1155 21st St., NW, Washington, DC. The meeting consisted of two panels. Panel I discussed 

the financial market risks related to climate change, including current domestic and international 

policy initiatives and supervisory approaches to address such risks, and the potential impact of 

climate change on the future stability of the global financial system. Panel 2 discussed market 

participants' management and ongoing efforts to mitigate climate-related financial market risks, 

including key risk management, governance, and disclosure considerations, and the challenges 

ahead for regulators and market participants. The panel discussions were followed by discussion 

of a report from the MRAC Interest Rate Benchmark Reform Subcommittee and remarks from 

Steven Maijoor, European Securities and Markets Authority Chair. 

MRAC Members in Attendance 

Nadia Zakir, MRAC Chair, Pacific Investment Management Company LLC (PIMCO), 

Executive Vice President and Deputy General Counsel 

B. Salman Banaei, Executive Director, Global Head of Clearance and Settlement, IHS Markit 

Stephen Berger, Managing Director and Global Head of Government & Regulatory Policy, 

Citadel 

Lee Betsill, Managing Director and Chief Risk Officer, CME Group 

Isaac Chang, Managing Director and Co-Head of Trading, AQR Capital Management, LLC 

Biswarup Chatterjee, Global Head of Electronic Trading & New Business Development, Credit 

Markets, Citigroup 

Matthias Graulich, Member of the Executive Board and Chief Strategy Officer, Eurex Clearing 

AG 

Frank Hayden, Vice President, Trading Compliance, Calpine Corporation 

Lindsay Hopkins, Clearing House Counsel, Minneapolis Grain Exchange 

Annette Hunter, Senior Vice President and Director of Accounting Operations, Federal Home & 

Loan Bank of Atlanta 

Vincent B. Johnson, Head of Regulatory & Policy Affairs, BP Products North America 

Demetri Karousos, Chief Risk Officer, Nodal Clear LLC, and Managing Director, Market 

Administration and Surveillance, Nodal Exchange LLC 

Derek Kleinbauer, Global Head, Rates and Equity e-Trading, Bloomberg LP and Vice 

President, Bloomberg SEF LLC 

Laura Klimpel, Managing Director, Clearing Agency Services at the Depository Trust & 

Clearing Corporation (DTCC) 

Sebastiaan Koeling, Chief Executive Officer, Optiver US LLC, FIA Principal Traders Group 

Kevin McClear, Chief Risk Officer, Intercontinental Exchange Inc. 

Dennis McLaughlin, Group Chief Risk Officer, LCH Group 

Craig Messinger, Senior Advisor, Virtu Financial 

Dale Michaels, Executive Vice President, Financial Risk Management, The Options Clearing 

Corporation 

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James Shanahan, Vice President, Financial Regulatory Compliance, CoBank ACB 

Lisa Shemie, Associate General Counsel, Cboe's Legal Division, Chief Legal Officer, FX and 

Cboe SEF 

Betty Simkins, Head of Finance Department, Professor and Williams Companies Chair in 

Business, Oklahoma State University, Spears School of Business (Special Government 

Employee) 

Tyson Slocum, Director, Energy Program, Public Citizen 

Marcus Stanley, Policy Director, Americans for Financial Reform Robert Steigerwald, Senior Policy Advisor, Financial Markets, Federal Reserve Bank of Chicago 

Kristen Walters, Global Chief Operating Officer of Risk and Quantitative Analysis Group, 

BlackRock 

Speakers in Attendance 

Sarah Breeden, Executive Director of International Banks Division, Prudential Regulation 

Authority, Bank of England (Panel 1) 

Stacy Coleman, Managing Director, Promontory Financial Group, Secretariat, Financial 

Stability Board's Taskforce on Climate-related Financial Disclosures (Panel 1) 

Dave Jones, Director, Climate Risk Initiative, Center for Law, Energy & the Environment at the 

University of Berkeley School of Law; Former California Insurance Commissioner (Panel I) 

Nancy Meyer, Director of Corporate Engagement, Center for Climate and Energy Solutions 

(Panel 2) 

Kristen Walters, MRAC Member, Global Chief Operating Officer of Risk and Quantitative 

Analysis Group, BlackRock (Panel 2) 

Matthias Graulich, MRAC Member, Member of the Executive Board and Chief Strategy Officer, 

Eurex Clearing AG (Panel 2) 

Dr. Stefano Giglio, Professor of Finance, Yale School of Management (Panel 2) 

Thomas Wipf, MRAC Interest Rate Benchmark Reform Subcommittee Chairman, Vice 

Chairman, Institutional Securities, Morgan Stanley 

Biswarup Chatterjee, MRAC Interest Rate Benchmark Reform Subcommittee, Initial Margin 

Working Group Leader, Global Head of Electronic Trading & New Business Development, 

Credit Markets, Citigroup 

Mamie Rosenberg, MRAC Interest Rate Benchmark Subcommittee, Clearing Working Group 

Leader, Managing Director and Global Head of Clearinghouse Risk & Strategy, JP Morgan 

Steven Maijoor, European Securities and Markets Authority (ESMA), Chairman 

CFTC Commissioners and Staff in Attendance 

Rostin Behnam, Commissioner and MRAC Sponsor 

J. Christopher Giancarlo, Chairman 

Dan M. Berkovitz, Commissioner 

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Ms. Lewis called the meeting to order. Commissioner Behnam in opening remarks 

acknowledged the designation of Ms. Zakir as the new MRAC chair, and stated that the meeting 

agenda would focus heavily on climate-related financial market risk. Commissioner Behnam 

noted that the impacts of climate change affect every aspect of the American economy, and 

believes that it is time to examine the relationship between climate related events to financial 

market risk and market stability, noting that the failure to address financial market risks 

associated with climate change will impede economic growth. 

He stated that acknowledged the work of international counterparts, such as the Network 

of Greening the Financial System (NGFS), a group of more than 40 central banks and 

supervisors from around the world, to understand and manage the financial risks of climate 

change. He stated that many oversee the same registrants as the Commission. Commissioner 

Behnam also acknowledged the work of the Financial Stability Board's (FSB) Task Force on 

climate-related Financial Disclosure (TCFD), acknowledging its value in enhancing how 

climate-related risks are assessed, priced, disclosed, and managed, stating that assessing such 

risks must be a priority, that he hoped would start with the current MRAC meeting. 

Commissioner Behnam advised that the MRAC would receive a status report from its Interest 

Rate Benchmark Reform Subcommittee. 

The Commissioner then welcomed Chairman Maijoor, who would be discussing 

European Market Infrastructure (EMIR) 2.2, central counterparty stress testing, and the 

withdrawal of the United Kingdom (UK) from the European Union (EU) (Brexit). He stressed 

the importance of building a consensus across borders and finding ways to maintain and promote 

deference where appropriate. Finally, Commissioner Behnam recognized the leadership of 

outgoing Chairman Giancarlo, noting that this meeting would be the Chairman's last advisory 

committee meeting before he departs from the Commission. In closing, Commissioner Behnam 

dedicated the meeting to the late Commissioner Bartholomew (Bart) Chilton. 

Chairman Giancarlo, in opening remarks, also commented on the passing of 

Commissioner Chilton. He then offered a brief explanation of the Commission's advisory 

committee process, acknowledged the importance of the meeting's subject, noting that the 

committees are composed of market experts and key stakeholders, that they set their own 

agendas, and are bipartisan, and have the essential mission of supporting the Commission's 

mission, and have the full support of the Commission. 

Commissioner Quintenz in opening remarks commented on the U.S. Environmental 

Protection Agency (EPA) fall release of its latest Greenhouse Gas Reporting Program data which 

indicated a decline in carbon emissions. The Commissioner attributed the decline in part to 

liquid energy derivatives and hedging markets that supported private sector ingenuity and 

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Securities and Markets Authority. 

Commissioner Stump thanked Commissioner Behnam for putting together the interesting 

and timely agenda, noting that it is extremely beneficial to the Commission and to market 

participants given that the risk to hedge and mitigate is always shifting, and so too must the 

agenda for such meeting. 

Commissioner Berkovitz's welcome remarks noted his interest in the meeting's topic and 

that it addressed emerging trends, whereas political systems may not be immediately responsive 

to such emerging trends. The Commissioner noted his interest in the discussion about the 

impacts that climate change may actually have on financial market stability and the financial 

system, since he had read a number of reports and news items about such potential threats. 

II. Panel I: Domestic and International Policy Initiatives regarding Climate-related 

Market Risks to the Financial System 

Ms. Breeden opened the panel by discussing the various risks associated with climate 

change, such as weather-related losses, that may also cause increased insurance claims, as well 

as risks that may lead to adjustments in business models and strategies in the economy. She 

added that assessing risk is "highly complex," and that the Prudential Regulatory Authority and 

Financial Conduct Authority established a forum whose aim is publishing "practical" guidance 

for such purposes. Ms. Coleman noted the limited discussion on climate risk and discussed the 

FSB's task force of public and private participants to pull together information about climate 

risks to factor into their decision making. In this regard they examined governance, strategy, risk 

management, and metrics and targets. Mr. Jones used the recent California wildfires and 

mudslides as examples when discussing the National Association oflnsurance Commissioners' 

(NAIC's) climate risk disclosure survey that showed how insurers are addressing climate risk in 

underwriting insurance. 

Following the presentation, Chairwoman Zakir opened the floor to questions and 

comments from the membership. 

Mr. Slocum asked whether mandatory uniform reporting of climate change-associated 

financial risk should be the standard. Ms. Coleman replied affirmatively, and stated that FSB 

may have to move toward mandatory disclosure rather than voluntary disclosure to ease 

receiving information. Ms. Breeden agreed, emphasized the need for disclosures to be 

comprehensive, comparable, and coherent. Mr. Jones discussed future challenges for regulators 

stating that there is a "fair degree" of communication internationally and consensus among 

financial regulators that the TCFD recommendations are "some of the best work" regarding the 

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Ms. Meyer presented first in the next panel and noted that managing physical risk usually 

falls under risk management, and that most companies are looking for ways for "framing the 

uncertainty." She is seeing some progress in implementing the TCFD recommendations. Ms. 

Walters stated BlackRock has integrated certain data allowing investors and risk managers to 

access risk data. Mr. Graulich discussed the public attention on climate change and the global 

goal to limit global warming and how Europe has integrated these targets into action. Dr. Giglio 

discussed hedging climate risks from a conceptual perspective, emphasizing that it is hard to 

define the right target of the hedge. He emphasized that important considerations should be to 

consider how to hedge long-term risks, and whether short-term portfolios to hedge long-term 

climate change can be used. Dr. Giglio concluded his remarks by discussing the derivatives 

market and climate risk, explaining that climate risk occurs heterogeneously across geographical markets and that risk sharing should be viewed as affecting a global market, rather than as 

affecting localized markets, but he also explained that markets need different exposures and 

different products. 

Following the presentation, Chairwoman Zakir opened the floor to questions and 

comments from the membership. 

Mr. Chang asked how Environmental, Social and Governance (ESG) is defined. Ms. 

Meyer defined it as meaning "greenhouse gas management," but noted that it is not currently 

well defined, and that they are "still trying" to define what ESG means, "especially with the 

TCFD recommendations." Ms. Walters added that while the science is known, the link to 

financial services is not. Dr. Giglio added that the markets should focus on producing and 

integrating the information, and then determine how to use it. 

IV. MRAC New Business-Establishment of Subcommittees 

Chairwoman Zakir turned to MRAC new business and proposed the establishment of four 

subcommittees to examine CCP Risk and Governance, Operational Risk, Market Structure, and 

Climate-Related Financial Risk. All members voted in favor and none opposed. 

V. Report from the MRAC Interest Rate Benchmark Reform Subcommittee 

Mr. Wipf discussed the important developments regarding the London Inter-bank Offered 

Rate (LIB OR) transition that has occurred since December 2018, in particular the publication in 

the cash markets of "fallback language" for those that continue to use LIBOR and cash products. 

He stated that the International Swaps and Derivatives Association (ISDA) is working on 

fallback language for derivative contracts, and will be seeking feedback on the market's views 

on the implementation. Mr. Wipf stated that Secured Overnight Financing Rate (SOFR) based 

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rates and that the subcommittee intends to write a letter to the MRAC with their 

recommendations in greater detail. 

Following the presentation, Chairwoman Zakir opened the floor to questions and 

comments from the membership. 

Mr. Chatterjee responded to a comment from Mr. Berger about the potential unintended 

consequences concerning the proposal to provide relief from initial margin requirements for 

uncleared swaps, by explaining that the relief or modifications are within reason, and short term. 

He also responded to a comment from Mr. Stanley about an estimate of transaction volumes 

would be helpful, by replying that the subcommittee tried to ensure that any of the 

recommendations put forward all have some level of analysis, with a large part of their 

discussions being focused on whether they can provide data. Mr. Shanahan stated that 

temporary relief may be needed to encourage activity, and Chairman Giancarlo agreed that shortterm relief may be needed, adding that he is confident that the Commission will find the right 

balance and ultimately get to a market-based benchmark. 

[Lunch Break] 

VI. Remarks by Mr. Maijoor 

Following the lunch break, Ms. Lewis called the meeting back to order, and gave the 

floor to Chairwoman Zakir, who introduced Mr. Maijoor to give his remarks. Mr. Maijoor 

explained that the European Union (EU) regulatory supervisory framework has focused on 

sustainability for two important reasons. First, sustainability risk can affect the risk returns and 

valuations of investments and issuers. Second, ESMA is aware that the investment community is 

changing their preferences and wants to take sustainability into account when selecting their 

investments and their issuers. He further explained that ESMA has been asked to provide advice 

to the European Commission, and is working on the integration of sustainability risks and 

sustainability factors regarding relevant asset management and investment firm legislation; 

political agreement on a disclosure regulation on the sustainability issues; and integration of 

sustainability into the benchmark regulation and making sure for carton benchmarks there are 

common factors. 

Mr. Maijoor then discussed Cross-Border issues. He explained that cross-border 

regulation presents national and regional challenges, with market participants wanting the same 

regulations for both, but that regulators are limited by their "regulatory framework and their 

supervisory mandates." Mr. Maijoor discussed a recently published report that gives an account 

of the use of tools to address cross-border challenges. He stated that the EU has been at the 

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Regarding stress testing, Mr. Maijoor noted that ESMA completed the first stress test of 

CCPs in 2016. He then discussed Brexit noting that it will have a negative impact for the EU 

and UK. Responding to a question on comparable compliance, Mr. Maijoor stated that ESMA is 

actively working towards publishing specific advice on this issue. He addressed such questions as comparable compliance, consequences that may flow from a no-deal Brexit, and about the 

issue of determining liquidity in the event that the Markets in Financial Instruments Directive 

(MiFID) is destroyed because of Brexit. 

Commissioners Berkovitz, Stump, and Quintenz offered closing remarks voicing praise 

for the agenda and the speakers. Chairman Giancarlo thanked the members of the committee and 

the distinguished guests for the work done and their contributions. Commissioner Behnam 

thanked all of the guests and participants and stated that he hoped the meeting could serve as a 

starting point for a larger conversation about financial market risk and the changing climate. 

adjourned the meeting at 2:43 p.m. 

Chair, Market Risk Advisory Committee 

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I Date