Operations and Technology 

Operations issues were front-and-center in 2023, starting with a January cyber disruption in our markets that demanded an urgent response. FIA quickly set up a crisis communications hub for the industry, coordinating information through regular calls. FIA President and CEO Walt Lukken also offered remarks before a CFTC advisory committee highlighting the resilience of our markets, and announced an FIA-led taskforce to assess the industry response and provide recommendations for future incidents. In September, FIA's taskforce offered six recommendations in this area.

Also noteworthy in 2023 was the continued work of the Derivatives Market Institute for Standards (DMIST). The standards-setting organization published its first standard in June on the timeliness of give-up trades and allocations, and this fall closed its second consultation on average pricing with the goal of publishing a second standard early in 2024.

FIA's operations work has also focused on modernizing risk management amid recent volatility and heightened scrutiny by global policymakers in this area. In October, FIA published a report that defines common exchange volatility controls and best practices for their use in derivative markets. This publication was a team effort, incorporating feedback from exchanges as well as the needs of the derivatives trading community.

All of this was on top of continued engagement with public policy efforts as they relate to operations, from the Digital Operational Resilience Act in the EU to the work of the Financial Stability Oversight Council in the US to industry and public policy efforts across Asia-Pacific.

FIA also worked closely with several exchanges and clearinghouses with regards to important changes to their operating systems and technology platforms. For example, FIA held a series of meetings with Euronext to assist clearing members and vendors with the migration from its SPAN margin model onto a new VaR-based margin methodology. Euronext’s positive engagement and collaboration with FIA’s Operations and Technology Vendor Committees in answering questions, providing additional assistance and extending the timeline helped ensure a successful migration without incident.

Another example was Eurex. As part of an upgrade to its trading platform, Eurex planned to introduce a voluntary trading disclosure scheme whereby buyside clients would disclose trading activity to the exchange in return for reduced fees. Eurex engaged in a series of constructive discussions with FIA’s e-Trading and Operations Committees regarding the practical challenges that the disclosures initiative would create for the exchange’s members, and it agreed to put the implementation of this initiative, in its original form, on hold.

Notable FIA work

Clearing and Trading

As in years past, FIA's core advocacy work continues to center on the foundational issues of global derivatives markets – capital, margin, CCP risk, and recovery and resolution issues. And in truth, much of the previously mentioned work regarding exchange volatility controls or EMIR 3.0 advocacy is fundamentally about clearing and trading as much as operations or cross-border concerns.

But beyond that work, FIA has most recently been engaged in vocal opposition to recent US bank capital proposals that would disincentivize clearing and cause shrinking capacity for clearing and increased costs for end-users. For instance, Jackie Mesa, FIA's chief operating officer and senior vice president of global policy, spoke about the potential negative impact of proposed capital requirements in a public advisory committee meeting held by the CFTC. FIA has also met with key US bank regulators and Congressional offices to highlight the impact these capital proposals will have on the cleared derivatives markets. Our advocacy related to these proposals will carry over into 2024. We have also continued our engagement with the CFTC on key market structure issues including our recent comments regarding exchange conflicts of interest and the related self-regulatory process. 

FIA has also engaged extensively with US, European and Asian regulators on the topic of margin transparency and adequacy. Ahead of the BCBS-CPMI-IOSCO margin policy stakeholder outreach in June, members had the opportunity to meet with key public sector stakeholders to discuss the issue of margin transparency and adequacy, specifically highlighting the need for consistent disclosures and additional transparency on core initial margin, additional margin and relevant anti-procyclicality measures amongst others. BCBS-CPMI-IOSCO is expected to use these inputs in a consultative report expected in Q4 2023.

Across Asia and the Americas, FIA continues to collaborate with our members to prioritize exchange and clearing capacity to meet the growing demand for futures, options and derivatives in these regions. Ongoing policy efforts around the capital markets union in the EU and the evolution of post-Brexit rulemaking in the UK continue to be a top priority as well.

Globally, FIA continues to work closely with standard-setting bodies including CPMI-IOSCO and the Financial Stability Board, on issues around central counterparty practices and CCP recovery and resolution issues. CCP recovery and resolution has been another hot topic this year as the SEC, the CFTC, the Bank of England and the Financial Stability Board released consultation reports covering CCP recovery and wind down plans and the CCP resolution toolbox approach. Notably, FIA is part of the UK HMT (UK Treasury) advisory CCP resolution panel advising on HMT proposals on resolution statutory instruments and CCP code of practice. FIA participated in the FSB resolution toolbox approach panel in November emphasizing the need for transparency and certainty. The topic of recovery and resolution is still progressing but remains highly debated amongst the industry.

In the US, FIA Law & Compliance has continued to engage with the CFTC on a practical regulatory framework for margining separate accounts of the same beneficial owner and filed several comment letters with the US Securities and Exchange Commission stressing the importance of the compatibility of US securities regulations with CFTC regulations governing derivatives market participants.

Beyond public comments and filings, FIA staff are also actively engaged behind the scenes.  This includes exclusive FIA-sponsored Exchange Briefing webinars that allow individual trading venues to preview their roadmap in a transparent way to key industry stakeholders.

Notable FIA work

Digital Assets

As in prior years, crypto derivatives were a hot topic in 2023 as policymakers in the US continued their debate about the oversight of these markets. FIA President and CEO Walt Lukken was invited to appear before the US House Committee on Agriculture, which has oversight over the CFTC, to discuss the evolving landscape and FIA's views on the best way to provide regulatory certainty in these markets.

FIA also continued to consult with public sector officials in the EU on its Markets in Crypto-Assets Regulation (MiCA), and with global policymakers via submissions like an IOSCO consultation on crypto-asset regulation.

Notable FIA work

Growth and Innovation

As global exchange-traded derivatives markets closed 2023 with yet another record year for volumes, FIA remains committed to the continued growth and responsible innovation that drives our industry.

This includes our annual Innovators Pavilion showcase of fintech startups as well as thoughtful FIA-led discussions about artificial intelligence, tokenization of collateral, and other emerging technologies.

We also continue to engage with exchanges and trading firms around the world capitalizing on a megatrend in retail trading growth and options use, ranging from the US to India to China.

Notable FIA work

Products and Services

In support of our mission to promote better understanding of and greater transparency into the global derivatives markets, FIA publishes several types of statistics for our members. These include statistics on customer funds held by US futures commission merchants, trading volume and open interest for more than 85 exchanges, risk metrics and default resources for 15 clearinghouses, and trading volume on US swap execution facilities.

In 2023, FIA offered a series of updates to our Exchange Risk Controls Repository. This central repository of exchange-provided risk controls and practices is maintained for the exclusive use of FIA members. In consultation with member firms, we developed a survey that helps provide greater transparency and facilitates risk-control benchmarking for global brokers, clearing firms, trading firms and commercial and institutional traders. This convenient centralized source of information about exchange risk controls makes it easier for firms to expand the range of markets that they use around the world.

Additionally, FIA continues to maintain a comprehensive documentation library, which includes FIA CCP Risk Review, European Documentation Library and US Documentation Library. We regularly update existing documentation, including FIA legal opinions, or add new templates, disclosures or other industry standard documents to reflect the latest regulatory, legal and other developments to ensure that our documentation services remain the go-to, state-of-the-art suite of documents for consumption primarily by clearing firms. For example, in 2023, we published an updated User Guide to the FIA Terms of Business 2018 (Version 2.0) that features new sections on contractual recognition of bail-in and stays, indirect clearing and EU CCP Recovery and Resolution Regulation (EU CCPRRR). Separately, we also launched a number of standard disclosures and other helpful documents to help firms comply with certain clearing member requirements under EU CCPRRR.

In 2023, FIA transferred its online courses to its nonprofit educational foundation, the Institute for Financial Markets (IFM), which resulted in a convenient, single-source training provider. IFM has supplied education to market participants, regulators, and policy makers for almost 35 years.

The newly branded FIA-IFM Get Smart eLearning offers training specifically designed for the futures industry by the industry. Courses are a cost-effective means for firms and market participants to avoid costly mistakes, trading suspensions and fines. On-going training, as noted by regulators, promotes high standards of market conduct and market integrity, and reduces recidivism which builds a culture of compliance.

The Get Smart course catalog offers training on market conduct, exchange fundamentals on major global markets and the associated regulatory requirements as well as courses mandated by the Commodity Futures Trading Commission and National Futures Association for those trading on U.S. markets. Get Smart courses are ideal for customers, traders, sales, client services and operations staff, and those with supervisory responsibilities.