MINUTES OF THE MEETING OF THE

U.S. COMMODITY FUTURES TRADING COMMISSION’S

GLOBAL MARKETS ADVISORY COMMITTEE

APRIL 15, 2019

The Global Markets Advisory Committee (“GMAC” or “Committee”) convened for a

public meeting on Tuesday, April 15,2019, at 10:00 a.m., at the U.S. Commodity Futures 

Trading Commission’s (“CFTC” or “Commission”) Headquarters Conference Center, located at

Three Lafayette Centre, 1155 21st St., NW, Washington, DC. The meeting consisted offive 

panels. Panel 1 provided an overview offinancial system issues for the 2019 G20 Japan

Presidency. Panel 2 examined regulatory-driven market fragmentation. Panel 3 discussed 

trading on exchanges or electronic trading platforms and clearing through central counterparties.

Panel 4 discussed initial margin for non-centrally cleared derivatives contracts. Panel 5

discussed over-the-counter (“OTC”) derivatives reporting to trade repositories.

GMAC Members in Attendance

Angie Kama (“GMAC Chair”), Managing Director, Head ofGlobal Markets Legal, Americas, 

Nomura Securities International, Inc.

Chris Allen, General Counsel, Clients & Products, Standard Chartered Bank

Ted Backer, Global Head ofListed Derivatives Execution, Morgan Stanley

Ashley Belich, Head ofGlobal OTC Derivatives & Dodd-Frank Advisory, RBC Capital Markets

Shawn Bernardo, ChiefExecutive Officer, TP ICAP SEF

Darcy Bradbury, Managing Director, D.E. Shaw & Co., L.P.

Clive Christison, Senior Vice President Pipelines, Supply & Optimization for Fuels North

America, BP

Joseph Cisewski, Consultant, Better Markets

Jim Colby, Representative, Coalition for Derivatives End-Users

Gerry Corcoran, Chairman ofthe Board and ChiefExecutive Officer, R.J. O’Brien & Associates, LLC

Sunil Cutinho, President, CME Clearing

David Goone, ChiefStrategy Officer, Intercontinental Exchange, Inc.

Alexandra Guest, ChiefCompliance Officer, Cargill Risk Management

Paul Hamill, Global Head ofFixed Income, Currencies and Commodities, Citadel Securities

Amy Hong, Head ofMarket Structure Strategy, Goldman Sachs

Adam Kansler, President- Financial Services, IHS Markit

Robert Klein, Managing Director & General Counsel, Citigroup Global Markets

Stephen Li, Managing Director & Head ofU.S. Agency Derivative Services, Barclays

Erik Tim Muller, ChiefExecutive Officer, Eurex Clearing AG (“Eurex”)

Joseph Nicosia, Global Platform Head ofCotton, Louis Dreyfus Company 

Christopher Nikkei, Senior Director - Global Risk Trading, Bunge Global Agribusiness 

Muthukrishnan Ramaswami, President, Singapore Exchange Limited

Thomas Sexton, President & ChiefExecutive Officer, National Futures Association 

Jessica Sohl, Partner & President, HC Technologies

Supuma VedBrat (Via Telephone), Managing Director & Global Head ofTrading, BlackRock 

Mark Wetjen, Managing Director, Head ofGlobal Public Policy, Depository Trust & Clearing 

Corporation (“DTCC”)

Masahiro Yamada, Managing Director & Head ofAmerica’s Cross Asset Structuring, JP Morgan 

Securities LLC
Speakers in Attendance

Shunsuke Shirakawa, Vice Commissioner for International Affairs, Japan Financial Services

Agency (Panel 1)

Steven Kennedy, Global Head ofPublic Policy, International Swaps and Derivatives Association

(“ISDA”) (Panel 2)

Nicolette Cone, Counsel and Director, ISDA (Panel 3)

Colin Lloyd, Partner, Cleary Gottlieb Steen & Hamilton LLP (Panel 3)

Rafael Martinez, Senior Financial Risk Analyst, CFTC, Division of Swap Dealer and

Intermediary Oversight (“DSIO”) (Panel 4)

Richard Haynes, Supervisory Research Analyst, Office ofthe ChiefEconomist (“OCE”), CFTC

(Panel 4)

David Aron, Special Counsel, CFTC, Division ofMarket Oversight (“DMO”), CFTC (Panel 5)

Kate Delp, Executive Director and General Manager, GTR Americas, DTCC (Panel 5)

CFTC Commissioners and Staffin Attendance

Commissioner Dawn D. Stump, GMAC Sponsor

Chairman J. Christopher Giancarlo

Commissioner Rostin Behnam

Commissioner Dan Berkovitz 

Commissioner Brian D. Quintenz

Andree Goldsmith, Special Counsel, CFTC, Division ofClearing and Risk, GMAC Designated 

Federal Officer

I. Opening Remarks

Ms. Goldsmith, the Designated Federal Officer for GMAC, called the meeting to order.

In her opening statement. Commissioner Stump discussed the objectives ofthe GMAC,

including helping the Commission determine how it can avoid unnecessary regulatory and

operational impediments to global business while still preserving core protections for customers 

and other market participants. She stated that another objective is to assist the Commission in 

assessing the impact on U.S. markets and firms ofthe Commission’s international efforts and the 

initiatives offoreign regulators and market authorities. Turning to the agenda, she noted that it

revolves around the sometimes-overlooked component ofthe G-20 agreement in 2009 in 

Pittsburgh, which stipulates that regulators should “assess regularly implementation and whether 

it is sufficient to improve transparency in the derivatives markets, mitigate systemic risk, and

protect against market abuse.” She then gave an overview ofthe scheduled presentations for the

meeting.

Chairman Giancarlo provided his opening remarks next. He stated that the meeting will 

discuss how regulators are implementing the 2009 G-20 directive regarding the OTC derivatives 

market at the G-20 nation state level in a fashion that is consistent, though not identical. He 

highlighted a concern regarding whether disparate implementation ofthe reforms is causing 

undue market fragmentation, increasing market fragility, and leading to smaller disconnected 

liquidity pools and less efficient and more volatile pricing. Chairman Giancarlo stated that the 

issue is how to conduct reform implementation in ways that are well calibrated to systemic risk

mitigation while balancing undue market fragmentation. He noted that a “Follow-Up Group”

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formed by the International Organization of Securities Commissions (“IOSCO”) is revisiting the 

work ofthe Cross-Border Task Force set up in 2013. One ofthe group’s tasks is the examination

ofinstances ofmarket fragmentation in securities and derivatives markets and the potential 

reasons why fragmentation has developed. The group is also tasked with building a central

repository ofsupervisory memoranda ofunderstanding to strengthen collaboration and

cooperation between IOSCO regulators. The group has been reaching out to IOSCO members, 

the industry, and other stakeholders, and will present its observations at the IOSCO meeting next

month in Sydney.

Commissioner Quintenz stated that he was looking forward to hearing all ofthe 

distinguished members’ and panelists’ thoughts on the robust meeting agenda. He welcomed

Vice Commissioner Shirakawa, who served on a panel with him at EUROFI two weeks before, 

where all ofthese issues were discussed at a very high level. He stated that it is important to

repeat that there was language in the G-20 agreement that reflected all the leaders’ commitments 

to insuring against protectionism and the fragmentation ofmarkets and regulatory arbitrage.

Commissioner Behnam also welcomed Vice Commissioner Shirakawa, whom he saw the 

previous week. He stated that it is the right time to revisit the G-20 reforms, and the

Commission should also let the past inform the future as we reflect on the crisis and how we can

shape new policy to make sure that systemic risk is eliminated and that we have a robust, 

transparent, global marketplace. He welcomed everyone and said he was looking forward to the

work ofGMAC in the future.

Commissioner Berkovitz welcomed Angie Kama as the new Chair. He noted that the 

CFTC has been focused lately on collaborating with its international counterparts to harmonize

regulations for derivatives trading. He also stated that as other countries are finalizing their

mles, the CFTC’s cross-border guidance and approach has provided it with a flexible framework 

to streamline access to international derivatives markets while minimizing risks that could come 

back to the United States. He stated that he was looking forward to hearing from all ofthe

panelists and to the discussion.

II. Panel 1: Overview ofFinancial System Issues for the 2019 G20 Japan Presidency

The presenter for Panel 1 was Vice Commissioner Shirakawa. He focused on three 

priorities ofJapan’s G-20 presidency: (1) market fragmentation, (2) technological innovation, 

and (3) aging.

First, Vice Commissioner Shirakawa discussed ways to address market fragmentation.

He explained that the Financial Stability Board (“FSB”) and IOSCO have launched an initiative 

to identify the sources ofharmful market fragmentation and to explore ways to address any 

financial stability risks. Vice Commissioner Shirakawa stated that potential sources ofmarket

fragmentation driven by regulatory and supervisory measures can be broadly classified into three 

categories: (1) inconsistencies in the implementation ofinternational standards; (2)

extraterritorial application ofmarket regulation, or location policies requiring certain activities to

be conducted in a specific jurisdiction; and (3) incompatibilities between domestic and foreign 

requirements. Vice Commissioner Shirakawa suggested that it may be useful to design processes

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and approaches fitted to the various phases ofregulations: the development ofinternational 

standards, national rulemaking, deference and/or recognition offoreign regulatory frameworks, 

and daily supervisory activities. He stated that we need to explore how supervisory cooperation 

could be improved for mitigating fragmentation, as insufficient cooperation often leads to

excessive conservatism in comparability assessments offoreign regulatory frameworks.

Vice Commissioner Shirakawa then discussed technological innovation in the financial 

sector. One immediate need is to mitigate the risks posed by crypto-assets. Since multilateral 

responses are needed given their borderless nature, standard-setting bodies are working on 

addressing crypto-asset issues in line with their mandates. On AML/CFT, the Financial Action

Task Force (“FATF”) is expected to submit a new Interpretive Note to the G-20 in June.

Additionally, the FSB published a directory of crypto-regulators, as a basis for cross-border 

supervisory cooperation. The FSB is also exploring the underlying decentralized financial 

technologies and their implications for financial stability, regulation and governance. Vice

Commissioner Shirakawa also noted that IOSCO is preparing a report on crypto-asset trading

platforms.

Vice Commissioner Shirakawa noted that in collaboration with the Ministry ofFinance 

and Bank ofJapan, JFSA will examine the implications of aging for fiscal and monetary policy

and the financial sector. JFSA’s focus is on financial inclusion in an aging society. Aging is a 

global phenomenon, and both developed and developing countries are experiencing growth in

the number and proportion ofolder people. Aging is particularly challenging for less developed 

economies with limited financial infrastructure. Vice Commissioner Shirakawa also discussed 

statistics related to dementia, which make it harder for older people to make financial decisions; 

the failure ofwealth to keep pace with increased longevity; and the projected estimated 

retirement savings gap of400 trillion U.S. dollars by 2050 for the eight advanced economies.

Japan will chair the Global Partnership for Financial Inclusion (“GPFI”) and identify emerging 

issues and potential policy responses. The GPFI will submit a report at the Ministers’ and

Governors’ meeting in Fukuoka in June. He finally noted that Japan will also host a high-level 

symposium in Tokyo in June.

Chairwoman Kama thanked Vice Commissioner Shirakawa for his very informative 

presentation, and there was no panel discussion.

(Break)

III. Panel 2: Regulatory-Driven Market Fragmentation

Following the break. Chairwoman Kama introduced the second panel.

Mr. Kennedy addressed regulatory-driven market fragmentation. He noted that market

fragmentation can trap capital, liquidity and risk in local markets, making the financial system 

and financial firms less efficient. The derivatives market is especially sensitive to market

fragmentation issues because it has historically been the most global. In addition, barriers to

entry orto competition within markets can make it more expensive for end-users to hedge their

risk.

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Mr. Kennedy noted that regulations are a source ofsome ofthe risk in the markets.

ISDA published a paper earlier this year giving specific examples ofregulatory driven market

fragmentation. He noted that extraterritoriality, substituted compliance, and deference are all big

issues, but there seems to be willingness among policymakers to cooperate. With respect to

capital, there’s a fundamental apprehension between participants in the EU and participants in

the U.S. about the implementation ofthe new market risk capital rules. Mr. Kennedy discussed 

differences in the approaches taken byjurisdictions related to the net stable funding ratio, the

credit valuation adjustment, and leverage ratio. He also noted jurisdictional inconsistencies with

respect to initial margin for non-cleared swaps, timeframes for posting margin, collateral

eligibility requirements, the posting ofinitial margin for inter-affiliate transactions, initial margin 

modeling, and back-testing. In the clearing area, he discussed clearing location policies, client 

clearing requirements, and requirements for margin period ofrisk. Otherjurisdictional

inconsistencies relate to trade execution, trading location policies and policies for trading 

personnel location; reporting requirements for trades and different definitions for data required to

be reported; eligible counterparties and transactions covered by netting; and benchmarks. He 

mentioned that a new EU benchmark regulation will be effective in two years.

ISDA’s paper articulated potential solutions, which Mr. Kennedy briefly described. First, 

he noted that it is important for policymakers to articulate the benefits ofglobal markets and the 

dangers ofmarket fragmentation. Second, he noted that, when policymakers meet to discuss 

global standards, it is important that they consult with other national regulators to make sure that

it is possible to implement those standards. Many times there is agreement on a global level, but

no agreement on a local level, which leads to regulatory arbitrage and market fragmentation. He 

suggested that it may not be appropriate for smallerjurisdictions to implement global standards 

where there's a de minimis amount of derivatives activity. He noted that everyone would agree 

that a line-by-line analysis is not going to work for regime comparability, and that ISDA’s

suggestion is for a risk-based framework for regime comparability. Third, he noted the

importance ofpolicymakers periodically taking a look at the regulations they have in place.

Chairwoman Kama started offthe discussion session by asking committee members why

market fragmentation has come to the forefront as a key priority, and what concerns committee 

members have that impact their organizations and are driving why market fragmentation is a key

priority. Mr. Colby expressed concern that many benefits that the CFTC has provided to endusers are undermined by the lack ofcoordination betweenjurisdictions globally and lack of

coordination between some ofthe regulators in the United States.

Chairwoman Kama asked which areas the CFTC should prioritize. Mr. Hamill stressed 

the importance oftrading execution and clearing rales and trading venues that allow customers to

access pools ofliquidity without fragmentation. Mr. Cutinho encouraged global regulators to

build a foundation of deference and risk-based evaluation, and praised the CFTC’s white paper.

Chairman Giancarlo noted that bank capital rales are largely set by bank prudential

regulators and central banks. Therefore, it is difficult for the CFTC to influence dealer capital

issues, which have a large impact on the markets the CFTC regulates. The CFTC has been vocal 

in areas like the Supplementary Leverage Ratio (“SLR”), but it’s difficult to prevail because 

prudential and bank regulators look at the world not from a market’s point ofview, but from the

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perspective ofa bank’s balance sheet. Many ofthe capital rules are biased against derivatives 

and clearing, yet clearing was one ofthe core mandates ofthe G-20.

Ms. Bradbury emphasized that regulators and the markets need better data. Mr. Muller

stated that fragmentation that is harmful to the markets should not be confosed with CCP

fragmentation. According to Mr. Muller, in the CCP world, his firm Eurex has concentration 

rather than fragmentation. Some ofthe major asset classes have essentially ended up in one

CCP. Mr. Muller has observed a CCP retreating from offering credit default swaps and another 

CCP not offering interest rate swaps clearing anymore. Therefore, Eurex is promoting 

competition in the field as choice and optionality are important for CCPs.

Chairwoman Kama then asked about the potential solutions which Mr. Kennedy had

highlighted, and in particular which is most important and whether there are other potential 

solutions. Ms. Hong agreed with ISDA’s recommendation for an ongoing regulatory review

process, on a global basis and across all regulators. Ms. Belich described the difficulty for 

Canadian banks in pivoting between various regulators, and encouraged regulators to take the 

same approach in implementing substituted compliance and equivalency. Mr. Colby stated that

you cannot prioritize substituted compliance and equivalency over implementing a risk-based

framework.

Chairman Giancarlo stated that he agreed with the importance ofmoving to more riskbased approaches to data, and he commended the ChiefEconomist’s office under Bruce 

Tuckman for their groundbreaking work on entity netted notionals as a new way ofmeasuring

the size ofmarkets, which he characterized as a more risk-based approach than the traditional 

approach ofusing gross notional amounts.

(Lunch)

III. Panel 3: Trading on Exchanges or Electronic Trading Platforms and Clearing

Through Central Counterparties

Ms. Cone began the next panel by discussing global trading on exchanges. First, she

discussed the historical issues of cross-border centralized derivatives trading. Historically, there

have been three key issues with the CFTC SEF and trading rales in the context of cross-border 

trading. First, liquidity is being fragmented across pools, across platforms, and across border

lines resulting in separate liquidity pools for similar transactions. Second, “footnote 88” in the 

SEF release requires a facility to register as a SEF or obtain an exemption ifit meets the SEF

definition, even though it is not listing swaps that are subject to U.S. mandatory trading rales.

This has led to non-U.S. trading platforms denying access to U.S. persons for fear ofbeing

captured by the SEF registration regime. Third, there is a potential for firms operating globally

to face overlapping trading mandates, and now that the otherjurisdictions have caught up with

the U.S., firms can be forced with the decision to execute the same trade, but with different 

requirements on different platforms.

Ms. Cone then noted that there have been positive achievements. For the first time ever,

the CFTC has achieved trading venue recognition with the EU and Singapore. Hopefully, the

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CFTC will continue working with foreign regulators to achieve trading venue recognition in

other non-U.S. jurisdictions.

Ms. Cone then presented ISDA’s paper which analyzes the effect ofmutual recognition 

on the order flow oftrades executed on US/EU recognized trading venues. Ms. Cone presented 

diagrams of clearing and trade reporting flows on recognized Multilateral Trading Facilities 

(“MTFs”), Organised Trading Facilities (“OTFs”) and Swap Execution Facilities (“SEFs”)

involving U.S. and EU counterparties under various scenarios. ISDA found that (1) trading

venue recognition has had a positive effect on cross-border centralized trading, but the overall 

lack of global harmonization still poses challenges, and (2) granting recognition for certain 

rulesets, but not others, introduces complexity to cross-border trading. ISDA encourages 

regulators to issue wholesale, holistic comparability determinations using ISDA’s risk-centered, 

outcomes-based approach. ISDA supports a de minimis trading activity exception for emerging 

markets.

Next, Mr. Lloyd presented on a December 2017 white paper by the Futures Industry 

Association (“FLA”) and the Securities Industry and Financial Markets Association (“SIFMA”)

on reverse fragmentation. He noted that once swaps are subject to centralized trading and central 

clearing, they start to behave in many ways consistently with the futures markets. The futures 

markets are not fragmented in large part due to the CFTC’s Part 30 regulations, which greatly

contribute to the ability ofU.S. firms to participate in foreign markets and set an excellent 

precedent. The U.S. and Europe have taken a number ofvery positive steps to facilitate crossborder trading in swaps, but markets in Asia, Latin America, and other non-U.S. jurisdictions

should not be forgotten. He noted that the expansion ofinitial margin requirements for uncleared

swaps will increase demand for U.S. access to non-U.S. CCPs.

Mr. Lloyd then explained the current framework for a U.S. customer to access non-U.S.

CCPs, which under the CFTC’s regime is bifurcated between customer clearing and proprietary

clearing. In order for a U.S. customer to access a foreign CCP, the U.S. customer must clear 

swaps solely through a registered FCM and that registered FCM must clear at a registered DCO.

To provide access to the five registered non-U.S. DCOs, a U.S. firm typically must have both a 

U.S. FCM affiliate that clears U.S. customer business and a non-U.S. affiliate that clears nonU.S. customer business. This structure directly exposes the U.S. FCM to the non-U.S. CCP’s

risk mutualization framework and can increase the overall firm’s liquidity/funding risk. The 

non-U.S. CCP must directly satisfy U.S. customer protection requirements, which may not be

consistent with local equivalents and in some cases has necessitated relieffrom the CFTC.

Mr. Lloyd then discussed the FIA/SEFMA proposal that the CFTC adopt an approach to

foreign cleared swaps modeled on Part 30’s approach to foreign futures. Under the proposal, a 

U.S. customer could access a non-U.S. swaps CCP either: (1) indirectly through a correspondent 

clearing structure involving the U.S. customer clearing through a U.S. FCM that in turn clears

through an omnibus account carried by a non-U.S. clearing member ofthe non-U.S. CCP

(similar to CFTC Rule 30.7); or (2) directly through an account carried by a comparably 

regulated non-U.S. clearing member ofthe non-U.S. CCP (similar to CFTC Rule 30.10). Mr.

Lloyd stated that the Commission has adequate legal authority to do this, though he noted that

there are questions in relation to the U.S. Bankruptcy Code for at least the indirect access model.

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Mr. Lloyd then discussed Chairman Giancarlo’s Cross-Border 2.0 white paper that

addresses certain aspects ofFIA/SIFMA’s proposal. The white paper proposed to permit U.S.

customers to access non-U.S. swaps CCPs in comparable jurisdictions through a comparably 

regulated non-U.S. clearing member. However, the white paper did not address the indirect

access model. According to Mr. Lloyd, this is an important difference as he believes a number

ofU.S. customers will strongly prefer the indirect model because it will allow them to maintain

their positions with a U.S. FCM.

Mr. Lloyd’s presentation was followed by a discussion by the members. Issues discussed 

included implementation ofthe cross-border guidance; the Chairman’s white paper on crossborder issues; the current regulatory environment for foreign CCPs and their ability to serve U.S.

customers; comparability assessments; the concern that it is not cost-effective to be a clearing 

member; the importance for end users offacilitating impartial access to trading venues around 

the world; and lack of access by international CCPs to central bank accounts. One member

asserted that U.S. law should be applied strictly to encourage a race to the top rather than 

deferentially which could impose risks on the U.S. financial system. Other members disagreed, 

arguing that the whole suite ofEuropean regulations are just as comprehensive and rigorous as

the regulatory framework in the U.S., and that market fragmentation and fragmentation of

liquidity are not positive for end-users and the markets.

Commissioner Berkovitz asked whether the CFTC’s approach is a risk-centered 

outcomes-based approach that is consistent with ISDA’s recommendations. A participant stated 

that he believes the CFTC is acting consistently with the recommendations, but more needs to be

done. For example, footnote 88 remains an issue. The recognition oftrading venues in the EU

and Singapore has ameliorated market fragmentation, but hasn’t eliminated the problem. For

instance, there are minor technical disconnects in items like the trade reporting rules.

IV. Panel 4: Initial Margin for Non-Centrally Cleared Derivatives Contracts

Mr. Martinez presented on the development ofinternational standards on margin on

uncleared swaps. In 2011, the G-20 added margin requirements for uncleared derivatives to the 

post-crisis reform agenda. The same year, the Basel Committee on Banking Supervision 

(“BCBS”) and the International Organization of Securities Commissions (“IOSCO”) jointly

created the working group on margin requirements (“WGMR”) that included representatives 

from 25 regulatory authorities. In 2013, the WGMR published a framework that established 

minimum standards for margin requirements for non-centrally cleared derivatives. At the end of

2015, the prudential regulators and the CFTC voted on final rules.

For initial margin, there were five phases of compliance, with larger entities having to

comply in 2016, and grace periods for smaller entities in each ofthe five stages. The third phase 

was in September 2018, and there are two more phases to go. The CFTC tried to obtain industry

information through a survey ofnine firms before adopting the rules, but had limited data in 

calibrating the requirements as it only received a response from one firm. Unfortunately very

few entities come under the rule in the second and third phases. ISDA estimated that 1,100

entities will be coming into scope in the coming phases, and that the majority will come into
scope in phase five. However, the lion’s share ofinitial margin was captured in the first three 

phases, since those are the phases in which larger entities came into scope. While the industry

has been developing supporting practices, processes, and infrastructure, the CFTC doesn’t know 

whether those 1,100 entities will be ready to comply.

Mr. Haynes discussed a paper that the CFTC’s Office ofthe ChiefEconomist (“OCE”)

released in October 2018 that focused primarily on phase five. Consistent with ISDA’s

estimates, OCE found that approximately 704 entities would come into scope in 2020 during 

phase five. The paper concluded that most (75%) ofthe Phase 5 entities have less than $50

billion average aggregate notional amounts (“AANAs”), comprising just 30% ofcumulative 

AANA. Phase five entities are concentrated around the low end ofthe threshold (especially nonfinancials). OCE also examined a proposed exemption for physical FX trades from AANA,

which would reduce the number of covered entities by about 200 in phase five, particularly at the

low end ofthe notional range.

The members then discussed some ofthe issues raised by Panel 4, including challenges 

that smaller entities face in complying with phase five; the effect ofthe proposed exemption for 

physical FX products; the challenges presented by implementation ofphase five more generally; 

whether the implementation schedule should be delayed; and whether there are more meaningful 

measures than notional thresholds in terms ofrisk-weighting and determining which parties and

asset classes should be subject to initial margin requirements. Mr. Martinez noted that BCBSIOSCO recently clarified that documentation is not required until an entity crosses the $50

million threshold. He stated that regulators need to clarify expectations regarding what firms 

need to do as they approach the $50 million threshold. He noted that regulators had mistakenly

assumed that people under $8 billion notional will never cross the $50 million threshold. He also

noted that the CFTC is aware ofissues related to asset managers. One member suggested that

the CFTC issue guidance this summer ifthey believe those with less than $50 million exposure 

should not have to be subject to all ofthe requirements. Chairman Giancarlo said that the CFTC

is very aware ofthis issue.

(Break)

V. Panel 5: OTC Derivatives Reporting to Trade Repositories

Following the break. Chairwoman Kama introduced the fifth panel.

Mr. Aron began the session by presenting an update on the Division ofMarket 

Oversight’s (“DMO’s”) swap data roadmap implementation. He gave updates on proposals 

under parts 43, 45 and 49 ofthe Commission’s regulations which are being drafted in response to

DMO’s roadmap review.

Mr. Aron also discussed DMO’s international harmonization work. In April 2018, the

CPMI-IOSCO Working Group for the Harmonization ofCritical OTC Derivative Data Elements 

(“CDEs”) published definitions, formats, and allowable values ofCDEs to give authorities a

comprehensive view ofOTC derivatives. In the draft part 43 and 45 rulemakings, CFTC staffis

proposing replacing existing required swap data fields with a standardized streamlined set that is

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harmonized with the CDEs where possible and that can be issued and updated by staff as needed.

Mr. Aron then provided an update on the CFTC’s global harmonization work with respect to

Legal Entity Identifiers (“LEIs”), Unique Transaction Identifiers (“UTIs’), and Unique Product 

Identifiers (“UPIs”).

Next, Ms. Delp provided DTCC’s perspective on progress made to date and where DTCC 

believes OTC derivatives reporting is headed. She gave background on the creations ofDTCC’s

global trade repository service. She noted that, rather than follow DTCC’s global approach to

standardization, national legislators and regulators responded to G-20 commitments by first 

prioritizing domestic compliance. The result was a fragmented global reporting environment in 

which a firm regulated in multiple jurisdictions might have to report the same OTC derivatives 

transaction to multiple trade repositories, each one then applying different identifiers, reporting

rules, data fields, terms and formats. Despite this fragmentation, she described the current state

ofreporting as a success. New industry-wide processes and procedures have been implemented 

to ensure that transactions across the multi-asset class, OTC derivatives universe can be reported 

in an accurate and timely fashion. Collaboration has continued to increase and trade repositories 

have acted as a valuable bridge between regulators, regulated firms, and industry bodies. Key

industry bodies are establishing global data and processing standards for OTC derivatives, and

work continues toward the removal ofbarriers to data sharing and third-party access to that data.

Ms. Delp noted that future, increased coordination by industry players including 

regulators will narrow differences acrossjurisdictions in reporting policies and practices for OTC

derivatives. A global reporting framework built through collaboration and potentially enhanced 

through new technologies such as distributed ledger technology can enable trade repositories to

better achieve their fundamental purpose, which is to provide regulators with the data they need 

to quickly identify and analyze systemic risks triggered by OTC derivatives trading.

The presentations by Mr. Aron and Ms. Delp were followed by a general discussion by

members. In response to Chairwoman Kama’s question regarding how transparency with

respect to swap data has impacted business and trading strategies, members discussed the

importance oftransparency, as well as the need to protect confidential information. One member

said anything the CFTC can do to streamline and simplify is extremely helpful, as it can be

difficult to figure out how to report unique bespoke products. Ms. Delp noted that market

fragmentation has led some participants to bifurcate internal processes on the trade repository

side, as they may no longer be able to send a single message to multiple regulators, resulting in

an increased cost burden. Some participants noted that duplication and fragmentation in the 

market can disproportionately affect small and medium-sized banks, which have fewer 

resources. Mr. Aron said that UTI differences can impede the CFTC’s ability to get a global

view ofa participant’s risk exposure. Chairman Giancarlo expressed his disappointment with the 

lack ofprogress being made by some global bodies, as a number ofkey regulators do not have a 

mandate to implement global standards the way the CFTC does. Ms. Delp’s advice to global

regulators was to follow in the CFTC’s footsteps; adopt CDE and do not make changes to what

CDE has proposed, unless everyone is going to make the same changes; and adopt UTI and UPI,

in coordination, at the same time.

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VII. Closing Remarks

In closing, the Chairman and Commissioners expressed their thanks to Commissioner 

Stump, her staff, and Ms. Kama for an excellent meeting discussing the challenges and different 

perspectives concerning global market issues.

Ms. Goldsmith adjourned the meeting at 4:13 p.m.

I hereby certify that the foregoing minutes are accurate.

Angie Kama F Date

Chair, Global Markets Advisory Committee