Public Statements & Remarks

Opening Statement of Commissioner Caroline D. Pham Regarding Open Meeting on June 7, 2023

June 07, 2023

I’d like to extend my thanks to Chairman Behnam for holding today’s open meeting, and to say what a pleasure it has been over the last several months to be working together to achieve the ambitious agenda that was laid out in your testimony before the Senate Agriculture Committee.  I think it’s clear to everybody here that we have important work ahead of us and I’m really looking forward to getting the job done.

As you all know, I like to focus on the big picture and how it all fits together.  Following on Commissioner Johnson’s remarks, I’ll quote from Succession: “What are the angles here?  What’s the play?  Is that a move?”[1]  I keep these questions front-of-mind when I review the critical policy decisions that the Commission considers every day.

We bear a tremendous responsibility as regulators of the global financial markets.  Our role grants us the privilege to make a positive impact on the global economy, because our derivatives markets serve as the backbone of the global economy, facilitating price discovery, risk management, and diversification opportunities that drive economic growth and investment.  The impact of our actions today will extend far beyond our agency’s walls.  The decisions we make can influence market resilience, financial stability, and the overall health of the financial system.  We must exercise our regulatory authority with diligence and careful consideration, based on data and observations, and with a deep understanding of market fundamentals, market structure, market operations, and market participants, as well as externalities and emerging risks.

I am truly honored to serve with my fellow Commissioners under the leadership of Chairman Behnam and to work alongside the talented individuals at the CFTC who share a common mission of maintaining the integrity of our financial markets and combating fraud, manipulation, and other abusive acts and practices.  And I’d especially like to thank my team, particularly Meghan Tente and Brigitte Weyls, for their very hard work on these important rules.

From the start, I’ve always said that one of my first principles is having clear rules of the road.  I know firsthand that one of the best ways to promote compliance is to have clear rules.  And as a Commissioner, I believe in supporting growth, progress, and access to markets.  I have worked with the staff and Chairman Behnam and my fellow Commissioners on each of these rules to achieve these goals, and I am very gratified that my revisions have been incorporated into these rulemakings.

Final Rule on Governance Requirements for Derivatives Clearing Organizations (DCOs)

As I’ve said before[2], one of the proud traditions at the CFTC is that we Commissioners get to sponsor advisory committees comprised of members of the public to provide expert advice and input.  And like my fellow Commissioners, I want to recognize that this final rule has its roots in recommendations from the Central Counterparty (CCP) Risk and Governance Subcommittee of the Market Risk Advisory Committee (MRAC) under then-Commissioner Behnam’s leadership.

I would like to join in and commend the Chairman for his leadership of the MRAC at that time, and providing an example of how the industry can come together to propose workable solutions to issues in our markets through the CFTC’s advisory committees.  I hope that I can follow in this tradition with my work sponsoring the Global Markets Advisory Committee (GMAC).  And I’d like to tell you all to stay tuned on that.

Today, we are taking a forward-looking approach and adopting rules to strengthen our DCOs.  I believe that one reason why our markets are resilient even during times of market stress is because our principles-based regulatory framework ensures that strong guardrails are in place, while giving our registered entities like DCOs flexibility to implement our Core Principles in a way that best fits their business and operating model.

To put it another way, we are going to make sure that you build your house to code, but I’m not going to tell you what color to paint it.  It’s my hope that this final rule is consistent with that approach by not being overly prescriptive.

I do support the final rule on DCO governance requirements.  Thank you to the staff of the Division of Clearing and Risk for their work over many years to address market participants’ efforts to enhance CCP risk and governance and codify standards.  I’d like to thank Clark Hutchison, Eileen Donovan, Tad Polley, and Joe Opron.  I especially want to express my appreciation to the staff for working with me to address my concerns to provide regulatory clarity and not upend existing law or standards for corporations and corporate governance.

I appreciate that—as also pointed out by commenters—the staff has removed the word “independent” from the final rule text with respect to members of DCO risk management committees (RMCs) for purposes of Rule 39.24(b)(11), because this issue was already addressed by the rule’s requirements for conflicts of interest policies and risk-based input, and it is different from the concept of “independence” for outside board directors.

I also appreciate that the preamble to the final rule clarifies that DCOs have flexibility on how they structure the RMC, and the difference between a DCO structuring a RMC as an advisory committee to satisfy Rule 39.24(b)(11), and the risk management committee of a board of directors, especially for public companies and their subsidiaries and affiliates.

Proposed Rule for DCO Recovery and Orderly Wind-down Plans; Information for Resolution Planning

On the DCO recovery and wind-down proposal, having worked at a global systemically important bank (GSIB), I am very familiar with resolution planning and living will requirements.  Generally, it is important that the CFTC continues to periodically review our regulations to see that they remain fit-for-purpose and to update them as necessary to reflect developments in international standards as well as in our markets.

I am mindful that we implemented this rule in 2013 to satisfy the requirements of Title VIII, as well as the international Principles for Financial Market Infrastructures (PFMIs).  But we are not the only agency that has the responsibility to implement these requirements for financial market infrastructures that pose systemic risks to our financial system, and are therefore identified by the Financial Stability Oversight Council (FSOC) as “designated financial market utilities” (DFMUs).  We have authority alongside the other primary regulators of DFMUs, the Federal Reserve and the Securities and Exchange Commission (SEC), and each agency has issued rules for standards for DFMUs.

Because each agency is implementing the exact same requirements under Title VIII and the PFMIs, I believe that each agency should try to harmonize our rules and take a consistent approach to achieving the same outcomes.  Not only does that seem like common sense, but it will also significantly simplify and improve processes for firms that have entities that are registered with the CFTC, SEC, or both agencies, resulting in stronger and more effective oversight by regulators.

Given the incredibly detailed proposal we are voting on today, I am really looking forward to seeing commenters’ responses to the proposed amendments to Part 39.  I am particularly concerned about the breadth and the rationale for the ex ante production of information for resolution planning.  In all of my years of working with U.S. and non-U.S. regulators on regulatory filings and examinations, I don’t believe I’ve ever seen anything quite like this in terms of scale and ongoing submissions or updating what seems to be a standing legal document repository at the CFTC.

I’d especially like to thank Bob Wasserman and Eric Schmelzer for working with me to address some of my concerns and especially in working through some of the definitions regarding orderly wind-down and legal risk management, as well as risk assessment of non-defaulting clearing members.  Thank you very much for taking my comments into consideration and making revisions to this proposal.

Proposed Rule for Large Trader Reporting Requirements under Part 17

Regarding the large trader reporting proposed rule today, I’ll join in by saying I am again pleased to see that we are periodically updating our rules to reflect developments in the markets.  This is important because we have to recognize that our work is never done. Technology and markets change, and we must modernize our rules to reflect innovation.  I’d like to recognize and thank the following CFTC staff members: Owen Kopon and Paul Chaffin in the Division of Market Oversight, James Fay in the Division of Data, and Daniel Prager in the Office of Chief Economist, for their critical work on these important requirements and ensuring that both the markets and the CFTC have the transparency and information necessary for price discovery, risk management, and market surveillance and oversight.

Proposed Order and Request for Comment on Comparability Determination for EU Nonbank Swap Dealer Capital and Financial Reporting Requirements

Finally, on the EU nonbank swap dealer capital and financial reporting requirements comparability determination, I’d like to close by reminding you that the highly technical work of the CFTC staff creates the underpinnings of the global markets that enable governments, central banks and commercial banks, asset managers, and investors and companies to manage the risks inherent in international flows of capital that fuel economic growth and prosperity in both developed and developing economies.  I commend these Market Participants Division staff members for their dedication and work on this proposal: Amanda Olear, Tom Smith, Rafael Martinez, Liliya Bozhanova, Joo Hong, and Justin McPhee.

I especially thank the staff for addressing my comments on the prior capital and financial reporting comparability determination proposals, by providing more clarity on the conditions for notice requirements for certain defined events such as undercapitalization or breaches of capital levels.  This additional clarity will allow EU nonbank swap dealers to implement reasonably designed notification processes to comply with the proposed conditions.

I am pleased that the Commission is finishing what it started back in 2012 by taking these steps to complete comparability determinations necessary to providing a substituted compliance regime over the whole of the CFTC’s swaps regulation.  As I have stated before, global collaboration and coordination are critical to promoting regulatory cohesion and financial stability, and mitigating market fragmentation and systemic risk.[3]

I continue to believe that the CFTC should take an outcomes-based approach to substituted compliance that promotes efficient global markets and preserves access for U.S. persons to other markets.  When used appropriately, substituted compliance can take a balanced approach to achieving these key objectives: (1) facilitating market access to foreign market participants seeking to conduct business on a cross-border basis; (2) maintaining appropriate levels of market participant protection; and (3) managing systemic risks.[4]  I commend the staff for striking the appropriate balance in this proposed order and request for comment on a comparability determination for EU nonbank swap dealer capital and financial reporting requirements.


I am pleased that each of the rulemakings we will consider today reflects my goals of promoting growth, progress, and access to markets.  I look forward to continuing to work with Chairman Behnam, my fellow Commissioners, and the staff to accomplish our ambitious agenda and fulfill the CFTC’s mission in service to the American people.

[2] Commissioner Pham “Opening Statement of Commissioner Caroline D. Pham before the Global Markets Advisory Committee” (Feb. 13, 2023), available at

[3] Id.

[4] These considerations for regulatory authorities were recognized by IOSCO in its 2015 Report on Cross-Border RegulationSee IOSCO Report, “IOSCO Task Force on Cross-Border Regulation Final Report” (Sept. 2015),