May 2022 | Volume 42 | Issue 5 Futures and Derivatives Law Report ing climate change a regulatory priority . He believes that the CFTC should play a role in “ answering the President ’ s global call to tackle climate change by reinforcing the role of derivatives in confronting climate-related risks and supporting innovation that addresses these risks and supports capital allocation .” 25 As Commissioner , Behnam sponsored the Commission ’ s Market Risk Advisory Committee (“ MRAC ”), which focuses on issues such as interest rate benchmark reform , central counterparty risk and governance , market structure , and climate-related market risk . 26 Under his leadership , the MRAC established the Climate-Related Market Risk Subcommittee , whose members represent financial , agricultural and energy markets , academia , data and intelligence providers , and the policy sector . 27 The Subcommittee notably produced a report entitled “ Managing Climate Risk in the U . S . Financial System ” that made 53 recommendations to mitigate market risks posed by climate change by using existing statutes to monitor , analyze , and address climate risks and working with the private sector in promoting financial innovation to manage climate risk , among other recommendations . 28
Then , as Acting Chairman , Behnam created the Climate Risk Unit (“ CRU ”) 29 “ to support the agency ’ s mission by focusing on the role of derivatives in understanding , pricing , and mitigating climate-related risk , and supporting the orderly transition to a low-carbon economy through market-based initiatives .” 30 The CRU utilizes expertise across the agency to engage with stakeholders in the industry in exploring “ market-driven processes ” related to climate change . 31 In particular to international efforts at emissions reductions , Behnam has directed the CRU to examine how the agency can assist the development of and have a role in the voluntary carbon markets and carbon offset derivatives . 32 The Chairman has called on the industry to proactively engage with the agency in this climate change dialogue . Industry and market participants should take the Chairman up on his offer and be part of the discussions that will likely lead to new regulations , legislation , or enforcement programs for the CFTC .
3 . SWAPS REGULATIONS AND CROSS BORDER HARMONIZATION
Regulation and enforcement of the swaps market has been and will continue to be at the top of the CFTC regulatory agenda . Under former Republican Chairman Tarbert , the agency addressed or amended several swaps rules and worked with international regulators on a framework for substituted compliance . 33 Not all of these changes were supported by then Commissioner Behnam and his fellow Democratic Commissioner Berkovitz . 34 In one dissent , Behnam stated that “ to the extent the Dodd-Frank Act was enacted to reduce systemic risk to the financial system , the CFTC ’ s role is to individually utilize its expertise in addressing risk to the financial system created by interconnections in the swaps market as a market conduct regulator through supervisory oversight ” of swap dealers and major swap participants . 35
As Chairman , Behnam is ready to take another look at swaps regulations and the reforms implemented over under the last administration :
In the next months and years , under my leadership , and with a new and complete cadre of commissioners and an exceptional staff , we will continue to monitor the reforms put in place in the wake of the financial crisis and evaluate
4 K 2022 Thomson Reuters