FTX Plan Said to Face CFTC Roundtable Next Month

A proposal from FTX.US on direct derivatives clearing is set to be the focus of public discussion on May 23.

AccessTimeIconApr 19, 2022 at 10:15 p.m. UTC
Updated May 11, 2023 at 3:45 p.m. UTC
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The FTX proposal to directly clear the trades of its derivatives customers will get an informal hearing on May 23, according to a person familiar with the Commodity Futures Trading Commission's (CFTC) plan.

With the 60-day public comment period coming to an end on May 11, the U.S. regulator will invite representatives of the company and others who have a stake in the decision to a public roundtable, said the person, who spoke on condition of anonymity because the event hasn’t yet been announced. The open discussion will invite public commentary from proponents and critics without carrying the force of a hearing.

CFTC spokesman Steven Adamske declined to comment on the plan, and an FTX official couldn't be reached for comment.

Chairman Rostin Behnam has said his agency is taking a cautious approach to the application from FTX.US to allow its trading platform to directly clear derivatives that are backed by margin. He suggested the application could be the first of many, and if approved could have major implications. The industry, though, has been optimistic about the tone Benham struck at a recent congressional hearing.

“This proposal could end up leading to more efficient trading execution, less risk in the system,” Behnam told lawmakers last month at the House Agriculture Committee, adding that he’s required to foster “responsible innovation” and FTX’s idea wouldn’t seem to violate commodities laws.

The CFTC held more than two dozen roundtables when it was trying to establish an array of new rules after the Dodd-Frank Act sought to prevent a repeat of the 2008 financial crisis. This time, the agency is weighing the key crypto matter with a new slate of commissioners – four members having been sworn in during March and April after recent Senate confirmations.

The agency has already received dozens of comment letters, such as one from the founders of BlockTower Capital, which argued that FTX’s idea “will reduce the over-reliance on the current gatekeepers to trading markets.” The comment period, however, runs for three more weeks, and the proposal is expected to have critics among more established exchanges.

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Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.


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