Public Statements & Remarks

Statement of Commissioner Christy Goldsmith Romero Regarding the Proposal for Enhanced Monitoring and Identification of Systemic Risk and Emerging Threats to the U.S. Financial System

August 10, 2022

As a U.S. financial markets regulator and a member of the Financial Stability Oversight Council (FSOC), the Commission has a critical responsibility to monitor, identify, and respond to systemic risks and emerging threats to U.S. financial stability.  I support the proposed amendments to Form PF because they will enhance one of the Commission’s tools to fulfill that critical responsibility and facilitate our regulatory oversight of private funds.[1]

One lesson from the financial crisis was the risk of contagion to U.S. financial markets from private-fund activities, strategies, and exposures, including those related to novel or complex derivatives.  This was evident with the failure of Bear Stearns’ structured credit funds in the lead-up to the financial crisis, and more recently, with the failure of Archegos Capital Management.  These examples, and others, highlight the necessity for U.S. financial regulators to have visibility into funds’ activities and exposures to fulfill their regulatory responsibilities and ultimately, to prevent or mitigate the buildup of systemic risk in the U.S. financial system.

This proposal marks important coordination with the Securities and Exchange Commission (SEC) to enhance joint reporting requirements and guard against hidden risks in the U.S. financial system.

The CFTC and SEC embark on this proposed rulemaking after nearly a decade of experience of private fund reporting.[2]   It is particularly appropriate to revisit our reporting framework given that, as U.S. financial markets have evolved over the past decade, the private fund space has grown and evolved in tandem.  This is why we seek public comment on new or revised areas of dataincluding those intended to provide further insight into complex structures, new types of instruments, identification data, redemption and withdrawal rights, ownership, and counterparty exposures, among other subjects.  It is also important that we collect information on fund exposure to digital assets in order to understand evolving market risk.

Our objective is to increase the usefulness of the data collected; to ensure that it is actually used as Congress intended to bring transparency to risk previously hidden.  I look forward to reviewing public comment on whether the proposal would meet our objective.

Thank you to Commission staff for working with my office to improve the proposal to facilitate effective oversight by the CFTC.  I commend staff from both agencies on this proposal, and on future information sharing, that will promote the financial stability of U.S. financial markets.


[1] The data collected also supports the CFTC’s supervision, examinations, enforcement investigations, and customer protections.

[2] The Dodd-Frank Wall Street Reform and Consumer Protection Act, section 112, Pub. L. No. 111-203, 124 Stat. 1376 (2010) (the Dodd-Frank Act), required the SEC and CFTC to establish joint rules in furtherance of the FSOC’s critical mission to monitor systemic risk through the creation of Form PF.  See Section 406 of the Dodd-Frank Act.  Since 2012, private fund advisers, including certain commodity pool operators and commodity trading advisors that are dually-registered with both the CFTC and SEC, have been required to file reports regarding their operations and holdings through Form PF.  See also Reporting by Investment Advisers to Private Funds and Certain Commodity Pool Operators and Commodity Trading Advisors on Form PF, 76 Fed. Reg. 71128 (Nov. 16, 2011).