The US Commodity Futures Trading Commission last week withdrew proposed guidance and rulemaking in several areas as it seeks to align with the US administration’s goal of simplifying regulation and reducing burdens on market participants.
On 11 September, the CFTC’s Division of Clearing and Risk withdrew its guidance on the recovery and winding down of distressed clearinghouses. FIA and ISDA had previously advocated for the CFTC to codify this guidance, to ensure that derivatives clearing organisations, particularly systemically important DCOs, have viable recovery and wind-down plans in place to maintain financial stability in times of crisis or failure.
But in a press release last week, the CFTC said that DCOs that opt to be subject to Subpart C of Part 39 of the CFTC’s regulations are already required to maintain viable recovery and wind-down plans that are consistent with the risk management requirements of the Commodity Exchange Act and international standards. This makes the guidance “duplicative and not necessary,” it said.
The CFTC also announced that it would withdraw its proposed operational resilience rules for futures commission merchants, swap dealers and major swap participants, as these entities are already subject to requirements from regulators in other jurisdictions and international standard-setting bodies. FIA responded to the proposed rules last year, stating that they included many prescriptive elements that would be disproportionately burdensome for some FCMs.
“The CFTC withdrew its operational resilience proposed rulemaking to address my concerns that the CFTC’s approach should not be overly prescriptive and should generally take a principles-based approach in recognition of the extensive years-long global implementation of operational resilience requirements by US and non-US regulators and banking organizations,” CFTC Acting Chair Caroline Pham said in a post.
“The CFTC will reconsider how potential operational resilience rules work in practice with the rules of other regulators, whether foreign or domestic,” she continued. “Because the CFTC’s rules are often only one part of a much broader risk governance framework for financial institutions, the Commission must ensure that it has the full picture before coming to conclusions to ensure that our rules not only address any potential regulatory gaps or changes in risk profiles, but also to avoid issuing rules that are conflicting, duplicative or unworkable with other regulatory regimes.”
Earlier in the week, the CFTC announced that it had withdrawn its guidance on the listing of voluntary carbon credit derivative contracts, citing specific sections of the Commodity Exchange Act that already established the regulatory framework for listing derivative contracts, including voluntary carbon credit derivative contracts.
The withdrawals purportedly align with Pham's stated goal of focusing on essential mission priorities and avoiding unnecessary burdens, in line with the Trump Administration's goal to simplify regulation and control regulatory costs.
“The [CFTC’s] 2025 Unified Agenda implements the President’s executive orders and demonstrates that the CFTC is getting back to basics,” Pham said in a statement. “Regulations proposed over the last several years that do not serve our mission and instead pile on excessive and unnecessary costs are being withdrawn.”
Earlier this month, the CFTC and the US Securities and Exchange Commission issued a joint statement on regulatory harmonisation opportunities and announced that they would hold a joint roundtable at the end of September. The statement indicates that the two agencies will consider harmonising product and venue definitions, streamline reporting and data standards, and align capital and margin frameworks.
