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21) and crucially, other FCMs/members/customers should not be exposed to that decision

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22) one party said, as — I think — a criticism, “if customers can choose whether or not to use an FCM, they won’t” First—that seems to imply FCMs don’t provide any value. I think many do, and so customers would want to keep using them! But also, if customers choose something…

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23) more vague allusions to “but what would happen in large moves!” Check out ftxpolicy.com/posts/risk-man; we have empirical data!

Risk Management, Process, and the Future – An Update

FTX US Derivatives (FUSD) has an application before the U.S. Commodity Futures Trading Commission (the “FTX Application”) that would amend its existing license to operate a clearing house.

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24) note, again, that FTX doesn’t rely on credit, and so doesn’t require additional capital backing credit—though it still does absolutely require both initial margin, and a guarantee fund etc.

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25) great point by Virtu—FCMs can still provide credit/capital to customers to prevent margin calls! But the capital ends up at the DCO one way or another, so other members aren’t impacted

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26) recent comment seems to forget—as is clearly stated in the “stylized facts”, our application, etc.—that we have a guarantee fund in addition to margin

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27) also once again ignores all the existing data about risk model performance And in the end, CFTC/DCR are experts in analyzing this and wouldn’t ultimately approve a model they found inadequate

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28) really agree with the points Cisewski is making! We need more competition in futures markets. And in the end, the actual performance of the models is what matters.

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29) there are already DCOs live without FCMs—this doesn’t require new rule making And we would like to allow for FCMs as well

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30) on self-certification and new asset classes—DCR can approve margin models for particular products/asset classes, which limits spread

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31) and also CFTC can object to particular self-certs!

4:09 PM · May 25, 2022Twitter for iPhone

Replying to

32) glad to hear talk from a competitor about needing engagement before self-certs, guessing they would support having a round table discussion before each of their self certs?

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33) a lot going on here—simultaneously debating crypto, algorithms, computers, retail, 24/7, etc. most of these already exist on other DCOs, and really unclear what her point is. And weird that she’s skeptical that markets increase liquidity!

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34) remember price bands—people are protected from 1 minute market moves! Also—users know _way_ more than any of these people about these markets, ironic to hear the opposite condescendingly said.

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35) “retail” is not a monolithic category!

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36) good point by Dave Olson—this is the model that many are already used to!

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37) ohhhh boy is this going to be a few minutes per person of closing statements? If so, that’s a few *hours* worth.

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38) really well spoken closing statement from Ann/ISDA!

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39) really interesting perspectives from

and

—and agree, figuring out the details and ensuring transparency are what matter!

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40) pleasantly surprised by the constructive closing statement from RJO!

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41) huuuge difference in demeanor between Downey and Duffy

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42) people asking whether this model makes economic sense or is the best model. Not really supposed to be the purview, and not usually required for businesses to prove their model is best to be allowed to operate. That’s what economic competition and consumer choice are for!

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43) reeeeeaally good points by Dave/Jump here; innovation is really hard in the current system!

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44) helpful point by DRW—models are not about better/worse, they’re about consumer choice and economic competition

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45) note about capital usage—real time margin reduces the effective risk period, which reduces capital demands

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46) good points from Virtu too

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47) re: retail: what if the DCO/DCM has all the standard protections, and CFTC oversight?

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48) reminder: automated margin calls can _reduce_ risk by doing so only when necessary

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49) ok two final thoughts: a) I guess if what we’re doing brings all these people here all day to argue and debate and learn then we’re doing _something_ right b) no chance we’d be here today without the amazing work of Zach, Brian, Julie, and the whole FUSD team <3

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50) I know I’ve said this before, but: the CFTC isn’t the world’s fastest acting regulator and our process has been loooong and drawn out, but boy do they know their shit, care about details, and display an approach that today’s partisan climate could learn something from

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