FIA Highlights Role of Derivatives in Sustainability Efforts

In a policy paper, FIA emphasized the role of derivatives markets in addressing climate change.

FIA highlighted three areas for possible partnerships between the industry and policymakers:

• Innovation. FIA expressed its support for market-driven experimentation, citing the success of the cap-and-trade system in the United States in reducing acid rain.

• Standardization. FIA stated that lawmakers can promote the industry-led process of derivatives exchanges developing sustainability standards, such as the sourcing criteria established by the London Metal Exchange.

• Harmonization. FIA, using the example of the European Green Deal, encouraged consistency among lawmakers in establishing new regulations and market-driven standards in the midst of a "fragmented global regulatory environment."

Additionally, FIA encouraged regulators, when developing standards for the derivatives industry, to consider physical, transitional, liability, reputational and operational risks.