Public Statements & Remarks

Concurring Statement of Commissioner Caroline D. Pham Regarding the CFTC Request for Information on Climate-Related Financial Risk

June 02, 2022

I respectfully concur with the publication of the Request for Information (RFI) on Climate-Related Financial Risk in the Federal Register because it is imperative that the public has an opportunity to provide input and share expertise.

In our work in this area, however, we must be mindful of our statutory mandate: oversight of the commodity derivatives markets.[1]  In particular, as the RFI recognizes, our markets are “affected with a national public interest” because they facilitate risk management and price discovery “through trading in liquid, fair and financially secure trading facilities.”[2]  Further, as the RFI also recognizes, the Commodity Exchange Act mandates that the Commission serve this public interest through our oversight of “a system of effective self-regulation of trading facilities, clearing systems, market participants and market professionals,” and by deterring and preventing price manipulation and other disruptions to market integrity, ensuring the financial integrity of transactions in our markets, avoiding systemic risk, protecting market participants from “fraudulent or other abusive sales practices and misuses of customer assets,” and promoting “responsible innovation and fair competition.”[3]  This statutory mandate bears repeating because it makes clear that the Commission is a market regulator over our markets and products, market infrastructure, market integrity, market conduct, market participants, and market professionals.

We are not, for instance, a prudential banking regulator like the Fed, OCC, or FDIC, nor are we a primarily disclosures-based market regulator like the SEC.  Keeping our focus on our markets, products, and purpose—keeping our eyes on the ball—will help us avoid the risk of diluting our limited resources and potentially straying from our core expertise and responsibilities into areas already tasked to others. 

As we do our work on climate-related financial risks within our statutory authority—such as by fostering the development of new products and markets to manage physical risk and transition risk—we also should be thoughtful when considering the steps we take.  Any actions that may impose new obligations and costs on our market participants, especially end-users that rely upon our markets for hedging, must be balanced and carefully considered.

For registrants that have other regulators and are already subject to climate risk management frameworks, we should seek to harmonize from the start with existing prudential and other regulatory regimes in order to be efficient and avoid imposing duplicative or unnecessarily burdensome and complex requirements.

And most importantly, I caution that for any potential future Commission action, we must take care to consider the impact on small entities and evaluate alternatives that would accomplish the objectives of any potential rule without unduly burdening the substantial numbers of growers, producers, and other end-users who depend on our markets for risk management and price discovery.[4]  That is, after all, the original purpose of our markets and the Commission.


[1] Commodity Exchange Act (“CEA”) Section 2(a)(1)(A), 7 U.S.C. § 2(a)(1)(A). 

[2] CEA Section 3(a), 7 U.S.C. § 5(a). 

[3] CEA Section 3(b), 7 U.S.C. § 5(b).

[4] See Regulatory Flexibility Act (RFA) of 1980 (5 U.S.C. §§ 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996, Pub. L. No. 104-121, 110 Stat. 857 (codified at 5 U.S.C. § 601 et seq.).