MINUTES OF THE MARCH 8, 2023 MEETING OF THE 

U.S. COMMODITY FUTURES TRADING COMMISSION'S 

MARKET RISK ADVISORY COMMITTEE 

The Market Risk Advisory Committee (“MRAC”) convened for a public meeting on 

Wednesday, March 8, 2023, at 9:33 a.m., at the U.S. Commodity Futures Trading Commission's 

(“CFTC” or “Commission”) Headquarters Conference Center, located at Three Lafayette Centre, 

1155 21st Street, N.W., Washington, D.C. The meeting consisted of three sections. Section 1 

discussed cybersecurity and central counterparty (“CCP”) risk and governance. Section 2 provided 

an overview on perspectives of the future of finance. Section 3 discussed climate-related market 

risks, addressed market structure, and examined interest rate benchmark reform and the transition 

away from the London Inter-Bank Offered Rate (“LIBOR”). 

MRAC Members in Attendance 

Alicia Crighton, Chair of the Board of Directors, Futures Industry Association (“FIA”) 

Robert Allen, President and Global Head of Fenics Rates, FMX Futures Exchange, LP 

James Andrus, Interim Managing Investment Director, California Public Employee's Retirement 

System 

Ann Battle, Senior Counsel, Market Transitions & Head of Benchmark Reform, International 

Swaps and Derivatives Association (“ISDA”) 

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

LLC 

Richard Berner, Clinical Professor of Management Practice in the Department of Finance and CoDirector of the Stern Volatility and Risk Institute 

Alessandro Cocco, Vice President and Head of Financial Markets Group, Federal Reserve Bank 

of Chicago 

Biswarup Chatterjee, Managing Director and Head of Innovation for the Global Markets Division, 

Citigroup 

Neil Constable, Head of Quantitative Research and Investments, Fidelity 

Tim Cuddihy, Managing Director, Financial Risk Management, Depository Trust and Clearing 

Corporation 

Gina-Gail Fletcher, Professor of Law at Duke University School of Law 

Graham Harper, Head of Policy and Market Structure at DRW, FIA Principal Traders Group 

Lindsay Hopkins, Chief Corporate Counsel, MGEX Clearing, Minneapolis Grain Exchange, LLC 

David Horner, Chief Risk Officer, LCH Ltd, London Stock Exchange Group 

Demetri Karousos, President and Chief Operating Officer, Nodal Exchange, LLC 

Eileen Kiely, Managing Director, BlackRock 

Elisabeth Kirby, Managing Director and Head of Market Structure, Tradeweb Markets 

Derek Kleinbauer, President, Bloomberg SEF LLC 

Ernie Kohnke, General Counsel Vitol, Commodity Market Council 

Purvi Maniar, Deputy General Counsel, FalconX Bravo Inc. 

Craig Messinger, Vice Chairman, Virtu Financial, Inc. 

Andrew Nash, Managing Director and Head of Regulatory Affairs, Morgan Stanley 

Ashwini Panse, Head of Risk Oversight for ICE Clear Netherlands, and Chief Risk Officer for the 

North American Clearinghouses, Intercontinental Exchange, Inc. 

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Andrew Park, Senior Policy Analyst, Americans for Financial Reform 

Jessica Renier, Managing Director, Digital Finance, Institute of International Finance 

Marnie Rosenberg, Managing Director, Global Head of Central Counterparty Credit Risk and 

Strategy, JPMorgan Chase & Co. 

Tyson Slocum, Director, Public Citizen Energy Program, Public Citizen 

Suzanne Sprague, Managing Director and Global Head of Clearing and Post-Trade Services, CME 

Group Inc. 

CFTC Commissioners and Staff in Attendance 

Chairman Kristin N. Johnson, MRAC Sponsor and Commissioner 

Christy Goldsmith Romero, Commissioner 

Caroline D. Pham, Commissioner 

Bruce Fekrat, Chief Counsel to Commissioner Johnson and MRAC Designated Federal Officer 

(“DFO”) 

Marilee Dahlman, Special Counsel, Division of Market Oversight, MRAC Alternate Designated 

Federal Officer 

Speakers in Attendance 

Hayden Adams, Founder and Chief Executive Officer, Uniswap Labs 

David Bowman, Senior Associate Director, Program Direction Section, Monetary Affairs at the 

Board of Governors of the Federal Reserve System 

Eun Young Choi, Director of National Cryptocurrency Enforcement Team, U.S. Department of 

Justice (“DOJ”) 

Caitlin Clarke, Assistant National Cyber Director for Planning and Operations, Office of the 

National Cyber Director 

Matthew Cronin, Director of National Cybersecurity, Office of the National Cyber Director 

Sonja Gibbs, Managing Director and Head of Sustainable Finance, Institute of International 

Finance; Member of the Board, the Integrity Council for the Voluntary Carbon Market 

(The Integrity Council) 

Mark Hays, Senior Policy Analyst, Americans for Financial Reform/Demand Progress 

Chris Hayward, Chairman of Policy and Resources, City of London Corporation 

Julie Holzrichter, Chief Operating Officer, CME Group 

Linda Jeng, Chief Global Regulatory Officer and General Counsel, Crypto Council for 

Innovation 

Candace Kelly, Chief Legal Officer, Stellar Development Foundation 

Brad Levy, Chief Executive Officer, Symphony 

Walt Lukken, President and Chief Executive Officer, Futures Industry Association 

Caroline Malcolm, Global Head of Public Policy, Chainalysis, Inc. 

Tim Massad, Research Fellow Harvard Kennedy School, Mossavar-Rahmani Center 

for Business and Government, and Director M-RCBG Digital Assets Policy 

Project, Harvard University 

Amanda Olear, Director, Market Participants Division (“MPD”), CFTC 

Suyash G. Paliwal, Director, Office of International Affairs, CFTC 

Kirsten Robbins, Senior Special Counsel, Office of International Affairs, CFTC 

Greg Ruppert, Executive Vice President, Member Supervision, FINRA 

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Tom W. Sexton III, President and Chief Executive Officer, National Futures 

Association (“NFA”) 

Brian Smith, Deputy Assistant Secretary for Federal Finance, U.S. Department of the 

Treasury 

Valerie Szczepanik, Director, Strategic Hub for Innovation and Financial Technology, 

U.S. Securities and Exchange Commission (“SEC”) 

Nathaniel Wuerffel, Senior Vice President, Federal Reserve Bank of New York 

I. Opening Remarks 

Mr. Fekrat called the meeting to order at 9:33 a.m. and introduced the Commissioners in 

attendance. 

Commissioner Johnson stated that the meeting would be the MRAC’s first public 

examination of the ION ransomware attack. ION Cleared Derivatives is a division of ION Markets, 

a Dublin-based third-party provider of trading, clearing, analytics, treasury, and risk management 

services for capital markets and futures and derivatives markets. Because of its central role in 

trade processing, the cyber attack disrupted not only ION's markets, but also the operations of 

other market participants, triggering a ripple effect across markets. The cyber incident halted deal 

matching, required affected parties to rely on manual trade processing, and caused delays in 

reconciliation and information sharing and reporting, among other challenges. Commissioner 

Johnson requested guidance on firms’ day-one plans for responding to cyber incidents and whether 

the Commission’s cyber risk management regulations are fit-for-purpose. 

Commissioner Goldsmith Romero highlighted the market risks from geopolitical events, 

economic uncertainties, and continued impacts of the pandemic. She sought advice on how the 

Commission should be thinking about risk in terms of the high prices, high volatility, and high 

volume that markets experienced this past year. 

Commissioner Pham supported the MRAC’s continued discussion of issues raised in recent 

Global Markets Advisory Committee meetings. 

Following the opening remarks, Mr. Fekrat took a roll call. Chair Crighton then provided 

opening remarks, noting the topics to be discussed at the meeting and suggested that it would be 

productive if the MRAC met each quarter this year. 

II. Section 1: Cybersecurity and CCP Risk and Governance 

Chair Crighton then introduced the first section to provide remarks on matters critical to 

the nation’s cybersecurity strategy. 

Mr. Cronin put the importance of cybersecurity in historical context, bookended by the 

Russian invasion of Ukraine and the potential Chinese invasion of Taiwan. He discussed the threat 

posed and harm caused by Russian cyber actors. He also discussed American intelligence 

assessments that if Taiwan were invaded, there is a risk that the Chinese would engage in cyber 

attached against U.S. critical infrastructure. 

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Ms. Clarke discussed the administration’s National Cybersecurity Strategy. She identified 

two fundamental shifts in strategy: first, to rebalance the responsibility to defend cyberspace away 

from individuals and small entities to the larger, more capable, and more resourced actors in 

cyberspace; and, second, to focus on long-term investment. 

CCP Risk and Governance Panel 1: Leadership Perspectives 

Mr. Lukken presented a timeline of events precipitated by the ION ransomware attack. He 

stressed the importance of flexibility and communication during a crisis. He commended the 

Commission and NFA for their direct engagement with market participants and the flexibility with 

respect to reporting requirements afforded to registered entities. He announced that FIA is forming 

a Cyber Risk Task Force to look at the ION event and develop recommendations for 

improvements, aiming to release a report by the end of second quarter this year. Focus areas will 

include existing cyber protections and protocols, the effectiveness of industry’s initial response, 

best practices around reconnection, and safeguards around third-party service providers. He 

emphasized that continuity testing is crucial to helping derivatives firms prepare for unplanned 

market disruptions. He stated that FIA is reviewing how they conduct annual disaster recovery 

exercises, and recommended that public authorities continue conduct regular simulated exercises 

aimed at improving responses to a range of cyber threat scenarios within the financial sector. 

Mr. Sexton discussed how the ION incident highlighted the risks associated with both 

cyber incidents and third-party service providers, but opined that it also illustrated the resiliency 

of the derivatives industry. He outlined previous efforts to institute measures relevant to the ION 

incident. Among them, in 2021, NFA required member firms to adopt supervisory frameworks 

relating to third-party providers that assist members in fulfilling their regulatory obligations. The 

requirements generally follow best practices for vendor management and proactively address the 

risks associated with these providers in order to mitigate them. Mr. Sexton echoed Mr. Lukken’s 

points about updating practices, continued disaster recovery exercises and coordination among 

market participants with regulators. 

Ms. Holzrichter focused on steps taken at CME in response to the ION ransomware event, 

which affected fewer than 20 percent of their clearing member firms. As firms were impacted 

differently CME worked to assist them in recovery once new environments had been built, and put 

in place enhanced risk monitoring for the impacted firms. She emphasized that collaboration 

across the industry is critical when there has been a cyber event. She stated that third-party risk 

management is a growing and evolving field, but the risks introduced can be managed. 

CCP Risk and Governance Panel 2: Regulatory Perspectives 

Ms. Olear acknowledged that registrants face a broad array of challenges to their risk 

management activities, ranging from geopolitical events, public health crises, macroeconomic 

forces to threats of operational disruptions, which are amplified by an increased reliance on 

technology and the ever-evolving sophistication of cyber criminals. She announced that the 

Commission will be issuing an Advance Notice of Proposed Rulemaking in order to revisit the 

Commission’s risk management requirements for FCMs and swap dealers in light of recent events. 

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She stated that MPD plans to engage with registrants to get their perspective on the risk 

management regime. She expressed MPD’s belief that the Commission could play a more direct 

role in fostering strong operational resilience practices among registrants. She also stated that, at 

the Commission’s request, MPD has begun work to develop policy recommendations for 

cybersecurity practices of FCMs and swap dealers. She concluded that the CFTC can help raise 

standards in a way that will improve operational resilience across the financial sector and better 

protect markets and participants. 

Mr. Ruppert addressed the need to be proactive in the cyber arena. He explained that 

FINRA has separated cybersecurity risk and technology risk out of their traditional operational 

risk category and is handling those risks as a separate category. FINRA is looking at expanding 

capabilities to interact with threat intelligence across the U.S. government and other entities. 

They’ve created a Cyber and Analytics Unit, and broken out additional teams relating to 

cybersecurity, cyber fraud, and a crypto asset investigations unit. FINRA alerts membership and 

others to developments in all of these areas. FINRA surveils firms for compliance with the Federal 

securities laws, their approach to cybersecurity risk management, and evidence of cyber-specific 

misconduct. Mr. Ruppert identified some top risk areas: phishing, smishing, ransomware, supply 

chain attacks, and insider threat. He mentioned the increase in frequency and complexity of social 

engineering attacks. He called out areas such as financial loss, reputational risk, and operational 

failures in many FINRA and SEC rules that demand attention. The rise of social media has 

increased the amount of data available to outside threat actors, which adds to the vulnerability for 

social engineering. AI or machine learning technologies also help threat actors. He stated that 

FINRA has been reinforcing the need for business continuity plans with membership. FINRA has 

seen a significant increase in the nexus of member firms to new technologies, business models and 

digital assets, so FINRA is monitoring threats in these spaces. 

CCP Risk and Governance Panel 3: CCP Risk and Governance Subcommittee 

Ms. Panse observed that markets have been volatile due to the COVID-19 pandemic and a 

war in Europe where the aggressor is the main energy supplier to the continent. She stated that 

markets have handled the disruptions of the last year very well and provided examples. She opined 

that Europe is in a stronger position with respectto energy prices now than it was prior to the crisis, 

and 2022 ended with the highest number of market participants ever. The infrastructure around 

that market was robust and managed its way though that risk well. She opined that the 

implementation of prices caps in the futures markets in Europe is unhelpful. The CCP Risk and 

Governance Subcommittee met the week prior to reexamine current and potential workstreams in 

light of the recent unprecedented volatility in the commodity markets. Ms. Panse described 

previous work and reports by the Subcommittee. In August 2022, the Commission proposed 

several amendments to regulation 39.24 that are consistent with the Subcommittee’s 

recommendations to enhance DCO governance standards. The Subcommittee can continue to aid 

the Commission’s work. Other Subcommittee recommendations, such as in the areas of margin 

and stress testing, are already being followed by industry. Where areas of consideration lacked 

agreement, the Subcommittee will explore whether additional consensus can be achieved. Ms. 

Panse identified a few areas of focus: price volatility controls in light of the LME event, liquidity 

preparedness of market participants in the event of another bout of extreme volatility, 

responsiveness of margin models to market stresses, opacity of commodity markets and data gaps 

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in regulatory reporting, transparency in centrally cleared and uncleared markets, variation margin 

processes, and recovery and resolution. 

Mr. Paliwal commenced speaking about some international work on derivatives margins. 

In the wake of volatility caused by the onset of the pandemic, IOSCO, CPMI, and the Basel 

Committee established a group to consider the liquidity effects of margin by looking at market 

dynamics during that time, particularly March 2020. The group published a report in September 

2022 that observed that the clearing ecosystem and margin in both cleared and uncleared markets 

functioned as designed, but the size of margin calls was still high, and that the ecosystems would 

benefit from greater preparedness by market participants. 

Ms. Robbins outlined six areas identified by the group’s report for follow-up: (i) enhancing 

the transparency of cleared initial margin; (ii) exploring the use of metrics and other tools to 

identify baseline expectations of procyclicality in cleared markets and to address, among other 

things, the responsiveness of initial margin models to market stress; (iii) streamlining variation 

margin processes in cleared markets, including intraday margin calls; (iv) examining the 

responsiveness of initial margin models in noncleared markets; (v) streamlining variation margin 

processes in the noncleared markets; and (vi) considering recommendations to enhance the 

liquidity preparedness of market participants, as well as data gaps in regulatory reporting. She 

opined that it is critical not to undermine the G20 reforms on central clearing in response to 

problems not caused by the CCPs. The work should be grounded in data, and costs, benefits, and 

other challenges of various policy proposals considered. 

III. Section 2: The Future of Finance 

Mr. Hayward identified innovation in digital assets, central bank digital currencies, and 

voluntary carbon markets as areas for closer collaboration and regulatory alignment between the 

United Kingdom and the United States. He voiced the hope that the Financial Regulatory Working 

Group will become the long-term mechanism for coordination. He mentioned the City 

Corporation’s plans for a United States office. 

Future of Finance Panel 1: Developing a Regulatory Framework for Digital Assets (Critical 

Policy Considerations) 

Mr. Massad offered insights on critical policy considerations. He stated that the crypto 

industry does not today comply with investor protection standards comparable to other financial 

markets, and hundreds of thousands of people have suffered losses. He commented that Crypto 

industry participants exploit jurisdictional gaps. He then stated that the SEC and CFTC should 

cooperate because desired investor protections are largely the same, whether crypto is a security, 

commodity, or something else. Moreover, most crypto trading is recorded on traditional ledgers 

kept by centralized intermediaries. The CFTC and SEC should create common minimum 

standards, starting with requirements for centralized trading platforms. He proposed: (i) 

requirements for the custody and safeguarding of customer assets; (ii) prohibitions on the 

operations of conflicting businesses; (iii) prohibitions on economic interests in products traded on 

the platform; (iv) prohibitions against fraud, manipulation, and abusive practices; (v) requirements 

regarding surveillance and detection systems; (vi) standards for execution and settlement of 

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transactions; (vii) pre- and post- trade transparency requirements, recordkeeping, and periodic 

public disclosures; (viii) governance standards; (ix) basic risk management, operations resilience, 

and cybersecurity standards; and (x) standards to ensure that stablecoins are, in fact, stable. He 

discussed implementation of the standards and incentives to encourage SRO membership. 

Ms. Szczepanik stated that there are crypto market protections contained in the Federal 

securities laws. The SEC takes a technology neutral approach and has been applying the Federal 

securities laws effectively in the crypto sphere. She described enforcement efforts and 

collaborative work with domestic and international partners. 

Ms. Choi stated that the primary ambit of the Department of Justice and its role in the 

digital assets space is to ensure that it is well positioned to combat the criminal misuse of digital 

assets. This started with Silk Road; since then, the number of both dark markets and transactions 

executed on them have increased. The ways in which digital assets have been misused by criminal 

actors varies. She described how DOJ has been considering whether criminal authorities are 

adequately dealing with the challenges posed by digital assets. She discussed the executive order 

entitled Ensuring Responsible Development of Digital Assets to Address Risks and Harness the 

Potential Benefits for Digital Assets and Related Technologies, and the administration’s Roadmap 

to Mitigate Cryptocurrency Risks. She stated that criminal authorities should be equally applicable 

to new products in order to keep the American public safe from the risks posed by digital assets. 

DOJ has proposed amendments to the Bank Secrecy Act and other statutes to deal with various 

types of digital asset crimes. 

Mr. Hays expressed a skeptical view of the use case for digital assets to promote racial and 

economic justice and equity throughout the financial system. He expressed concerns that crypto 

business models end up mimicking predatory financial activities seen in traditional markets, and 

about the structural limitations of the technology itself. He asked how the Commission could gain 

better visibility into the integrity and management of businesses that seek to acquire ownership 

stakes in entities registered with the Commission. He also said that the CFTC should explore what 

additional authority or resources may be necessary to enhance acquisition diligence efforts. He 

suggested that the MRAC lead a review of recent acquisitions of CFTC registrants exposed to 

digital assets to identify anomalies or diligence best practices. He also recommended exploration 

of the topic of cybersecurity threats for blockchain products in general and for crypto derivatives 

markets more specifically. He further recommended that the MRAC review the linkages between 

cybersecurity risks found on platforms tied to existing crypto derivatives, in respect of operational 

risk and underlying structural risk. 

Mr. Cocco addressed liquidity risks to banking organizations resulting from crypto asset 

market vulnerabilities. He spoke about the Joint Statement on Liquidity Risks to Banking 

Organizations Resulting from Crypto Asset Market Vulnerabilities by the Board of Governors of 

the Federal Reserve System, the FDIC and the OCC. He explained that the topic of the statement 

is the liquidity risks to banking organizations presented by participants in the crypto asset markets. 

He further explained that the statement also addresses some practices to manage these risks. Rather 

than creating new risk management principles, the Statement reminds banking organizations to 

apply existing principles. The statement highlights the susceptibility of banking organizations to 

large inflows and outflows that may or may not be specific to crypto assets. 

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Future of Finance Panel 2: Moving Beyond Common Use Cases: DeFi, Digital Identity, 

Interoperability and More on Distributed Digital Ledger and Blockchain Technology 

(Emerging Uses and Market-Tech Trends) 

Mr. Levy presented slides and focused on interoperability and identity. Interoperability is 

the ability of multiple systems and software applications to exchange and make use of information 

seamlessly. He explained that the FDC3 standard is an enabler of interoperability. He stated that 

larger firms are moving relatively quickly on interoperability, while firms on the smaller side of 

the spectrum are more heavily reliant on the vendor community to drive initiatives. He also 

described efforts to build a better identity solution for the market overall. 

Mr. Adams focused on decentralized finance and DeFi protocols, which he explained are 

rules-based, autonomous software with transparent code that can be an alternative to intermediaries 

in some transactions. He stated that reliance on intermediaries can cause fraud, error, or other 

risks. He observed that some believe that DeFi protocols are more accessible and fairer. He stated 

that DeFi protocols are transparent when properly designed and should not be able to be 

unilaterally altered by any one actor to the detriment of users. DeFi protocols permit users to retain 

custody of their own assets. He described how risk of hacks and scams can be reduced. 

Ms. Kelly asked, what is blockchain good for? She described the way that MoneyGram 

access uses blockchain to facilitate remittances and humanitarian aid. She said it also could be 

used for international payroll, and mentioned that Franklin Templeton issued regulated assets on 

a blockchain network. Blockchain technology can track transactions and the ownership of tokens, 

approve users, freeze accounts, claw back assets and facilitate fulfillments of compliance 

obligations. 

Ms. Jeng discussed decentralized or self-custodied identity. When transacting in a digital 

economy, it is difficult to verify identity remotely. She proposed the issuance of verified 

credentials from, e.g., banks or DMVs, all of which represent a dynamic identity. She explained 

that individuals would then choose which verifiable credentials to share to meet the needs of others 

to verify identity. The technology to do this is open source and available today; the issue is now 

really developing a regulatory framework to support it. 

Ms. Malcolm focused on data. She advocated for a data-first approach to comprehend 

issues, before mandates. She stated that it was important for the CFTC to really understand the 

data it already has on hand before deciding how to supervise market actors. She addressed illic it 

activity in the digital asset markets. She stated that although we reached in 2022 an all-time high 

of just over $20 billion of illicit activity, this represents 0.2 percent of all on-chain activity that 

took place. This sector is transparent; other sectors are less so and produce estimates rather than 

concrete numbers. 

Chair Crighton allowed for a short break. The meeting recessed at 12:04 p.m. and 

reconvened at 12:12 p.m. 

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IV. Section 3: Climate-Related Market Risk, Market Structure, and Interest Rate 

Benchmark Reform 

Mr. O'Malia discussed liquidity shortfalls in March of 2020, in 2022 after the Russian 

invasion of Ukraine, and again in September of 2022. He stated that it is clear that markets are 

now more susceptible to liquidity risk, and that regulators and market participants must work 

together to identify and address the drivers of the recent stress events so markets can withstand 

future shocks. He also stated that following the collapse of the multiple crypto entities last year, 

it is critical that the legal foundations and fundamentals regarding bankruptcy and custody are fully 

considered. With respect to climate risk, he stated that further work is required to build liquidity 

and manage counterparty risk in climate markets. ISDA has established definitions and templates 

for climate products, including verified carbon credits. He expressed the hope that the Integrity 

Council for Voluntary Carbon Markets will set a more selective global standard for carbon credits 

in order to prevent greenwashing, which could damage confidence and stifle liquidity. He briefly 

discussed climate risk management and expressed concerns about the upcoming changes to the 

CFTC’s block trading rules. He stated that the increased thresholds would have a big impact on 

market liquidity. He then touched on inefficiencies in the U.S. Treasury market. He identified 

changes to the supplemental leverage ratio and the G-SIB surcharge, and clearing of certain U.S. 

Treasury security transactions, as proposals that could increase liquidity in this market. He 

concluded that firms should continue to move away from LIBOR proactively and use the tools that 

are available for legacy transactions. 

Panel 1: Climate-Related Market Risk 

Ms. Gibbs identified two fundamental challenges for market integrity: the lack of carbon 

credit standards and benchmarks on the supply side, and confusion about the use of carbon offsets 

to fulfill climate commitments on the demand side. She gave an update on the work of the Integrity 

Council for the Voluntary Carbon Market, which will be unveiling benchmark standards in two 

phases. 

Mr. Slocum stated that there are systemic problems with carbon offsets to ensure that they 

are verifiable. He also stated that the CFTC should play a more proactive role in reviewing the 

integrity of carbon offsets. He praised Chairman Behnam’s efforts and the subcommittee’s work 

on climate risk. He requested a detailed briefing on the effect of position limits. 

Panel 2: Market Structure 

Mr. Smith addressed disruption in the Treasury market, major recent accomplishments, 

proposed enhancements, and increased data availability. 

Mr. Chatterjee discussed block trades. He stated that during periods of market volatility 

and economic uncertainty, block trade frameworks help facilitate liquidity without causing further 

disruptions to the market or adversely impacting execution price or transaction cost. He observed 

that SDR data reflects historic trading patterns and may not always be the most important factor 

for current or future marketplace trends. Historic trade data does not distinguish between trades 

executed during regular market conditions vs. those when liquidity was constrained. Some block 

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trades are executed on SEFs and not truly away from SEFs. He asked whether there should be 

time limited exceptions or other fallbacks in disrupted periods. He concluded that the MRAC 

could perform a thorough cost benefit analysis to assess the impact of the new block trade 

framework. 

Panel 3: Interest Rate Benchmark Reform Update on Transition Progress and Last Steps 

Mr. Bowman addressed the transition away from LIBOR to SOFR. He discussed the 

differences between term SOFR and overnight SOFR. He stated that the transition will only 

remain tenable if overnight SOFR remains the dominant benchmark. He explained that derivatives 

markets do not need term SOFR. He also commented that term SOFR is used in business loans, 

and can be used in legacy LIBOR cash products and some hedges. 

Mr. Wuerffel repeated that overnight SOFR needs to remain the primary tool for derivative 

and capital markets. He stated that reference rates should not be used for convenience, but need 

to have underlying transaction bases that are robust through economic and credit cycles. 

V. MRAC Member Open Discussion 

Chair Crighton opened the floor for comments and feedback from the MRAC membership. 

Mr. Chatterjee, Mr. Bowman and Mr. Wuerffel continued the discussion of term SOFR. 

Mr. Kohnke commented on the voluntary carbon market and the development of new 

futures contracts for environmental credits. He identified three core issues that make market 

participants uncomfortable with the risk associated with transacting in these markets: 

additionality, the legitimacy of credits and the potential for double counting, and greenwashing. 

VI. Adjournment 

Chair Crighton and Commissioner Johnson thanked participants. 

Mr. Fekrat adjourned the meeting at 1:07 p.m. 

______________________________ _________________________ 

Alicia Crighton Date 

06/02/23

MRAC Chair 

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