finance – MRAC members discussed emerging market innovations and related regulatory issues, including vertical integration and non-intermediation in derivatives markets – particularly the fallout in the wake of the FTX failure and related events in digital asset markets. Discussion also touched on stablecoins. The MRAC formed a related subcommittee that will explore these issues further in the months ahead.

Official statements and documents


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