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FIA President and CEO Walt Lukken sat down with Rostin Behnam, acting chairman of the US Commodity Futures Trading Commission, to discuss the agency's recent formation of a Climate Risk Unit that will focus on the role of derivatives in understanding, pricing, and addressing climate-related risk and transitioning to a low-carbon economy.
Behnam explained that the unit, which was just announced on 17 March, will be an "interdisciplinary activity" and build on the recent work of the agency's Market Risk Advisory Committee that published a comprehensive report on the financial markets and climate change late last year. He said he hopes the group will "smooth the transition" to a low-carbon economy and explore the role of derivatives in managing "physical risks from devastating climate events."
"I thought it was important given my role as acting chair to move the conversation from a broader financial market risk scope to one that is focused exclusively on CFTC issues in derivatives markets," Benham said.
In his discussions with Behnam, Lukken noted his work on behalf of the Taskforce on Scaling Voluntary Carbon Markets, and extended an offer to work with Behnam on support for these markets as a solution to climate change. The Taskforce, initiated by Mark Carney, UN Special Envoy for Climate Action and Finance Advisor to UK Prime Minister Boris Johnson for COP26, is comprised of participants across the financial sector, market infrastructure providers and buyers and suppliers of carbon offsets.
Behnam said he generally supports the effort, noting "carbon markets need to be scaled exponentially" in the years ahead.
"As a commodity regulator and markets regulator, we can play an important role and I intend to do that," he said.
The Q&A took place as part of FIA's International Futures Industry Conference on 18 March, and also touched on digital assets, the rise of retail trading, cross-border regulatory trends and Behnam's outlook and priorities now that he has become acting chair of the CFTC.
Note: Video quality was affected by poor connection speeds
