Center for American Progress

RELEASE: A Climate and Competition Agenda for the Commodity Futures Trading Commission

RELEASE: A Climate and Competition Agenda for the Commodity Futures Trading Commission

Washington, D.C. — A new report from the Center for American Progress lays out a roadmap for a new climate and competition agenda for the Commodity Futures Trading Commission (CFTC).

As a regulator of the United States’ derivatives markets, the CFTC has an important role to play in ensuring that both individual companies and the larger economy hedge their exposure from the risks of climate change. The report outlines the top five reforms that would ensure that derivatives markets can withstand risks from climate change; are transparent and equitable; and provide for a resilient and stable market structure that ensures counterparty risks are handled within the financial system without harming the real economy. The report also details 14 specific recommendations to accomplish these priorities.

The CFTC’s five priorities should be to:

  1. Facilitate the transition to a net-zero economy.
  2. Stress-test central counterparties for climate risks.
  3. Ensure competition between traders and between the platforms that enable the derivatives markets to operate.
  4. Increase trading transparency and real-time data reporting requirements.
  5. Impose meaningful regulations on the parts of digital asset markets that are within the commission’s jurisdiction.

“Safe and efficient derivatives markets are vital to modern finance,” said Todd Phillips, director of financial regulatory and corporate governance at CAP. “With new leadership at the agency, now is an excellent time to develop a strong and effective agenda that the CFTC can implement over the next few years. And as the global financial system faces an ever-growing financial risk, the importance of the CFTC doing its part to ensure that derivatives markets are both capable of withstanding climate risks and facilitating the transition to net zero could not be greater.”

Read the report: “A Climate and Competition Agenda for the Commodity Futures Trading Commission” by Todd Phillips

For more information or to speak to an expert, contact Julia Cusick at jcusick@americanprogress.org.

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