Chair Pham Urges Greater Cooperation with CFTC as Markets Develop
Acting CFTC Chair Caroline D. Pham urged market participants to engage with CFTC staff early and often as the markets move toward 24/7 trading, perpetual futures and non-intermediated clearing.
In an address before the Piper Sandler Global Exchange and Trading Conference, Ms. Pham described recent efforts to promote a "regulatory agenda that was submitted pursuant to the President's executive orders." Ms. Pham highlighted:
Self-certification. Ms. Pham said, while the CFTC's self-certification framework for the listing of products under CFTC Rules Part 40 provides registered markets with broad autonomy, the system depends on good faith engagement.
Agency cooperation. Ms. Pham called on exchanges and clearinghouses to maintain a "no surprises environment" and fully comply with CFTC staff during reviews. She also backed staff's use of available tools—including extending review periods and issuing notices of non-approval for filings that are incomplete, inadequately explained, or inconsistent with the Commodity Exchange Act or CFTC rules.
24/7 trading. Ms. Pham said the CFTC is actively evaluating recent public comments on 24/7 trading, which launched last month on Coinbase Derivatives and Nodal Clear for crypto products. While CFTC regulations do not prohibit around-the-clock trading, Ms. Pham flagged risks related to collateral exchange during weekends, market liquidity during low volume periods and operational challenges for platforms, clearinghouses and FCMs. She noted that early data shows strong initial participation in 24/7 crypto derivatives trading, but she warned that expanding the model to traditional commodities would require much deeper analysis.
Perpetual derivatives. Ms. Pham weighed-in on DCM self-certifications this year. She said staff is evaluating concerns about basic risk and whether such products are suitable for hedging physical commodities. She said that some "see perpetuals as inconsistent with the risk management and price discovery function of futures markets," though she acknowledged they may be a good fit for crypto markets.
Direct access retail clearing and non-intermediated models. Ms. Pham questioned whether such models can safely support leveraged trading without intermediated risk management. She noted that "CCP risk management [may need to shift to] real-time posting of collateral—a 'pay in cash, not in credit' model." She flagged the dangers of auto-liquidations in illiquid markets and the potential need for last-resort measures like variation margin gains haircutting and tear-ups—tools that have not been used in decades.
Ms. Pham also urged firms pursuing novel market structures to engage with CFTC staff.