Keynote Address by Commissioner Caroline D. Pham, 98th Annual Convention of the American Cotton Shippers Association
We’re Finally on the Job—Now Let’s Get to Work
June 22, 2022
Thank you very much for inviting me here to speak with you all today. I’m so glad to be here, especially because my very first meeting as a Commissioner was with ACSA. It just seems right that my first keynote speech is with you all too. And it’s an honor to be part of a historic Commission, and the first full Commission in over two years—finally. I know a lot of people have been waiting for this.
I should give a short disclaimer and a quick confirmation. The disclaimer is that my views are my own and don’t necessarily reflect those of the Commission or other Commissioners. The confirmation is that yes, my dress is 100% cotton.
I’d like to tell you a bit more about myself, where I come from, and how I do things. I was born and raised in Modesto, in California’s Central Valley, and we had peach and almond orchards. It’s about a three-hour drive from here. We used to come to Lake Tahoe in the winter, so I have a lot of great memories here, including a lot of falling down on the ski slopes. I did 4-H when I was little and showed horses at the Stanislaus County Fair and California State Fair—luckily, I fell a lot less there. And my family taught me the values of hard work and lifelong learning.
Fast forward—I grew up and moved to the big city. And the hard work and learning continued. In my career, I’ve traveled the world and engaged with thousands of colleagues, policymakers, executives, and clients from dozens of countries and nearly every sector of the economy. I’ve worked on tackling the most significant international financial policy issues. I’ve built global programs and teams and implemented global financial regulatory reforms. I’ve seen just how big the world is, and how small it is, too. Time and again, I saw firsthand how important it is to get all the information, to learn as much as possible, and then to take a pragmatic approach to finding solutions.
You might remember when I was in Commissioner Scott O’Malia’s office during Dodd-Frank. One of my favorite parts of the job was meeting with ag producers and commercial end-users to learn more about how our rules would actually impact them. Then, when I worked at a global bank, one of my favorite parts of the job was working with our commodities and other businesses to understand what clients needed. And now that I’m a Commissioner, one of my favorite parts of the job is to hear from people trying to run their businesses, create jobs, and support the economy—to make and move the things we eat and wear and use every day.
We all work for our clients and customers. And we all know that client and customer relationships are built on trust. I work for the American people, and I’ve been given the public’s trust. That’s something I believe very deeply and a responsibility I take very seriously. And so what I wanted to do with you today was share how I am approaching the job and talk about what’s going on.
Clear Rules of the Road
Going back to first principles, it’s important for there to be clear rules of the road. I’ve seen it from both sides—from government and from the private sector—that you need clear rules to go about your day-to-day business. When you make business decisions, there’s no gray area in yes or no. You have to decide to buy something, or not; to build something, or not; to make a choice, one way or the other.
I believe that markets work best when there are clear and simple rules with common standards. I learned that lesson again and again. Regulation shouldn’t unnecessarily increase operational complexity or costs, especially costs that then get passed down. People’s jobs are hard enough, and there’s enough going on in the world, without making it even harder.
Growth and Progress
Although I’m in only week 11 of my term as Commissioner, I’ve been getting out and about after being cooped up for two years. This week I was in Nebraska meeting with family farmers, and over the past weeks I’ve done learning tours and met with so many different stakeholders to understand what they do and what they care about. It really is one of the best parts of my job. So far, I’m looking at things through two lenses—growth and progress.
First, we should support growth in both traditional and new markets. In traditional markets, there should be deep, liquid markets that best provide risk management and price discovery. End-users and others need reliable and efficient ways to hedge their risks. And for new markets and products, we have a mandate to promote responsible innovation and fair competition.
Second, we should be making progress on what’s in front of the CFTC, and hopefully it doesn’t take us so long. I was an intern at the CFTC when the position limits rulemaking first began. By the time it was done, I was a managing director at Citigroup. The CFTC has a pivotal role in a lot of big-ticket items, and I’d like to see us move the needle on them during my term.
Global Markets Advisory Committee
One of the many proud traditions at the CFTC is that Commissioners get to sponsor advisory committees comprised of members of the public. I’m excited to sponsor the Global Markets Advisory Committee (GMAC).
The big picture is that the GMAC promotes a level playing field for global business and global markets. It’s as simple as that.
I’m relaunching the GMAC with a fresh approach to that goal. Under my sponsorship, the GMAC will focus on firms’ global business strategy and operations and the markets that are needed to support growth and effective risk management. It is an international forum for executive leaders from both the public and private sectors to come together and create a shared vision for the future of markets.
When I was in Madrid recently for the ISDA Annual Meeting, I met with the Chair of the Basel Committee on Banking Supervision (currently the Governor of the Banco de España), and senior officials from the U.S. Treasury Department, the Financial Stability Board, the International Organization of Securities Commissions (IOSCO), the European Commission, the European Securities and Markets Authority (ESMA), the UK Financial Conduct Authority, and the Comisión Nacional del Mercado de Valores (CNMV). I shared with them my plan for the GMAC, and I’m inviting international standard setters and non-U.S. regulators to participate and promote global collaboration and coordination. We need global solutions to global challenges.
As described in its charter, the GMAC was created to advise the CFTC on issues that affect the integrity and competitiveness of U.S. markets and U.S. firms engaged in global business, including the regulatory challenges of a global marketplace that reflects the increasing interconnectedness of markets and the multinational nature of business. The GMAC also makes recommendations regarding international standards for regulating futures, swaps, options, and derivatives markets, as well as intermediaries. Members include financial market infrastructures, swap data repositories, intermediaries including swap dealers, market participants, end-users, service providers, public interest groups, and regulators.
We just received nominations for GMAC members and potential priorities. In the wide range of nominees, I’m so pleased at the number of successful executives who have built leading global firms and are willing to take the time to serve and now build the future of markets in addition to running their businesses. With their insights and those of others, the GMAC will truly be a driver for growth and progress.
The top concerns that have been submitted for the GMAC to take on include important global market structure issues such as cross-border harmonization and market fragmentation; global commodity markets and volatility; and interconnectedness of cash and derivatives markets, including Treasury market reform and sovereign debt. Other top concerns are digital asset markets and trade reporting. So I’m looking to have potential subcommittees on Global Market Structure, Digital Asset Markets, and Trade Reporting.
The GMAC has a critical role as the world faces immense challenges, and we should not miss this opportunity to lead.
On the Job
That’s how I’m approaching my job as Commissioner. I’m also very excited about my top-notch team—Meghan Tente, Gates S. Hurand, and Keaghan Ames—that makes it possible for me to do what I do. It’s been wonderful to be welcomed back to the CFTC by so many familiar faces. It’s an honor to work again with such impressive staff who are so dedicated to the agency’s mission. Let’s talk about some issues that the CFTC is looking at right now.
Global Commodity Markets and Volatility
One is volatility. I don’t have to tell you that we’re seeing high levels of volatility in the global commodity markets, and not just in one or two products. COVID-19 and its effects on the global economy and international trade, supply chains, production, and demand are all contributors to one of the biggest economic disruptions in decades. Now that the world is coming back from the pandemic, we are still working through these issues as well as new ones. And many of these issues involve market fundamentals and externalities that impact value chains, price action, and volatility. All of that puts stresses on the system. Let us know if you have concerns about certain markets and if there’s something we should be looking into.
Climate and Carbon Markets
Another area is climate. This is a priority for Chairman Behnam. The CFTC recently asked for comments from the public on an expansive set of climate issues including data, scenario analysis and stress testing, risk management, disclosure, product innovation, voluntary carbon markets, digital assets, greenwashing, financially vulnerable communities, and public-private partnerships and engagement. And we also hosted a roundtable last month on voluntary carbon markets.
I believe in market-driven solutions. Weather has always been unpredictable, and from the beginning CFTC markets have been used to hedge those risks. I’ve met with innovators who are developing new products and enabling technology to manage physical risk and transition risk. And carbon markets are an area where there could be opportunities for new revenue streams in addition to facilitating the climate transition. I’ve met with startups who are partnering with small farmers on regenerative agriculture and carbon capture.
Given the breadth of the CFTC’s climate request for information, we need to be thoughtful about our next steps here. I discussed some of my concerns in my concurring statement. We need to focus on our mandate and mission, and be mindful of where other regulators have the expertise and the primary authority and are already addressing the issues. We need to do our best to avoid duplicative, overly burdensome, or costly rules. We really need to consider the potential effects of any new requirements on hedgers and end-users, especially small entities—real businesses in the real economy. I want to hear what you think about all this.
Non-intermediated Clearing and Market Structure
A third area is non-intermediated clearing. The CFTC needs to be transparent in how it’s approaching this issue, and recently hosted an all-day roundtable discussion. It was very helpful to hear expert perspectives from so many highly respected names in our markets. I generally believe in ongoing innovation and evolution that is responsible. As things change, we need to consider the potential for unintended consequences. This is an area with a lot of important questions to ask. CFTC markets have stood the test of time for a long while now—if there’s a big shift, we need to be prepared for what happens next.
Let’s Get to Work
I mentioned one of my favorite parts of the job is meeting with, hearing from, and learning from people. That’s because I take very seriously my responsibility to engage with the public. And it’s also just who I am.
I’m going to keep on learning as much as I can. It is so important for us to talk with each other—for your voices and ideas to be heard. You all know how important it is to speak with and hear from your clients and customers. Like I said earlier, I work for the American people. I am so glad to join you here today, to speak with you, and hear from you. We have to work together to protect and improve our markets. So let’s keep talking, and let’s get to work. Thank you.
 Press Release Number 8542-22, CFTC Commissioner Caroline D. Pham Seeks Nominations for Global Markets Advisory Committee Membership and Public Comment on Committee Priorities, available at https://www.cftc.gov/PressRoom/PressReleases/8542-22; CFTC Request for Nominations for Membership on the Global Markets Advisory Committee (GMAC), 87 FR 33754 (June 3, 2022).
 E.g.¸ Ryan Dezember, Chaotic Trading in Energy, Metals and Food Spills Into Real World, Wall St. J. (Apr. 12, 2022).
 CFTC Request for Information on Climate-Related Financial Risk, 87 FR 34856 (June 2, 2022).
 Concurring Statement of Commissioner Caroline D. Pham Regarding the CFTC Request for Information on Climate-Related Financial Risk, id.at 34862, Appendix 5.