The US Commodity Futures Trading Commission (CFTC) will hold a roundtable discussion to consider FTX.US’ proposal to directly clear the trades of its derivatives customers.
The CFTC announced the May 25 roundtable on Wednesday.
The proposal made by FTX.US states that futures commission merchants should be removed from the learning process and thus, asks for trading in the derivatives market 24/7. The Chicago Mercantile Exchange (CME) however decided to oppose the exchange’s proposal.
The decision comes after CFTC extended deadlines for the public comment on a request from FTX.US Derivatives.
Chairman and chief executive of CME Group Terry Duffy raised the objection during the CME‘s Q1 financial results call. He said that in case of any changes in market structure, the CME should not be left out of participating in the changes.
He said that while it is true that the CFTC has to look at new products, one cannot have innovation for the sake of innovation.
He added, “Innovation has still got to be under the principles-based regulatory regime that is highly outlined by the CFTC today so it will be fascinating to see how this plays out.”
It is worth mentioning that the elimination of futures commission merchants (FCMs) would make trading smooth by reducing the number of times assets change hands. As a result of which, each layer calls for separate requirements for liquidity holding.