CFTC Alert! The March 8 Meeting of the Market Risk Advisory Committee (MRAC) is OPEN for public comment in connection with the meeting.
Items to be addressed at the meeting: technology-oriented risks affecting the derivatives and related financial markets, central counterparty risk and governance.
Source: https://www.cftc.gov/PressRoom/PressReleases/8671-23
Public Comments
Members of the public may submit comments in connection with the meeting, identified by “Market Risk Advisory Committee,” by March 15, 2023. Follow the instructions for submitting public comments through the Comments Online process on cftc.gov. If you are unable to submit comments online, contact Bruce Fekrat ([email protected]) or Marilee Dahlman ([email protected]), to discuss alternate means to submit comments. Statements submitted in connection with the committee meeting will be made available to the public, including publication on cftc.gov. The meeting agenda may change to accommodate other MRAC priorities. For agenda updates and more information about this advisory committee, including its members, visit MRAC.
If you have opinions around technology-oriented risks affecting the derivatives and related financial markets, central counterparty risk and governance and would like to leave a comment for the Market Risk Advisory Committee (MRAC), go here, you have until 3/15/23.
https://comments.cftc.gov/PublicComments/ReleasesWithComments.aspx
Press Release for meeting:
CFTC Commissioner Kristin N. Johnson, sponsor of the Market Risk Advisory Committee (MRAC), today released the agenda for its public meeting on Wednesday, March 8 from 9:30 a.m. to 12:30 p.m. (EST) at the CFTC’s Washington, D.C. headquarters. Members of the public may also attend the meeting virtually. See the detailed agenda here.
At the meeting, the MRAC will address current topics and developments in the areas of emerging technology-oriented risks affecting the derivatives and related financial markets, including recovery and resilience in the event of cyber-security incidents. The MRAC will also discuss central counterparty risk and governance, climate-related market risk, market structure developments and interest rate benchmark reform.
“The MRAC meeting will examine the many facets of risk and risk management that traditional market participants and new entrants to our markets must navigate. Persistent, pernicious, and pervasive cyber risks threaten critical infrastructure resources. Such resources include intermediaries that facilitate trade execution, including clearinghouses, exchanges, futures commission merchants, and the third-party service providers who assist these firms. Increasing threats such as ransomware attacks require collective consideration of operational resilience, industry-wide communication, a major incident response plan, and protection of customer assets and information,” said Commissioner Johnson.
“A cyber-related incident in January of this year at ION Cleared Derivatives (a subsidiary of ION Markets), a third-party service provider of cleared derivatives order management, order execution, trading, and trade processing, had ripple effects across markets impacting many firms and their counterparties. This series of events underscores the potential threat that cyber-related incidents pose for financial market infrastructure” Commissioner Johnson noted. The MRAC meeting will feature special presentations by Matthew Cronin, Director the Office of the National Cyber Director; Tom W. Sexton, President and Chief Executive Officer, National Futures Association; Walt Lukken, President and Chief Executive Officer, Futures Industry Association; Julie Holzrichter, Chief Operating Officer, CME Group; Chris Hayward, Chairman of Policy and Resources, City of London Corporation; and regulators from the U.S. Department of the Treasury, Federal Reserve, U.S. Securities and Exchange Commission, and the U.S. Department of Justice.
“We anticipate proposals and announcements regarding valuable, collaborative approaches to prevent or mitigate cyber risks across the diversity of firms operating in our markets. I expect the CFTC and our fellow regulators, alongside key partners who have real time access to data, information flows, and operational infrastructure, to take the lead in setting standards and monitoring systems to minimize the frequency and magnitude of cyber threats,” Commissioner Johnson continued.
According to Commissioner Johnson, “In addition to cyber threats, the MRAC will explore the remarkable, transformative growth and innovation in digital asset markets – both the promise and the peril. In the wake of a contagion marked by several cryptofirms experiencing liquidity crises, we anticipate moving beyond the commonly cited use cases and exploring DeFi, digital identity, interoperability and alternative uses and use cases for distributed digital ledger and blockchain technology. Looking past the hype-cycle, what is the value proposition of these technologies and what risks should TradFi, CeFi, and DeFi market participants and their customers consider and address?”
The MRAC will continue critical discussions and recommendations advanced by the Central Counterparty Risk and Governance, Market Structure and Interest Rate Benchmark Reform Subcommittees. Finally, the Climate-Related Market Risk Subcommittee discussion will offer a roundtable exploring voluntary carbon markets among other topics growing from the 2020 report Managing Climate Risk in the U.S. Financial System, the 2022 Voluntary Carbon Market Convening at the CFTC, and the responses to the follow-on Request For Information released in June of 2022.
The meeting agenda may change to accommodate other MRAC priorities. For agenda updates and more information about this advisory committee, including its members, please visit MRAC.
