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1155 21st Street, NW, Washington, DC. The meeting included a status report from the Interest 

Rate Benchmark Reform Subcommittee and its recommendation regarding plain English 

disclosure materials, which were approved unanimously by all members present. The MRAC 

also discussed other issues involving the transition from the London Interbank Offered Rate 

(LIBOR) to risk-free reference (RFR) rates, including central counterparty (CCP) adjustments to 

discounting/price alignment interest, and the clearing treatment for certain physically-settled 

swaptions. 

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 

Alicia Crighton, Chief Operating Officer, Prime Services, US Clearing, Goldman Sachs, Futures 

Industry Association (FIA) 

Matthias Graulich, Chief Client 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) 

Sebastian Koeling, Principal Traders Group, FIA 

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 

John Murphy, Managing Director and Global Head of the Futures Division, Mizuho Americas, 
Lisa Shemie, Associate General Counsel, Cboe

s Legal Division, Chief Legal Officer, FX and 

Cboe SEF 

Dr. 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 

Robert Steigerwald, Senior Policy Advisor, Financial Markets, Federal Reserve Bank of Chicago 

Janine Tramontana, Senior Counsel and Vice President, Federal Reserve Bank of New York 

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

BlackRock 

Suzy White, Chief Risk Officer, Global Banking & Markets and Commercial Banking, 

Americas, HSBC 

Rana Yared, Managing Director Principal Strategic Investments Team, Securities Division, 

Goldman Sachs 

Scott Zucker, Chief Administrative Officer, Tradeweb 

Speakers in Attendance 

Thomas Wipf, MRAC Interest Rate Benchmark Reform Subcommittee (Subcommittee) Chair 

and Vice Chairman of Institutional Securities, Morgan Stanley 

Ann Battle, Leader of the Subcommittee Disclosure Working Group and Assistant General 

Counsel, International Swaps and Derivatives Association (ISDA) 

Dennis McLaughlin, MRAC Member/Subcommittee Member and Group Chief Risk Officer, 

LCH Group 

Agha Mirza, Subcommittee Member, Managing Director and Global Head of Interest Rate 

Products, CME Group 

CFTC Commissioners and Staff in Attendance 

Rostin Behnam, Commissioner, MRAC Sponsor 

Dan Berkovitz, Commissioner Dawn D. Stump, Commissioner 

Alicia Lewis, Designated Federal Officer (DFO), Special Counsel, Division of Clearing 

Clearing and Risk, CFTC 

I. Opening Remarks 

Ms. Lewis called the meeting to order. Commissioner Behnam began with a brief 

summary of the topics on the agenda. He thanked the invited speakers and the MRAC 

leadership, and lauded the Subcommittee for its significant efforts in the larger transition away 

from LIBOR. 

2 
regarding the adoption of plain English disclosures for new derivative contracts referencing 

LIBOR and other interbank offered rates (IBORs); (2) a discussion of proposals from central 

counterparties (CCP) regarding adjustments to discounting and price alignment interest; and (3) a 

discussion of the clearing treatments for certain physically-settled swaptions. 

After Chairwoman Zakir's opening statement, Ms. Lewis took roll call of the MRAC 

members in attendance. Chairwoman Zakir then gave brief logistical instructions for the Q&A 

portion of the meeting, and introduced Mr. Wipf, who was the first speaker on the agenda. 

II. Report from the Interest Rate Benchmark Reform Subcommittee 

Mr. Wipf delivered a report from the Subcommittee. He provided an update on key 

developments regarding the transition away from LIBOR, driven by both regulators and market 

participants. Mr. Wipf discussed the plain English disclosures draft, stating that the standard set 

of disclosures can be incorporated into market participants' documents to better inform their 

clients and counterparties about the implications of using LIBOR and other IBORs. He added 

that market participants are also encouraged to amend these disclosures to best serve their 

organizations, as long as such disclosures ( or other internally developed disclosures that are 

substantively similar) are effectively distributed to both clients and counterparties. 

Mr. Wipf then highlighted key areas of concern for the CCP discounting and price 

adjustments proposals, which include timing of the adjustments, the pricing mechanism for cash 

compensation, and the methodology by which ongoing basis risk would be "compensated." He 

expressed the Subcommittee's desire for consistency across the clearinghouses in how it 

approaches this important event. He also noted that in the current construct of the single-step 

transitions at both clearinghouses, valuation discrepancies may arise in these products. For the 

swaptions discussion, Mr. Wipf said it was still premature to propose any kind of relief to the 

MRAC, but would follow the MRAC guidance as to how relief should be addressed. In 

summary, he expressed the need to continue discussion on the effective coordination of 

clearinghouse proposals, as well as a timely resolution for the transition to SOFR. 

Since there were no questions after Mr. Wipf s presentation, Chairwoman Zakir invited 

Ms. Battle to present the Subcommittee's recommendation on plain English disclosures. 

Chairwoman Zakir also indicated that the voting draft of the disclosures could be accessed via 

the link to the CFTC's MRAC Meeting Agenda. 

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substantively similar to the proposed disclosures, would satisfy the intent of the Subcommittee if 

they are shared with all counterparties in an "operationally feasible" manner. In addition, Ms. 

Battle stated that these disclosures are designed to be helpful to all market participants, 

regardless of their awareness of benchmark reform, existing fallback provisions in derivatives 

and other instruments, or other efforts to implement additional fallback language. 

Ms. Battle reported that the proposed disclosures have been revised to reflect feedback 

from the Subcommittee and the MRAC, and accordingly include the following clarifications: (1) 

that counterparties should consider using the ISDA protocol to add the new fallbacks when they 

become final, although they would not be required to do so; (2) counterparties could also seek to 

enter bilateral amendments to add the new fallbacks as an alternative to using a multilateral 

ISDA protocol; (3) counterparties should consider the tax, accounting and regulatory 

implications of continuing to enter transactions referencing LIBOR or other IBO Rs; ( 4) the 

recognition that existing derivative transactions do include a process for attempting to determine 

a fallback rate in case LIBOR or another IBOR is discontinued; and (5) spread adjustments are 

contemplated in connection with the new fallbacks to address the inherent differences between 

the IBORs and the risk-free fallback rates. 

Ms. Battle emphasized that nothing in the proposed disclosures would amend or 

supersede the terms of any transaction or any related governing documentation, and that 

information in the disclosures would remain subject to the terms of the relevant transaction's 

governing documentation. Ms. Battle noted that these proposed disclosures are separate and 

distinct from the more comprehensive disclosures that ISDA published in compliance with 

CFTC Rule 23.431 "Disclosures of Material Information." She said the Subcommittee's 

Disclosures Working Group has recommended that ISDA consider updating these more 

comprehensive disclosures at a later date. 

Mr. Hayden asked whether these recommendations concerning fallback provision 

language are specific to a particular type of counterparty. Ms. Battle responded that these 

disclosures are written for use by all market participants who continue to engage in transactions

that reference LIBOR or other IBO Rs. 

Next, Chairwoman Zakir called for a vote on the recommendation from the Interest Rate 

Benchmark Reform Subcommittee that the MRAC approve the proposed plain English 

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IV. Central Counterparty Adjustments to Discounting/Price Alignment Interest 

Environment 

Mr. McLaughlin reported that LCH Group produced a paper to outline its rates transition 

plan, with a preference for the transition to occur on October 17, 2020. He said LCH's approach 

is a combination of cash-only trading options and compensation for trading risk through swaps, 

with a focus on currency markets. Mr. McLaughlin welcomed comments to improve the 

components ofLCH's bi-lateral trade coordination efforts, which will apply to the swaps. He 

said the main idea is to help facilitate and standardize swap trading as LIBOR is phased out. 

Mr. Mirza stated that the goal of the CME plan is to achieve a single-day accounting 

mechanism with the transition to SOFR. He said CME's proposal would ensure market stability 

and risk management, with a plan to phase out the old rates by July 17, 2020. Mr. Mirza added 

that CME's proposal would eliminate value transfer by making a cash adjustment at the 

individual swap level that is equal and opposite to the change in each cleared swap's net present 

value specifically attributable to the discounting change. The proposal would also restore swaps 

at the July 17 closing curve value to mitigate hedging costs. He said that the proposal offers a 

standardized methodology for swap exercises, and bilateral compensation agreements could also 

be standardized in the proposal. Mr. Mirza stated that the single-day accounting will help to 

provide further liquidity in the market. 

After the presentations, Mr. Wipf stated that the keys to both proposals are timing, 

pricing mechanisms, and risk management. He suggested that it would be beneficial for LCH 

and CME to better align their proposed transition dates and plans to mitigate risk, facilitate 

consistency, and allay antitrust concerns. 

Mr. Chatterjee suggested for both LCH and CME proposals to align their transition dates, 

and to address present values and compensation mechanisms. Ms. Rosenberg echoed the need to 

align the transition dates, and recommended the preferred date of October 2020. She also 

suggested for the proposals to improve compensation mechanisms to mitigate risks. Mr. Berger 

added that the risks and challenges to address one-way auction flow and counterparty trading 

should also be considered in the proposals. Ms. Y ared recommended the transition date be set to 

July 2020. In her view, the sooner the transition can take place, the greater support can be 

provided for SOFR in terms of marketplace liquidity. She indicated a preference for bilateral 

5 
Mr. Wipf said the Subcommittee has been working on a proposal to address cleared 

swaps discounted at the federal funds rate, risk management of legacy swaps, cash options, and 

the transition to swaps contracted with SOFR. He stated that the Subcommittee believes it is 

premature to endorse any one proposal and that the Subcommittee will have an update in 

November. Mr. Wipf stated that some of the concerns of the Subcommittee include targeted 

clearing and factoring calculations, and the Subcommittee would welcome the MRAC's 

guidance on whether this is an issue that should be a key part of the Subcommittee's work. 

Mr. Wipf asked the MRAC two questions. First, does the MRAC view the potential 

valuation differences that may result in physically settled swaptions vis-a-vis discounting risk to 

be an issue for its respective firms or clients? Second, does the MRAC think the Subcommittee 

is an appropriate venue to discuss this issue? 

Chairwomen Zakir opened the floor to questions and comments from the membership, 

which included the following: (1) how risk is calculated on positions at exchanges, and given 

that LIB OR is dying, what is being done with regard to the basis risk calculation on clearing 

products that have this legacy IBOR-type index; (2) on the issue ofrelieffrom margin on 

uncleared or legacy swaps, there needs to be more thought and debate before jumping to a 

regulatory exemption; and (3) examining market experts who trade swaptions in their respective 

firms, and setting up a subcommittee under the Alternative Reference Rates Committee (ARRC) 

under the Market Structure Working Group to handle this. 

Following the presentation, Chairwomen Zakir asked Mr. Wipf to discuss the 

Subcommittee's next steps. Mr. Wipf stated that the Subcommittee's work will continue after 

this meeting, and intends to have another update for the group at the next MRAC meeting. He 

then summarized the meeting by emphasizing the positive impact of the plain English 

disclosures, the MRAC's desire for consistency and coordination between the clearinghouses in 

terms of their single-step plans, but indicated there is more work to be done on the clearing 

treatment for physically-settled swaptions. He reiterated the need for the MRAC to determine 

the appropriate forum where thoughtful harmonization among the clearinghouses can be 

achieved during the transition. 

VI. Closing Remarks 

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I here&; that the foregoing minutes are accura::·,W,\ I~ 

Nadia Zakir 

Chair, Market Risk Advisory Committee 

Date 

7 
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 

3 
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 

4 
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 

5 
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 

6 
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 

7 

I Date