Entity Detection Person_name Kevin Batte, Howard, Pham, Jeffrey Alata, Jeff, Jeff, Jeff, Deanna Dow, tribute Bland, Jay Burns, Michael Brooks, Kevin, Pham, Pham, Pham, Penn, Howard, Kevin, Jeff, Pham, Walt Lucan, Jill Summers, Don Stump, Mersinger, Dodd Frank, Pham, Pham, Heath Tarbert, Dodd Frank, Benham, Mark Tucker, Pham Occupation general counsel, agriculture, commodity professionals, commissioner, agriculture, MD for, FIA hall of Famer, head of all futures business, compliance director, enforcement trial lawyer, trial lawyer, counsel, board member, regulators, Commissioner, Commissioner, commissioner, Commissioner, Commissioner, commissionership, commissioner, commissioner, commissionership, commissionership, Commissioner, global business heads, C suite president, CEO's global function heads, commissioner, chairman, commissioner, deputy head of global regulatory affairs, decision makers, regulators, regulators, policymakers, dealers, asset managers, policy makers, public servant, commissioner, commissioners, commissioner, Commissioner, shareholders, insurers, Commissioner, farmers, regulators, Commissioner, Chairman, dealers, Chairman, chairman, commissioner Organization Commodity Markets Council, Delta Strategy Group, Commodity Markets Council, CMC, CMC, Intercontinental Exchange, CME, CBOT, NYMex, MGEx, Abex, ADM, Bunge, Cargill, CHS, Louie Dreyfus, Schuhler, Smithfield, BP, Exxon, Chevron, Mercuria, VTOl, Mizuho, RJ O'Brien, Merex, Abnamro, CMC, commodity Futures Trading Commission, Congress, CFTC, CMC, Mizuho, CMC, Ice, Coffco, CFTC, CFTC, CFTC, SEC, FERC, CMC, Bracewell, CMC, Dodd Frank, CMC, commission, CFTC, commission, advisory committee, advisory committee, advisory committees, Global Markets Advisory committee, advisory committees, CFTC GMAC, GMAC, GMAC, CDC, advisory committees, CFTC, global markets Advisory committee, Global Markets advisory committee, Global Markets Advisory Committee, GMAC, GMAC, advisory committee, GMAC, GMAT, GMAC, GMAC, GMAC, GMAC, Citi, GMAC, GMAC, GMAC, GMAC, GMAC, GMAC, GMAC, GMAC, GMAC, GMAC, FSB, IoSco, GMAC, GMAC, GMAC, CSD, GMAC, GMAX, GMAC, commission, GMAC. The, GMAC, us treasury, BCB, Iasco, CME, GMAC, commodity markets council members, CFTC, CFC, commission, SEC, board of directors, Mizuho, CFTC, GMAC, GMAC, EMAC, CFTC, FIA, GMAC, FCM, Fed, Fed, Fed, CMC, Fed, commission, North American Millers association, CFTC, CFTC, Fed, Fed, Fed, CFTC, CME, FIA, ice, GMAC, iosco, Iosco, GMAC, BCBS Iosco, GMAC, CCP, HSBC Event commodity Trading Week, commodity Trading Week, commodity trading week, Commodity Markets Council state of the industry conference, commodity Trading Week America, commodity Trading week, Agcon, GMAC, invasion of Ukraine, Russia Ukraine invasion, Covid-19 pandemic, Dodd Frank, Dodd Frank, pandemic, GMAC meeting, HSBC Global Investment summit Location DC, Fort Lauderdale, Florida, us, the United States of America, New York City, Basel, Kansas City, Kansas City, Kansas City, Washington, Washington, the us, Russia, the EU, Hong Kong Date_interval 1936, January, February of 2025, 2012, April of 2022, 1998, 2023, 2025, 2015, nineties, third quarter of, 2022 Duration 88 years, 88 years, a year, one day, a couple months Nationality Americans, Americans Date February 2 through fourth Money_amount $2 billion, 6 billion, japanese yen, us dollars, 700 trillion, 2 billion, 6 billion, $12 billion, $7 billion, $350 _________________________________________________________________________________ SPEAKER A Hi everybody, I'm Kevin Batte. I'm the general counsel of the Commodity Markets Council and we're proud to be a partner of commodity Trading Week. I also serve as a partner at Delta Strategy Group which is a DC based regulatory affairs government affairs firm. I'd like to welcome you to the derivatives and hedging track of the conference. Really thrilled to be here and partnering with commodity Trading Week and we hope this is the beginning of a great long term partnership and I wanted to thank Howard and the team here for including us as a partner. The Commodity Markets Council is the leading trade association for the commodity for commodity futures exchanges and their industry counterparts. CMC provides access and a forum and the action for exchanges and exchange users to lead our industry in addressing global market risk and risk management issues. Founded in 1936, that's 88 years ago, we advocate for open competitive marketplaces by combining the expertise, knowledge and resource of our members to develop and support market based policy. CMC addresses industry issues focused on agriculture, energy, finance, infrastructure and transportation. Our members include leading futures industry exchanges such as Intercontinental Exchange, CME, CBOT, NYMex, MGEx, Abex and others. Merchants and end users like ADM, Bunge, Cargill, CHS, Louie Dreyfus, Schuhler, Smithfield and many others, as well as energy companies like BP, Exxon, Chevron, Mercuria, VTOl, on and on. And of course the FCMs that service this client base such as Mizuho, RJ O'Brien, Merex, Abnamro and many more. If you're one of these types of companies and you're not a member of CMC, you should consider joining us. Together we form a powerful voice that serves to educate and when appropriate, lobby the commodity Futures Trading Commission and Congress on issues of importance to commercial end users and the people that rely. Sorry, the people that help put food on the table and energy into homes. Why do we do this? Because at the end of the day, if these markets don't work for our members and allow them to manage and hedge the risk of producing and moving commodities around the world, that risk gets passed down to everyday Americans in the form of higher grocery prices, higher electricity prices and higher fuel prices. So, in short, we advocate to make sure these markets work for all Americans. We're delighted to partner with commodity trading week to bring you some tremendous derivatives market structure content. If you ever want to kill the conversation at a cocktail party, start talking about derivatives market structure. Mere mortals will fall asleep. But we are true commodity professionals here and we all live for this stuff. And I can tell you that we have a phenomenal lineup of speakers for you this afternoon. First up will be a fireside chat with a dear friend, CFTC commissioner Pham. She's been an advocate for smart and efficient regulation that works for industry. She's made it her mission to fight back against regulatory excess, and she's been an advocate for the agriculture and energy commodity industry. She brings both private and public sector experience to the table, and she's not afraid to call them like she sees them. She will have a fireside chat with Jeffrey Alata, who is an active CMC member and the MD for futures and options at Mizuho. Jeff has been an invaluable resource to the CMC over the years as we've advocated for capital rules that work. It's a terribly important and complex subject that we will hear more about today, but know that Jeff is the expert in the room. Next up will be the derivatives market structure panel, moderated by Jeff and featuring some of the best and brightest in industry, industry veteran and FIA hall of Famer Deanna Dow, longtime personal friend and futures industry titan tribute Bland, who serves as the head of all futures business globally for Ice and Jay Burns, compliance director at Coffco. Finally, we will have a CFTC enforcement panel. This is one that is near and dear to my heart as a former and longtime CFTC enforcement trial lawyer. Reformed trial lawyer as much as I hate to say it, we hear many tales of enforcement overreach by the CFTC, the SEC, FERC, on and on. Today you'll hear from some of the experts, both in house and outside counsel, and you'll learn about what folks are seeing on the front lines of enforcement. This panel will be moderated by CMC board member and Bracewell partner Michael Brooks. We hope you enjoy this content and we invite you to attend our Commodity Markets Council state of the industry conference February 2 through fourth in Fort Lauderdale, Florida in January or, sorry, in February of 2025. If you've got any questions about CMC, please feel free to reach out to me. We'd be happy to speak with you. Thank you. SPEAKER B Before we start, thank you Kevin, for the kind introduction. Perhaps short of an expert, but certainly play one on tv so I'll be waiting for my Emmy at some point in the near future, I think. A further note on the relevance of CMC. While I have not been personally involved for 88 years, we certainly found value through Dodd Frank implementation, and CMC was a welcome place for us as a primarily a clearer of commodity end user business in an industry that was just figuring out what the Basel III framework would mean for clearers around the globe. To put a finer point on that, when we first got some of the exposures out of Basel three, we were a much smaller firm. In 2012, we had maybe $2 billion in customer funds. The number for our risk weighted assets in Basel III that we were presented from our home office was 6 billion. We assumed it was japanese yen, but unfortunately it was in us dollars. So clearly something was wrong. And the flying the CMC banner around the globe with regulators proved very helpful and fruitful and continues to be a flag to wave. So without further ado, would like to introduce Commissioner Pham. Commissioner Pham was sworn in as commissioner in April of 2022, bringing to the commission a depth of experience from both the private and public sector across all major asset classes. It's a pleasure to have her here at our conference, and please join me in welcoming Commissioner Pham to commodity Trading Week America. Commissioner Penn, why don't we kick off with talking about your priorities and agenda for your commissionership kind of midstream, but the agenda, I'm sure, is ongoing. SPEAKER C Well, thank you all so much for having me here today. It's a real pleasure. I want to thank Howard for the invitation, Kevin, for the extremely kind introduction, as well as all of the support over the years. And thanks, Jeff, also for that introduction. I have to give my brief disclaimer, which is that the views I share today are just those of my own in my official capacity as commissioner, and do not necessarily represent that of the CFTC or of any other commissioner. So looking at my commissionership, one of the things that I thought about when I was invited to speak here is that this isn't just commodities people, this is my people. And so that's why I'm really happy to be here and to be talking to all of you, you know, many former colleagues or people that I've engaged with in the industry over the years for my commissionership. When I came in, I really thought about, what do I stand for and what am I trying to accomplish here? Because I left a very nice job to go into public service. And I thought to myself, you know, first of all, there's just first principles, clear rules of the road. I had an implementation job, one of my many jobs. And, you know, when it came to how the rubber hits the road from an implementation perspective, particularly when you're looking at changing systems or processes, there's no gray area. The logic, it has to be a yes or a no, right? And so that was something where I really try to look at every rule that we do. And if I can't figure out how to implement a rule that we're proposing, particularly when I was in charge of enterprise wide global implementation for markets from the compliance side, then there's probably something wrong with our rule. It's not workable. That has been, I think, taking just that pragmatic and practical lens to understanding the operational issues and challenges with our regulatory framework is, I think, a unique skill set that I bring to the commission that maybe we haven't had in a long time. So I really appreciate that. The values that I stand for are really growth, progress and access to markets. It's growth in both new products and markets as well as the traditional ones. Deep and liquid markets are the most efficient and the best for price discovery and risk management. No brainer progress, because there's not just new regulatory frameworks or questions that we have to work through when we think about innovation. But also there are still what I like to call the Dodd Frank hangover of issues that have come through, particularly on the cross border side, since Dodd Frank was implemented. And it's important that we make progress on these longstanding issues as well. And then finally access to markets. This is very important to me. We're going to get into it when we talk about my small sponsorship of my advisory committee. But again, the dirtier's market is a global market because the commodity market is a global market, and financial markets are certainly global as well. And so I think it's very important that as we go through sort of a pendulum swing with globalization and de globalization, regionalism, that kind of thing, that we focus on access to markets. SPEAKER B Great. Thanks. As you mentioned, the advisory committee, so many of you will be aware, maybe probably all of you will be aware, that the agency has a number of advisory committees that are forums for public input. Commissioner Pham, one of your responsibilities includes the sponsorship of the Global Markets Advisory committee, one of the five advisory committees of the CFTC GMAC just met yesterday. Very timely to have you here. Maybe you can, before we kind of go into yesterday's meeting, maybe you can talk about assuming the sponsorship of GMAC and how you went about reconstituting it under your leadership. SPEAKER C Well, thank you. GMAC is something I'm very proud of because it's something that really the members have created and are driving, and I'm really quite honored to have such a group of industry experts and leaders, global business heads, C suite president, CEO's global function heads willing to serve and take time out of their incredibly busy day jobs to contribute to making sure that our markets are resilient and have integrity. So the CDC has had a long tradition of having these advisory committees that each commissioner sponsors. And it's an opportunity for us to be able to advance our own policy agendas besides the overall agenda of the CFTC, which the chairman sets. And I was very happy to see that I was getting the global markets Advisory committee. As the most junior, most recently sworn in commissioner, I get last pick. And I was very lucky that I got the Global Markets advisory committee. And it's also following in the footsteps of luminaries like Walt Lucan and Jill Summers and Don Stump, all of whom also sponsored the Global Markets Advisory Committee. Previously, when I went to relaunch it, I thought to myself, what is something that the GMAC is uniquely poised to address? And when I went back and looked at the history of the GMAC, it was first created in 1998 to address issues related to globalization and access to markets. And I'm thinking, well, these things are just as relevant, incredibly relevant today as they were back then. And also, we don't have an advisory committee that's really focused on business. So being competitive, particularly us competitiveness, global firms, but that's incredibly important for the United States of America. It's incredibly important from a national security perspective. It's incredible importance to us as an economic power and as a reserve currency. And so I think we should embrace that and make sure that we're good stewards of that position. When I looked at the GMAC, I thought we need something that's going to be about business. It's going to be focused on the business strategy and the commercial operations of firms, making sure that they can effectively operate in a safe way across jurisdictions and with access to markets. And so I relaunched the GMAT to really be about having a level playing field for global businesses and global markets. So that's what's been really guiding me in the creation of the GMAC. SPEAKER B Was there anything particular in your approach to looking at the membership specifically of GMAC, or was it really just broad representation and keeping true to those principles? SPEAKER C So I definitely put together a strategic plan when I thought about how I wanted to launch the GMAC and what I wanted the GMAC to try to accomplish under my sponsorship. So to me it was very important, particularly given my experience in the regulatory space as deputy head of global regulatory affairs of Citi, being in a function and then eventually moving into the front office on business development and working on new products and new opportunities. We needed to have decision makers who actually could represent the firm on the GMAC. And so that's why I wanted to really go top of house, because these are global firms, and I want them to be able to deliver the firm to the GMAC, because these things don't just impact one business line, it impacts the whole thing. So I made sure to have members of the GMAC who are at the top of the house or who have the mandate to represent the firm on the GMAC, then I wanted to make sure that it was well balanced to really include all aspects of the markets. So we have the sell side, the buy side. We've got clearing firms, we have financial market infrastructures, we have service providers, regulators. It's the entire marketplace. Because in order for the GMAC to be able to tackle the most significant challenges in global markets today, we have to have consensus. And I know this from working in all the different trade associations and things like that. And so you have to bring everybody to the table and you have to hash it out. SPEAKER B Yeah, and I think the Constitution of the committee has certainly borne that out. And I think that the discussions have really been, you know, quite compelling and, you know, certainly considerate of all of the various aspects of a particular issue. So, speaking of which, maybe turning to yesterday, you had organized the GMAC into a number of subcommittees, and those subcommittees read out a couple of reports. Maybe you talk a little bit about those, maybe the tasking of the subcommittees with those various work products and some of the news that we'd heard yesterday from them. SPEAKER C Yeah, I'd be happy to talk about that. It was also important to me, in doing the constituency of the GMAT, to make sure that I had liquidity providers, principal trading firms, end users, and. And so everybody's represented. The GMAC has formed three subcommittees. So global market structure, technical issues, which is really kind of infrastructure, pipes and plumbing, post trade, things like that, and then digital asset markets. So it's been great to see the work that they've put together in order to launch and promote the GMAC, especially because given the focus on globalization and cross border transactions and access to markets, it's important that the GMAC is able to inform and assess international standards. I really wanted the GMAC to be a little bit more of a real time feedback loop. Things that FSB is looking at, IoSco is looking at, because oftentimes in these international consultations, by the time it's open for public consultation, they've kind of already made up their mind. It's a little bit too late at that point in time. And so I wanted something that was going to be able to provide more of a real time feedback loop with actual data, data and observations from the markets. And so that's a key aspect of it. The work that the committees have been doing has really first kicked off with a global stock take. So I did a GMAC roadshow. Basically I went around the world and reintroduced myself to all these different regulators and authorities that I knew from my previous roles and talked about the GMAC and was trying to accomplish. Very well received. And then we did a global stock taking exercise. So that was participated in by both the GMAC members as well as. And I have to read out this list because it was a really tremendous effort, but it was policymakers, dealers, asset managers, liquidity providers, exchanges, trading facilities, clearing houses, technology service providers and end users. I probably had 100 conversations with policy makers around the world and 100 more with the firms that are market participants in CSD markets. So I was really proud of this global stock take exercise that we completed. Each GMAC member spoke and presented their views on the most significant challenges and out of that we created the GMAX work program for the 2023 to 2025 that really touches upon such a broad swath of issues. And so I think maybe what's easier to do is just tell you about the 13 recommendations in less than a year that the GMAC has already agreed upon, studied, presented and has been sent to the commission and other regulators and international standard setters for consideration. So the GMAC. The recommendations that the GMAC has done to date have covered a variety of issues, including us treasury market liquidity, well functioning repo and funding markets, exchange volatility controls, t plus one security security settlement, improved collateral management, CCP default simulation, streamlining trade reporting data to monitor systemic risk and a foundational digital asset taxonomy to facilitate alignment and regulation across jurisdictions. And just at yesterday's meeting, we advanced a recommendation on the Basel III capital proposal, the Basel three endgame capital proposal and the impacts that that would have, particularly on end users enter those markets. And then another recommendation to support the BCBs Iasco recommendations on streamlining variation margin processes. Then we had some presentations on the impact of the trading mandate on global market structure and liquidity on swap execution facilities. And then also a great presentation from CME on global commodity markets, market characteristics, fundamentals, trends and things like that. SPEAKER B That's great. All in a day's work. You spent a lot of time on the road, took the train down up here from New York City, from GMAC to commodity Trading week. You've been very generous with your time with commodity markets council members, both in the collective as well as individually. You've really, a common thread of your remarks so far has really been engagement with the, with market participants. But I thought maybe you would just maybe put a finer point on your general thoughts on that engagement and how it helps you in your decision making process. SPEAKER C So when I think about what is my job as a public servant and as a commissioner of the CFTC, I think I basically have two key functions. One is to meet with the public. And so by going out there and engage with people, being accessible so that government is not a black box, we live in a participatory democracy. People should be able to access their government and talk to their government and understand why we are coming up with rules that impact their livelihoods, their businesses, their day to day. And then the second part is to make good decisions. When I vote on all the actions that the CFC does. So the commission, as you may all know, is organized like the SEC, so we effectively function as like a board of directors over the agency. And so no action can be taken by the agency, no official action without a vote from all of the commissioners. So meeting with people, talking with people, staying up on the issues, understanding what's going on, what people are dealing with, what are the biggest opportunities, the biggest challenges, all of that helps me make good decisions when I'm regulating a 700 trillion notional jurisdictional market. SPEAKER B That's great. So as I mentioned at Mizuho, majority of our client constituency is comprised of commodity end users. So we have, I think, relative to other fcms, a unique perspective on the particular challenges of Basel. Three on that client set kind of gave that disparity between the 2 billion to 6 billion that was at the current exposure method. There's since been a, an improvement to those numbers moving from SEM to Sacer. But staying with the subcommittee report on Basel III, does the report raise any concerns for you about the availability of capacity for clearing and owing to your travels? We were also together in Kansas City at the CFTC's Agcon. We had a specific panel that kind of touched on FCM capacity. But it's been one of these issues that's been long discussed, you know, probably going way back before both of our experiences. But, you know, I think that the report gives some quantitative measures as to some of the challenges. So maybe you can touch on that. SPEAKER C Absolutely. And as a commissioner, I come to you. So I was very happy to go to Kansas City and to meet with not only members of our staff there in Kansas City, but market participants as well from the agricultural and other sectors. So what I think was really important about the work that the GMAC has done on Basel three endgame, and especially with the report, which is very comprehensive and was published yesterday, and is actually just the latest in a series of panels and things that the GMAC, but also Commissioner Mersinger's EMAC has also held, looking at the impact on energy. For example, it is a comprehensive summary of about two dozen comment letters received from end users on the impact of the Basel three endgame proposal on them, on their businesses, on their access to clearing, on their ability to manage their risks efficiently. And one of the things that meant a lot to me about coming to the CFTC and why I make it such a priority to go and engage with people is because in the commodity markets, in the commodity derivatives markets, it's really, we're at the intersection of the real world, the real economy and the financial markets. And the real economy is the real world with real people. And sometimes when you're sitting in Washington, it can become very abstract. Things are like academic or theoretical, but that's not the case when we're talking about what it means when costs get passed down and costs do get passed down. I don't think that you can sit in Washington and think that there's not some kind of impact of all of this regulation coming together and the overhead on all of this. As I like to tell people, businesses are not a charity, banks are not a charity. And if it is more expensive with these capital charges and RWA and so on to do clearing than the clearing business actually brings in, they're not going to engage in it. Banks have a fiduciary duty to their shareholders and to the safety and soundness of the bank. And if it doesn't make economic sense, then it doesn't make economic sense. So I think there's a real concern around what this will do for clearing capacity and also the ability of banks to keep their fcms as a going concern. Because we already have, I think, something like the top six fcms have maybe almost 90% of customer assets. It's very concentrated already. And that really accelerated after Dodd Frank. And in the report yesterday, which FIA presented at the GMAC, it showed, for example, that there would be a net increase of almost $12 billion as a result to banks as a result of the Basel III endgame proposal. There was another statistic which showed for one particular requirement, it would have increased by 80% increase. These are big numbers and I think people really need to appreciate that. So if you want kind of a cheat sheet, which is sort of, I think the point a cheat sheet of really, what does this mean across the board from not only producers and merchants, but also insurers and pension funds? Take a look at the GMAC report. SPEAKER B Yeah, I think one of the greatest sections of that report, and maybe most relevant for many of the firms that you all represent in this room is the disparity proposed for non publicly listed entities. There's not many that are traded on a public stock exchange. But to create a disparity between those types of entities and the potential for a bank then being compelled to Commissioner Pham's point about if we're instructed to take an exposure, exposure that's enumerated in the reg, we have to price to it, because if we can't cover the capital, then we don't keep the capital. So I think that report, that section in particular I think was quite telling. I think the tie on to that, of course, is that those entities potentially get shut out of clearing, certainly at a bank. But if you look at the FCM community, there's not many non banks that are in there. And then you, as in that client constituency, don't have the access to some of the bank credits then. SPEAKER C Yeah, and I've spoken to, for example, some members of the Fed staff and again, this point about this impacting end users. The Fed shared this story where they said, you know, all of a sudden we have farmers showing up at the Fed to come and talk to us about this. And I think it just, again drives home the point about this impacting end users. SPEAKER B Yeah, hopefully they didn't bring their pitchforks and torches, but similarly, that was one of the, really the highlights. I would say to the extent there can be highlights associated with Basel III, but of the advocacy that we were part of in 2015 was under the CMC banner at the us agencies, which is one of the participants assembled. But all these end users going around the table talking about the changes that they were seeing with respect to their cost of clearing, and these are regulators that are very used to hearing banks complain about models, banks complaining about the results of exposure measures and things like this, but to hear it directly from commodity end users was quite meaningful to Commissioner Pham's point. So encourage all of your firms to participate in that regard because it truly is meaningful in a way that you may not realize. SPEAKER C Yeah. And I appreciate you kind of going back in time for the history of this, because the whole point in derivatives was to encourage central clearing. In the nineties. The Fed came and said, hey, you need to put together some clearinghouses and do central clearing to mitigate counterparty credit risk. So. And Dodd Frank, a huge piece of Title VII of Dodd Frank and indeed the global duration regulatory reforms was to encourage central clearing. Well, now we have a policy that's coming along and it is discouraging central clearing. That just doesn't make sense. SPEAKER B Yeah. So maybe take a turning a bit, trying to be mindful of time. Although there's no shot clockwise. SPEAKER C There'S no end discussion of endgame. SPEAKER B Okay, cool. So we'll turn to maybe markets and risks. You joined the commission amidst a particularly volatile period in the commodity markets with Russia's invasion of Ukraine. I thought maybe you would just reflect maybe on that period just in some observations from the risk perspective. SPEAKER C Well, one of the things when I spoke to, to the North American Millers association was actually on the CFTC's response to the volatility and dislocation in wheat markets as a result of the Russia Ukraine invasion. And so I was really proud to say that under Chairman Heath Tarbert's leadership, the CFTC staff really worked with the exchanges and worked with market participants to do what they needed to do to address again that market volatility and stress. So that was a high point. I lived through the Covid-19 pandemic at a big bank. And so seeing it from that perspective, and again, just since Dodd Frank and things like that, overall, I think since Dodd Frank, you've seen that markets have become more fragile, markets have become more volatile, the amount of liquidity is shallower. We're seeing more and more frequent market volatility, market stress, market dislocation. And I think a huge part of that is because instead of having the dealers being there with deep balance sheets who are able to come in and intermediate and smooth out some of this market action, we have not that. So it seems that we've traded credit risk for liquidity or market risk. And that is something that I think we need to think much more deeply about, because the goal of Dodd Frank was to not bail out banks. But now, as we've seen from the pandemic, what we had was the Fed coming in as not the lender of last resort, but the market maker of last resort, standing up 13 Fed facilities to ensure that markets were well functioning and that the liquidity was available. So now we have the Fed bailing out the entire global market. I think we need to think about the trade offs that come with these policy decisions and what that might mean for CFTC derivatives markets with all this increased market volatility. And volatility in and of itself is not a bad thing. Right. It's driven by fundamentals and things like that. I'm pleased to see that the exchanges, their volatility, controls what they had in place, for the most part worked well. And as intended, we had a presentation on that yesterday by CME at the GMAC meeting. And FIA, as I mentioned, had led an initiative to do a report on best practices for exchange volatility control. So I think of the lessons learned. I think this will help us as we inevitably move into another. Something will happen, particularly in this geopolitical climate, that's going to introduce more shocks to the market. SPEAKER B Yeah. I think that from our perspective, the overwhelming message is the system worked. And that doesn't necessarily mean, means that we got great sleep those nights. But large margin calls, I think ice, in their quantitative disclosures for the third quarter of that year, had a record $7 billion in variation margin calls. So a lot of margin exchanged in that period. Obviously, you touched on dash for cash, so there's been periods before, there'll be periods in the future, but I think largely the system held. SPEAKER C Yeah. And I think that's why the GMAC is also focused on understanding are there ways to not only improve and make collateral management more efficient, but also, you know, should we be expanding eligible collateral to help again for things like dash for cash or proceed mortality? SPEAKER B Yeah. And I know we said we'd move on from basel iii, but I think the one thing that I would bring back into this discussion in that context is the emergence of notional based limits in terms of how clearing members are managing clients. So the relevance there being in the natural gas market in particular, where that contract peaked at $350 in the EU on Ice's platform, that means a larger notional number. Capital is not finite. So I think that that created a pro cyclical situation in and of itself, of imposing these limits which weren't tethered to the economic realities of the market. So, you know, certainly a colleague of mine always says the biggest room in the house is the room for improvement. So I think hopefully that's the overwhelming message here as well. But maybe staying with the topic then, of margin, you participated in a number of these iosco discussions, and Iosco had two particular consultations around margin. I think you'd mentioned that GMAC had some recommendations for them, but maybe I thought you would touch on your just the topic of initial margin adequacy and variation margin practices. SPEAKER C Yes, margin a hot topic. I actually participated in pulling together the data to submit for the BCBS Iosco margin study, which was a painful process. And look, I think that the world has come together to try to take a really thoughtful approach to margin, and again, to understanding the increasing demands for capital, for margin, for collateral and so on. I thought that GMAC recommendation yesterday was very helpful. How to streamline variation margin processes, for example. Right. And thinking about ways to introduce some of those efficiencies and things like that, I do think transparency is important, governance is important, and so I'm pleased that there have been initiatives to work on both of those areas. SPEAKER B Antiprocyclicality from the clearing member, putting my risk hat on margin can never be too high. Margins are set at the exchange at a one day margin period of risk. Of course, from the clearing member perspective, we think of it a much longer period of risk to potentially have to liquidate contract. But then from my sales side, you know that when you limit, when you set the margin requirement to the moon, nobody trades. So you know that trade off between liquidity and risk coverage just has to be factored into those discussions. And you've been very helpful in pushing forward these very necessary discussions. SPEAKER C Yeah. And, you know, because this has been a very longstanding conversation, actually an issue that I used to advocate on. You know, Chairman Benham did finalize a rule on CCP governance. I hope that it struck the right balance there. And, you know, we'll see how that turns out. But hopefully that addressed some of the concerns also around, you know, margin models and so on. SPEAKER B Great. And maybe we'll wrap up with the crystal ball question and, you know, we've come down from that commodity market volatility from 2022. Not to say that there's no volatility. Volatility there certainly is in many of the commodity markets, but with a number of geopolitical conflicts ongoing around the globe, as you remain engaged with market participants, are the common themes from your outreach that you might share with the audience. SPEAKER C One of the things that really stuck with me when I was speaking in Hong Kong a couple months ago at the HSBC Global Investment summit was the chairman of HSBC, Mark Tucker, was talking about how deglobalization has really led the headlines for some period of time. But, you know, we may be coming into a period where we're having re globalization, but it's reglobalization along new regional networks and new investment corridors. One of the things that was important to me to go to all the different markets hubs around the world was to get a good understanding of capital flow, of volumes. Where is the liquidity? What are the structural things that are impacting liquidity? How do we mitigate market fragmentation and so on. And so I do think it's going to be very important to keep an eye on what are the new regional networks, what are the new investment corridors. There's opportunities. There's also risks. SPEAKER B Great. Well, thank you for your very generous time in being with us today. Please join me in thanking commissioner Pham. SPEAKER C Thank you so much. Thanks.