The beginning of September marks the non-official end of summer as kids return to school, vacations end, and the weather turns cooler. Summertime typically gives us the chance to relax, take a holiday and spend time with family. This summer seemed busier and went by faster than normal. Maybe it’s the fact that virtual work makes it more challenging to get away as the lines blur between work and play. Truthfully, I don’t like this trend. As they say, all work and no play make Johnny (or Jackie) a dull human being. Who likes dull! That said, we have been incredibly productive during this time and here’s a snippet of the good work being done on your behalf:
One important development is the recent announcement by President Biden that he plans to nominate CFTC Commissioner Rostin Behnam to the role of Chair and Kristin Johnson and Christy Goldsmith Romero to the Democratic seats at the Commission. While this is a welcome development, this process is only the first step in a process that may take months to complete. The Republican candidate replacing departed Commissioner Brian Quintenz has not been named, leaving Acting Chair Behnam and Commissioner Stump alone at the Commission once Dan Berkovitz departs in mid-October. I am hopeful that the Senate Agriculture Committee moves with lightning speed to hold a hearing and vote the nominees to the Senate for final consideration. If we are lucky, we may have a full complement of Commissioners by the holidays. I sure hope so, given the importance of this agency to our global economy and the need for a voice representing our industry among key policymakers.
Euro clearing debate
The exit of the UK from the European Union has caused policymakers in the region to revisit how customers access markets cross-border. There is a vigorous debate on whether clearing certain products must be done in the home country for systemic risk purposes. FIA has opposed any forced relocation of clearing services to the EU and has urged regulators to ensure that customers have a choice as to where they clear their transactions. Recently, FIA participated in the European Commission technical working groups on the “opportunities and challenges to transfer cleared derivatives from the UK to EU CCPs” and coordinated industry advocacy efforts with the European Commission, European Central Bank and other central banks, finance ministries, and national supervisory authorities in the region.
In September, FIA joined eight other trade associations in a letter urging European Commissioner Mairead McGuinness to extend the European Commission equivalence decision for UK CCPs, which is set to expire on 30 June 2022. The letter argues an extension would help alleviate financial disruption and prevent negative financial, commercial, and operational impacts on EU clients and clearing members. Without an extension, customers might lose access to these important global pools of liquidity and FIA is committed to keeping these markets accessible and safe.
Focus on operations and standards
The March 2020 volatility exposed some realities that we must face as an industry. During this time, the clearing system held together, but the extreme fluctuations created some problems that demonstrate why we must modernize our post-trade settlement process. This modernization effort will involve bringing our industry stakeholders together to find ways to simplify and standardize the lifecycle of a cleared trade. This will be a prime issue for FIA this fall, and you will be hearing more about this in the coming months.
Supporting China's new Futures Law
This summer, FIA submitted comments to China’s National People’s Congress in support of the new draft Futures Law. For many years, FIA has advocated for passing a futures law in China as a vital step in developing and growing China’s markets. These markets already rank among the largest in the world in terms of trading volume, but they lack specific legal standards critical for deeper institutional participation. This historic milestone in the development of the legal framework will help develop a more robust and liquid futures market for both Chinese and international customers. FIA’s global membership is committed to working with the National People’s Congress, the China Securities Regulatory Commission, the Chinese Futures Association, and interested parties in developing and implementing this important new law.
Return to in-person conferences
Finally, after months of careful planning, FIA plans to bring back in-person conferences this fall under proper health and safety protocols in an effort to reconnect and energize our community. We will be hosting our annual IDX conference in London at the end of September. And we are looking forward to welcoming you back to Chicago for the annual Futures Industry Expo conference and trade show at the beginning of November. While virtual programming has its place, there is nothing like seeing your colleagues in person, hearing from industry leaders and learning of the latest trends. This is where the secret sauce of our industry is made. And I literally can’t wait!