Introduction

Good morning and welcome to the final meeting of the Market Risk Advisory Committee (MRAC) for 2024. I am delighted to have you all here, in person and virtually, to continue the thoughtful conversations and important developments of the Committee to advance a number of potential risks facing the futures and derivatives markets. Today, we continue the long tradition of this Committee’s engagement with the Commission, its valuable insight into the concerns that shape the stability and integrity of global derivatives markets, and its collaboration toward developing ways that the industry and the Commission can prepare for and mitigate the most critical risks facing our markets today. The work of this Committee influences the creation of regulation, industry standards, and best practices that govern global derivatives markets. The Committee provides valuable thought leadership on critical issues that impact citizens and businesses in every corner of the world by shaping the direction of the development of markets.

We have a full agenda for today’s meeting, and we are grateful for the many distinguished speakers and MRAC members who will share their expertise with us and create a diverse set of viewpoints on pressing risks not only to our markets and market participants, but the economy more broadly. The MRAC will introduce three formal recommendations, reports, and presentations with insightful guidance informed by diverse stakeholders to improve the integrity and stability of our markets. 

First, we will discuss the current state of Treasury markets, with opening remarks from The Honorable Josh Frost, Assistant Secretary for Financial Markets, U.S. Department of Treasury. Following Assistant Secretary Frost’s remarks, we will explore the U.S. Treasury cash-futures basis trade. A range of participants and members of the Market Structure Subcommittee will present recommendations on effective risk management practices. Next, we will continue the Committee’s efforts to robustly evaluate, and now propose recommendations related to, the importance of cyber resilience and especially critical risks related to third party service providers. We will hear the from chief cybersecurity officers, industry trade associations, and other experts as we continue to address the necessity of, and challenges related to, cyber resilience for financial markets.

MRAC has focused significant attention on cyberthreats to our markets since the creation of the advisory committee. In March 2023, MRAC held a first-of-its-kind public meeting to discuss then-recent cyber disruptions that affected cleared derivatives markets. Today, the MRAC advances proposals aimed at addressing cyber risks that may threaten market infrastructure and business continuity for several of our largest market participants. The Central Counterparty (CCP) Risk and Governance Subcommittee will present recommendations on central counterparty system safeguards for third party service providers. Our focus is driven, in part, by an increasingly significant industry-wide reliance on important services that facilitate critical market functions and for which there may be limited service providers, and, potentially, concentration risk. The CCP Risk and Governance Subcommittee will also share recommendations related to legal entity identifiers at the beneficial account holder level.

Next, we will hear presentations addressing a wide range of topics relevant to the MRAC’s market risk-related mandate, including in the areas of emerging technology-oriented risks affecting the derivatives and related financial markets, such as risks related to cybersecurity and artificial intelligence, and climate-related market risks and related developments. The recommendations address novel risks that market participants must navigate, and aim to help identify potential pathways for the Commission to smooth frictions and mitigate potential risks.

Treasury Cash-Futures Basis Trade

In our first presentation, we will hear a briefing on Treasury cash, futures, and repo markets as well as the broader Treasury ecosystem from market participants, as well as members of the Market Structure Subcommittee. Presentations will explore how Treasury markets are crucial to price discovery and liquidity across the financial system, as well as risk management practices for the Treasury cash-futures basis trade. We are grateful to Treasury Borrowing Advisory Committee (TBAC) Chair Deirdre Dunn and TBAC members David Rogal and Scott Rofey for sharing their perspectives on Treasury markets and their work with TBAC.

Today’s presentation and recommendations on effective risk management practices for the Treasury cash-futures basis trade are the culmination of the workstreams diligent efforts on this topic and its excellent work proposing effective risk management practices. At the December 2023 and April 2024 meetings, we had productive conversations about the role of the basis trade in U.S. treasury markets and mechanics of the trade, risk-management practices that are intended to limit leverage, oversight and transparency, and benefits, risks, and regulatory changes impacting these markets.

As the Subcommittee’s introductory report describes:

The Treasury cash-futures basis trade, which enables market participants to express a market view efficiently, supports the Treasury ecosystem by enhancing market liquidity and efficiency, lowering government funding costs, improving capital formation, and optimally allocating portfolio risk. The basis trade is a convergence trade where market participants arbitrage the price difference—or basis—between a Treasury security and a related Treasury futures contract by buying the deliverable security and selling the futures contract (or vice versa in the event the deliverable security were overvalued in comparison to the futures contract).

The basis trade has garnered significant attention recently, with elevated Treasury futures activity driving speculation that the strategy has grown amongst leveraged fund managers and that it has the potential to amplify market stress.[1]  

As discussed in the introductory report, a number of private and public sector studies have explored the role of the basis trade in the market stress that occurred around March 2020. In addition, report identifies both benefits and risks of the Treasury cash-futures basis trade. As noted,

Basis traders seek to arbitrage the difference in prices between Treasury securities and related Treasury futures contracts by purchasing the positions that are relatively undervalued and selling the others in anticipation that the prices will converge. Market participants will take different views of which of the position pair (securities or futures) is undervalued. This dynamic makes the basis trade appealing to various market participants and provides several benefits.[2]

These benefits include (i) greater market depth and liquidity, which contribute to overall efficiency of the Treasury market, (ii) greater price efficiency, (iii) lower funding costs for the federal government, and (iv) improvement of portfolio optimization and capital formation.[3]

Market participants in the basis trade are also exposed to potential losses that can arise from market, liquidity, and counterparty risks. As discussed in the report, these risks are dynamic, and in certain market conditions, can quickly impact the economics of the basis trade.[4]

A summary of these risks includes the following:

• Market Risk: Treasury futures and Treasury securities positions are subject to market price risk. When futures prices rise, there will be a mark-to-market variation margin call to cover this change in market prices. When Treasury security prices also rise, if the basis trader has provided margin on the Treasury security leg of the basis trade, the futures margin calls may be offset by a variation margin credit on the long Treasury securities positions in the basis trade. This price correlation relationship can change under market stresses. For example, even where margin is collected by dealers on the securities position, that collected margin may not be sufficient to meet the variation margin requirement on the futures leg. For highly leveraged investors, small changes in overall correlations could result in large margin calls and/or position liquidations. Although typically less significant than other forms of market risk, participants in the basis trade are also exposed to market risks associated with the Treasury security that is deliverable into the futures contract.  
   
• Liquidity Risk: For the basis trade, leveraged participants generally finance Treasury securities positions with repo transactions. The repo financing can be overnight or term, with overnight repo rates generally being lower and increasing the potential basis return. However, when repo duration does not match the maturity of the basis trade, interest rate changes could affect the financing costs and the return of the basis trade. Additionally, there is a possibility at repo maturity that the lender may not offer financing due to liquidity constraints or counterparty concerns. Therefore, prevailing repo market conditions could also require unanticipated funding needs or force an unwind of the basis position. 
   
• Counterparty Credit Risk: Counterparty credit exposures arise if a counterparty defaults prior to the settlement of all outstanding obligations…Since there are different counterparties and agents that may facilitate the trading and settlement activities in a basis trade, there are several ways that counterparty risk can arise in the basis trade and that exposure can change with market conditions. Parties to the trade may require margin to mitigate counterparty risk. As exposures increase or market prices change, counterparty risk mitigation may include reduction in current or future exposure via increased margin, reduction in capacity or services provided, liquidation of positions or a combination of these risk reducing measures. 
  
  Counterparty credit risk can increase due to combinations of high leverage, maturity mismatches, changes in correlation, or other market shocks that may result in anticipated margin calls and/or a reduction in the availability of repo financing. 
• Leverage Considerations: As discussed in more detail in the report, significant leverage is generally required to make the basis trade economically viable. The unwind of that leverage could pose systemic risk considerations given the critical role of the Treasury market and ecosystem.[5] 

Effective risk management practices are crucial and with respect to the Treasury cash-futures basis trade, can help to minimize the risks associated with it. Following its evaluation of the risk described above, the Market Structure Subcommittee has developed recommended practices to serve as a guide to effective management of market, liquidity and counterparty credit risks associated with the Treasury cash-futures basis trade – risks that could have a broad, systemic impact on markets and market participant associated with the trade.[6] The Subcommittee’s recommendations include:

• Market participants, including basis traders, futures markets participants, intermediaries, and others engaged in or providing intermediation for trades associated with the cash-futures basis—including the basis, long futures positions, and financing positions—should continuously assess and manage the risks associated with these trades including market, liquidity, counterparty credit, and other risks. These risks should be modeled, and a mark-to-market attribution analysis should be conducted.   
• Market participants should manage market risks that could affect the performance of their portfolios.
• Market participants should evaluate and manage their liquidity risks, including the risk that margin costs increase rapidly and significantly, and that financing is reduced or becomes unavailable.  
• Market participants should appropriately monitor and manage counterparty credit risks associated with the basis trade or its intermediation, including through effective due diligence, onboarding, credit risk mitigants, and continuous monitoring processes.[7]  

While these recommendations will help to ensure stability to this market and in turn, the financial system, the report acknowledges that these risk management practices should continue to be evaluated in light of changes in market structure, including Treasury central clearing rules, and changes in cross margining or available data, among others.[8] We are grateful to Nate Wuerffel, who led the workstream’s efforts, as well as Alessandro Cocco, Tim Cuddihy, David Bowman and Jennifer Han for their remarks today, in addition to other members of the Subcommittee that assisted in various stages of this workstream along the way.

Cyber Resilience and Critical Third-Party Recommendations

As noted above, MRAC has been at the forefront of the Commission’s efforts to address the importance of cyber resilience for market participants, central counterparties and the broader market and economy. At our March 2023 meeting, we brought together diverse viewpoints of the MRAC membership and others to begin to identify, examine, and explore both the vulnerabilities in our markets and specific policy interventions for consideration by the Commission, best practices for industry participants, and public-private partnerships or industry-engineered initiatives designed to effectuate collaborative cyber threat responses and create cyber-defenses for interconnected segments of our markets.

We look forward to hearing remarks from various stakeholders including Sanjeev Bhasker, Deputy General Counsel, Office of the National Cyber Director, Steve Pugh, Chief Information Security Officer, Intercontinental Exchange, and Don Byron, Head of Global Industry Operations and Execution, Futures Industry Association.

Since kicking off this workstream, the CCP Risk and Governance Subcommittee has worked to develop recommendations that highlight the importance of central counterparty cyber resilience and address the need for a more robust regulatory framework. As I have previously noted, the Commission has focused on similar cyber risk in other areas, but has not focused on CCPs, despite CCPs posing significant potential risk to derivatives markets and the broader financial industry. For example, the Financial Stability Oversight Council (FSOC) has previously addressed potential emerging threats and vulnerabilities, most recently noted the dangers to the financial system presented by underexamined cybersecurity at CCPs.[9]

The CCP Risk and Governance Subcommittee’s recommendations bridge this gap by addressing the critical cybersecurity risk to financial markets that is posed by CCPs face use of third-party service providers. In particular, the Subcommittee’s report addresses DCO system safeguard standards for third party service providers and advances recommendations to build upon and incorporate the language, concepts and principles already set out in the System Safeguards Rule found in Part 39.18 of the CFTC’s regulations (DCO Rule 18 -- System Safeguards) with respect to DCOs.[10]

As noted in the report, DCO Rule 18 currently imposes requirements with respect to outsourcing, but never expressly refers to a third-party relationship program.[11] The report sets forth recommendations to build upon existing regulatory frameworks to close a crucial gap and provide guidance with respect to third party relationships. In particular, the report states:

It is recommended that the proposed regulation build upon and incorporate the language, concepts and principles already set out in the System Safeguards Rule found in Part 39.18 of the CFTC’s regulations (Rule 18-System safeguards)[12] with respect to DCO.  The proposed regulation would further require that each DCO establish, implement, and maintain a Third-Party Relationship Management Program (a “TPMP”)[13] beyond what is currently in the Rule 18-System Safeguards.

We recommend that the Commission take a principles-based approach by adding TPMP principles to current Rule 18 (2). These principles are intended to reflect lessons learned from industry efforts and best practices in derivatives, the guidance notes in Form DCO, the NFA interpretive guidance, lessons learned from the wider context of third-party relationship management, as well as the principles enunciated in the PFMIs. Incorporating these principles in Commission regulations would enable the Commission to update its regulatory framework with respect to critical third party service providers and to bring its regulations in line with internationally accepted standards, while maintaining a principles based approach to regulation.[14]

More specifically, as described in more detail in the report, the Subcommittee recommends amendments to Rule 39.18(d)(2) on retention of responsibility, to retain responsibility over critical third-party arrangements provided by Third Party Service Providers (TPSP) by establishing a robust Third-Party Risk Management Program (TPRM).[15] The proposed language would include the following:

A robust TPRM program should identify, assess, mitigate and monitor the full scope of risks that the use of third party arrangements through implementation, at a minimum, of the following principles:

A DCO should:

1. Implement written policies and procedures reasonably designed to cover the entire lifecycle⁶ of the third-party service relationship and to manage risks associated with Third Party arrangements.
2. Employ personnel with the expertise necessary to enable the DCO to monitor and supervise TPSP’s performance against contractual requirements;
3. Conduct a pre-selection and an onboarding due diligence assessment, before entering into any third-party service arrangement, of the impact to the DCO’s operational risk, including an assessment of the TPSP’s financial posture, insurance coverage, contingency plans
4. Establish written policies and procedures to determine which of a DCO’s TPSPs are Critical TPSPs (CTPSPs) considering the following:

1. dependencies on functionality or support which would have a material impact on CFTC regulated activities if unavailable or if the service is impaired;
2. impact to critical operations or firm viability;
3. material impact on the ability to meet key legal and regulatory obligations;
4. significant customer impact;
5. potential significant security risks (including cybersecurity);
6. risk of concentration of third-party providers that the DCO has an arrangement with; and

5. Exit strategy and alternative solutions. With respect to CTPSPs, apply enhanced risk based due diligence and oversight to critical services.
6. Establish written policies and procedures to perform ongoing risk-based monitoring of performance of each CTPSP, based on generally accepted industry standards. 
7. Maintain adequate records of the agreements between the DCO and each CTPSP, each such agreement identifying (1) the scope of services that will be provided; (2) applicable services level agreements (SLAs); (3) contact at the CTPSP; and termination provisions. 
8. Establish reasonable standards for offboarding/ termination of CTPSPs.[16]

In addition, the report recommends incorporating Annex F of the Principles for Financial Market Infrastructure (PFMI)[17]: assessment methodology for the oversight expectations applicable to critical service providers. In particular, the Subcommittee recommends that the Commission consider requiring DCOs to obtain assurance from their critical service providers that they comply with the expectations set forth in Annex F of the PFMI.

Many thanks to Alessandro Cocco, Dick Berner and Juan Blackwell for presenting on the report today, and to the many others on the Subcommittee that have been involved in the workstream’s efforts.

Artificial Intelligence

The cybersecurity risks discussed above, and their potential to harm the financial service sector, is amplified by technological advances such as artificial intelligence. We will hear a presentation from Todd Conklin, Chief Artificial Intelligence Officer & Deputy Assistant Secretary of Cyber, U.S. Department of the Treasury that addresses the intersection of these risks. This past March, Treasury issued a report on Managing Artificial Intelligence-Specific Cybersecurity Risks in the Financial Services Sector.[18] The report draws on in-depth interviews with market participants to report on the current state of artificial intelligence in the financial services sector, and identifies best practices for financial institutions as mandated by Executive Order (EO) 14110, Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.[19]

Treasury’s report notes in its executive summary:

Financial institutions have used AI systems in connection with their operations, and specifically to support their cybersecurity and anti-fraud operations, for years. Early adopters in the financial services sector may be revisiting AI’s potential strategic value and considering new use cases in light of the recent rate of change and rapid developments in AI technology. Thus far, many financial institutions have incorporated AI-related risks into their existing risk management frameworks, especially those related to information-technology, model, compliance, and third-party risk management.

Some of the financial institutions that Treasury met with reported that existing risk management frameworks may not be adequate to cover emerging AI technologies, such as Generative AI, which emulates input data to generate synthetic content. Hence, financial institutions appear to be moving slowly in adopting expansive use of emerging AI technologies. Interview participants generally agreed that the safe adoption of AI technologies requires cross-enterprise collaboration among model, technology, legal, compliance, and other teams, which can present its own challenges. Further, in the case of cybersecurity and anti-fraud AI usage, interviewees largely agreed that effectively managing risks requires collaboration across the financial services sector. Applying appropriate risk management principles to AI development is critical from a cybersecurity perspective, as data poisoning, data leakage, and data integrity attacks can take place at any stage of the AI development and supply chain. AI systems are more vulnerable to these concerns than traditional software systems because of the dependency of an AI system on the data used to train and test it.

Like other critical infrastructure sectors, the financial services sector is increasingly subject to costly cybersecurity threats and cyber-enabled fraud. As access to advanced AI tools becomes more widespread, it is likely that, at least initially, cyberthreat actors utilizing emerging AI tools will have the advantage by outpacing and outnumbering their targets. At the same time, many industry experts believe that most cyber risks exposed by AI tools or cyber threats related to AI tools can be managed like other IT systems. To counter the threat actors’ initial advantage, financial institutions should expand and strengthen their risk management and cybersecurity practices to account for AI systems’ advanced and novel capabilities, consider greater integration of AI solutions into their cybersecurity practices, and enhance collaboration, particularly threat information sharing. According to interviewed financial institutions, the adoption of AI technology, including Generative AI, has the potential to significantly improve the quality and cost efficiencies of their cybersecurity and anti-fraud management functions.[20]

Treasury’s report identifies next steps, both challenges and opportunities, which we look forward to hearing more about today. The report concludes:

AI presents opportunities for the financial sector, but also significant potential risks, particularly for consumers and historically marginalized groups. Applications of AI in consumer financial services, insurance underwriting, fraud detection, and other areas of financial services have the potential to perpetuate or amplify existing inequities. Use of AI in these contexts also raises questions regarding consumer privacy and data security.

Treasury and financial regulators are also considering other potential risks and benefits associated with the use of AI by financial institutions. As discussed in the report in the context of cyber risk management, longstanding principles for sound risk management, including model risk management and third-party risk management, are critical to addressing the risks of AI more broadly. Treasury continues to monitor the development and use of these tools and consider risks to financial institutions and the financial system. To better understand the use of AI by financial institutions and its impact on consumers and investors, as well as the sufficiency of existing regulatory frameworks, Treasury is exploring opportunities for deeper engagement with the public.[21]

I have long expressed my agreement that the use of AI in financial markets may hold the potential for substantial benefits, and that such use may also introduce unprecedented risks concerning market integrity, customer protection, governance, data privacy, bias, and cyber threats.[22] The derivatives market provides many potential applications for AI. Accordingly, given the Commission’s mandate to promote responsible innovation while safeguarding market integrity, effective risk management is essential to address these concerns.

Throughout the years, I have maintained an unwavering commitment to researching and proposing regulatory solutions for AI in financial markets, driven by a steadfast dedication to ensure integrity and stability in this rapidly evolving landscape. Five years ago, I began to convene and participate in convenings of AI developers, adopters, academics, government and industry researchers, regulators, and public interest organizations. During my term as a Commissioner and in the decade prior to my appointment, I have advocated for market and prudential regulators to have clear visibility into the diverse technologies that increasingly define the infrastructure of our markets. I have advocated for working in partnership with market participants, and working with other market and prudential regulators to consider how best to integrate responsible innovation that reflects our regulatory values, protects customers, and preserves capital.

While I strongly support the Commission’s efforts to advance inquiries regarding the integration of AI in our markets and to explore the need to introduce guardrails to mitigate the risks that AI technologies may present, including the issuance of a Staff Advisory on AI last week,[23] I believe that there are some tangible steps that the Commission can take immediately to enhance the safety and benefits of incorporating AI in markets while minimizing the risks. As noted in my recent statement on future-proofing financial markets and assessing the integration of AI in global derivatives markets,[24] I have advocated for a few key proposals to develop a robust regulatory framework for our markets. These include:

• Creation of an AI Fraud Task Force: I encourage the Commission to consider a CFTC Task forced focused on mitigating AI enabled misconduct and would welcome an opportunity to work with our Division of Enforcement on developing an AI Fraud Task Force.
   
• Enhanced Supervision and Enforcement Resources: I believe that the Commission would benefit from increased resources dedicated to enabling several of the Divisions within the Commission to prepare for and meet the challenges of regulating innovative trading, clearing, and settlement technologies, among other changes to operational infrastructure that merits consideration.
   
• Heightened Civil Monetary Penalties to Deter Fraudulent Actors: I have encouraged enhanced penalties for bad actors who would use the powerful and important technologies described as AI to facilitate fraud or other illegal activity. Increasing civil monetary penalties against individuals and entities who misuse AI to engage in fraud or evade CFTC regulations will stymie the proliferation of misconduct.
   

• Interagency Collaboration: I believe it is important that regulators across financial markets within the United States and globally work in collaboration to establish effective regulatory approaches. Within the community of domestic market and prudential regulators, I have encouraged the creation of an inter-agency task force focused on understanding the implications of integrating more complex AI models into regulated markets.

Legal Entity Identifiers

The CCP Risk and Governance Subcommittee will also discuss their report and recommendations on legal entity identifiers, first describing the concept of the legal entity identifier, which was introduced in 2012 in the wake of the financial crisis, and its development in different markets around the world.  In its report, the Subcommittee recommends:

[CFTC Rule 39.19] should be amended to bring the US regulatory structure in line with global standards by mandating the use of Legal Entity Identifiers, or equivalent identifiers, by the beneficial account owner level (obtained and maintained by the beneficial account owner) for daily reporting by DCOs [and] … to the extent not already required, DCOs and futures commission merchants should also require that a beneficial account owner always provide an LEI with respect to any activity subject to such registered entity’s reporting obligation to the CFTC.[25]

Thank you to Dick Berner and John Bottega for sharing remarks on this important topic.

Climate-Related Market Risk

At the MRAC meeting in March of this year, members held a roundtable discussion focused on three mains topics related to carbon credit markets: (1) market integrity, disclosure, transparency and enforcement, (2) market design and intermediation, and (3) product design and reliability, and shared enthusiasm for the CFTC to create more robust standards for carbon credit markets. At this meeting, the discussion will continue as we hear remarks surrounding the private carbon credit market and its use by corporations to offset CO2 emissions.

We will also hear how climate-related financial risk can occur broadly. On December 6, FSOC unanimously approved its 2024 annual report, which addresses climate-related financial risks and notes that:

Climate-related financial risk can manifest as and amplify traditional risks, such as credit, market, liquidity, operational, compliance, reputational, and legal risks.[26] Climate-related financial risks may be occurring simultaneously with other stresses, such as financial crises or pandemics, and may also compound nonlinearly with other climate risks. For example, the joint impact of a physical climate shock and pandemic occurring simultaneously could be 50 percent larger than the sum of the impacts of the individual shocks.[27] Also, sea level rise can compound with heavy precipitation, increasing the likelihood of flooding events.[28] Given the Council’s focus on the stability of the U.S. financial system as a whole, it is important to consider a systemwide approach that combines individual firm and market risk assessments by taking into account interconnections and spillovers, which may amplify the financial effects on individual firms. A systemwide approach may also highlight possible trade-offs and the need to balance them. Actions individual firms take to protect themselves may lead to unexpected losses at other firms or hinder objectives related to low- and moderate-income community development, including fair access to credit.[29]

The 2024 FSOC report focuses on recent developments in physical risk, housing, and property insurance markets that are imposing significant costs to the economy. The report notes that:

From January through early November 2024, the United States experienced 24 confirmed weather and climate disaster events in which losses exceeded $1 billion, up from an annual average of 8.5 events per year between 1980 and 2023 and also up from a recent five-year annual average of 20.4 events from 2019 to 2023. This increase in events with losses exceeding $1 billion is driven by a combination of factors, including rising exposure values and replacement costs, natural variability, and the effects of climate change.[30] The costs of some of these events greatly exceed $1 billion. In the fall of 2024, the United States experienced two strong late-season storms, which resulted in the deaths of over 200 people and caused significant damage to property and infrastructure.[31] Hurricane Helene caused an estimated total flood and wind loss between $30.5 and $47.5 billion, of which between $10.5 and $17.5 billion are estimated to be insured.[32] Hurricane Milton, which made landfall as a Category 3 hurricane, is estimated to have caused between $30 and $50 billion in insured losses.[33] The exposure of the financial system to the effects of physical risk on real estate remains a primary transmission channel of interest. Acute climate related events and chronic physical climate risks may reduce the value of real estate, which could affect homeowners and owners of commercial real estate (CRE), and such events can also increase the probability of default and associated loss.[34] As markets factor these risks into pricing, real estate (and real estate investment products) exposed to physical risk could lose market value.

Today we will hear from three different speakers regarding climate-related market risk. First, we will hear from Sandra Lee, Deputy Assistant Secretary, Financial Stability Oversight Council, U.S. Department of Treasury on current topics and FSOC developments in the area of climate-related market risk. We will also hear from Chris Odinet, Professor of Law & Mosbacher Research Fellow, Texas A&M University School of Law, about the voluntary carbon credit market, including discussion of the smaller, private market-oriented carbon credit market which corporations use as part of their strategy to commit to CO2 reduction and the work of the Uniform Law Commission on a commercial law framework for voluntary carbon credits. Finally, we will hear from Kim Ratcliff, U.S. Department of Agriculture Advisory Committee on Minority Farmers; Board Member, Capital Farm Credit Advisory Committee; Treasurer and Board Member, Independent Cattlemen Association, to discuss equity, sustainability, and increasing economic opportunity in rural areas and by providing financial education and access to resources, knowledge, and networks needed to thrive in agriculture to underserved farmers.

Conclusion

This meeting is an opportunity to continue to advance discussions and pragmatic next steps on critical issues facing our markets. I am hopeful for an open and meaningful discussion among MRAC members informed by the viewpoints of our diverse group of expert speakers.

Allow me to thank our MRAC Chair and Chair of the FIA Board, Alicia Crighton; MRAC Designated Federal Officer (DFO) Danielle Abada; and MRAC Alternate DFO Peter Janowski. I also thank each of the ADFOs who support MRAC—Chris Lamb and Nita Somasundaram. Thank you to Christian Johnson for his assistance in preparing for the meeting. I also want to thank the CFTC logistics and administrative staff and contractors who ensured that our physical conference room and our virtual conference room were ready to go for our members and our invited speakers, including Andy Brighton, Jean Cespedes, Clarence Davis, Kashawn Diggs, Jude Luellen, Monae Mills, Ty Poole, Pete Santos, Gordon Schauer and Margie Yates.