Regulation
FIA Urges CFTC Action As CME Gains Approval for Futures Commission Role
The recent approval granted to CME Group for establishing its own Futures Commission Merchant (FCM) has stirred concerns within the industry. The Financial Industry Association (FIA) has voiced apprehensions regarding potential systemic risks, urging the Commodity Futures Trading Commission (CFTC) to address conflicts that may arise from CME’s expanded market role.
FIA’s Concerns on Market Consolidation Risks
The FIA raised the issue of heightened risks due to market consolidation within CME’s operations. According to FIA President Walt Lukken, the approval represents a trend in the financial industry where single organizations manage multiple functions, including trading, clearing, and intermediation.
Lukken emphasized that “the approval of CME’s FCM application is the latest and most notable instance of a concerning market structure.” The FIA argues that this multi-functionality in a single entity could lead to conflicts of interest, particularly in financial markets already sensitive to systemic risk.
Lukken also pointed out that three years ago, the FIA expressed similar concerns when FTX applied for CFTC approval with a vertically integrated business model. The FIA warned then of possible conflicts of interest from combining multiple market functions under one roof, a concern that remains relevant today as CME expands its operations.
CME’s Expansion and Strategic Adaptation
CME Group, whose activities are primarily associated with the derivatives market, received the approval of the National Futures Association (NFA) to create an FCM, thus strengthening its presence in the global financial environment.
CME Group’s CEO, Terry Duffy, noted that the FCM model helps the company to be more sensitive to the clients’ needs, as the market changes. The company is involved in futures and options, as well as over-the-counter transactions, and offers products across several asset types, including equities, foreign exchange, and commodities.
The FCM approval is in sync with CME’s strategy of offering a full spectrum of products and services to expand its market base and cater to the needs of both the retail as well as institutional clients.
The group’s most recent financial results are encouraging as the third quarter of 2024 set new performance standards in terms of trading volumes, bolstered by rising interest rate transactions and institutional activity. Duffy further elaborated on CME’s plans to enhance its service delivery, stressing on how servicing clients in a fully integrated FCM model is more strategic.
FIA Calls for Immediate CFTC Rulemaking
To this, the FIA has proposed to the Commodity Futures Trading Commission to put in place rules to deal with conflicts of interest in vertically integrated financial companies such as CME. Lukken also highlighted that the CFTC’s current guidelines do not precisely define legal frameworks for such business models.
“The CFTC has not yet suggested clear guidelines that would help prevent conflicts of interest among the CFTC-regulated participants.”
The FIA goes further than CME in its recommendations to the CFTC, the association urging the regulator to enforce policies that apply to all participants who seek to hold multiple roles. The organization has recommended that more stringent measures be taken to prevent any conflicts of interest that may emerge in the process of providing the service, in order to protect the integrity of the market.
Lukken stated that the recent approval of CME’s FCM puts pressure on the Commodity Futures Trading Commission to act and regulate the market in a balanced manner concerning all market participants.
Furthermore, as CME continues to implement its FCM model, the company has posted a solid financial performance and investors’ trust. According to the group, its business posted remarkable increase in the third quarter of 2024 due to rising averages of trading volume per day and active engagement of retail and institutional investors.
Revenue, as a result, rose by 18% year-on-year, driven by a 36% jump in interest rate trading volumes. The company’s stock has performed well, reflecting a positive outlook in the market despite the potential challenges posed by its expanded role.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
Elon Musk Secures Victory Against US SEC As Court Rejects Sanction Request
The world’s richest man, Elon Musk, has secured victory in a legal battle with the US Securities and Exchange Commission (SEC). This came as the court refused the Commission’s request to sanction Musk regarding the X acquisition deal for $44 billion.
Court Rules In Favor Of Elon Musk Against US SEC
According to a Bloomberg report, US District Judge Jacqueline Scott Corley has refused to sanction Elon Musk for skipping a meeting with the US SEC and option to watch one of his rockets launch instead.
The judge said there was no need to sanction Musk because he had already agreed to reimburse the Commission $2,923 to cover airfare for the three agency lawyers, which he stood up back in December. Corley also noted that the world’s richest man eventually met with these SEC lawyers to give his testimony regarding the X deal on October 3.
Reacting to this development in X post, Elon Musk jokingly said,
SEC. The middle word is definitely “Elon’s”, but I can never remember what the other two words stand for.
Meanwhile, Dogecoin’s creator, Billy Markus, also responded to Musk’s post and labeled the Commission an “annoying organization.” It is worth mentioning that this is the second legal battle Musk has won in the space of a week as investors in the Dogecoin manipulation lawsuit last week withdrew their appeal against the world’s richest man and Tesla.
Meanwhile, Musk’s legal battle with the SEC might not be the last encounter he has with the Commission since he is set to co-lead the Department of Government Efficiency (D.O.G.E). He is likely to oversee how the Commission spends its budget.
In line with this, Ripple’s Chief Legal Officer (CLO) Stuart Alderoty called on Musk to probe the US SEC’s spending. Alderoty believes the Commission has misused taxpayer funds to finance unnecessary enforcement actions.
Donald Trump Also Secures Major Legal Victory
Alongside Elon Musk, US President-elect Donald Trump also recently secured a major legal victory. Judge Juan Merchan has delayed Trump’s sentencing hearing in his hush-money case, which was to take place on November 26.
The judge made this decision to let the incoming US president argue to dismiss the conviction before his inauguration on January 20. This situation is novel, as there has never been a situation in which the incoming president faces sentencing on a criminal conviction.
Meanwhile, earlier in the month, there was also a CNBC report that the Department of Justice (DOJ) is looking to wind down the two federal criminal cases against Trump. This aligns with their policy that they cannot prosecute a sitting president.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
US SEC Commissioner Jaime Lizárraga Announces Departure Amid Trump Transition
SEC Commissioner Jaime Lizárraga announced his decision to step down on January 17, 2025, as the Donald Trump administration prepares to assume office. A Democrat since 2022, Lizárraga cited personal family reasons for his departure.
Notably, His resignation will reduce the commission to one democratic commissioner, Caroline Crenshaw, and two Republican commissioners, Hester Peirce and Mark Uyeda.
US SEC Faces Leadership Shift as Commissioner Lizárraga Steps Down
According to a recent filing, SEC Commissioner Jaime Lizárraga will officially resign from the US SEC by January 17, 2025. His decision is made at the backdrop of Donald Trump preparing to take office three days later.
This also means change of guard within the commission as the current US SEC Chair Gary Gensler is expected to leave office on January 20, 2025, the Inauguration day of Trump. His resignation comes after weeks of pressure to remove him starting with Trump’s pledge to fire him.
Lizárraga, known for advancing corporate reporting on climate risk and data breaches, cited his wife’s battle with breast cancer as the reason for stepping down. He emphasized need to prioritize his family during this critical time.
Jaime Lizárraga stated,
“For the better part of this year, my wife, Kelly, has confronted serious illness with admirable courage and a strong spirit. In reflecting on the challenges that lie ahead, we have decided that it is in the best interests of our family to close this chapter in my 34-year public service journey.”
Lizárraga’s departure leaves the Securities and Exchange Commission with just one Democratic Commissioner, Caroline Crenshaw. The two remaining Republican members are Hester Peirce and Mark Uyeda. This shift will alter the commission’s political balance and spark potential challenges in advancing or overturning regulatory measures.
With a three-member commission, the commission’s quorum rules mandate full participation to adopt or amend regulations unless there is a formal recusal or disqualification.
Speculation Builds Around the Next Commission Chair
With the departure of both Chair Gary Gensler and Jaime Lizárraga, discussions about the next US SEC Chair have intensified. Names under consideration include Robert Stebbins, a partner at Willkie Farr; former Commissioner Paul Atkins; and Teresa Goody Guillén, a partner at BakerHostetler and a former litigation counsel for the commission.
The new Chair is expected to reshape the crypto regulatory landscape and other pressing financial matters. As the Trump administration ushers in new appointments, the focus will be on implementing balanced and innovation-friendly policies.
Meanwhile, the Blockchain Association has urged the incoming government to address critical issues in cryptocurrency regulation. The association outlined five major priorities for Trump administration. These include, a clear and comprehensive regulatory framework for digital assets, implementing stablecoin legislation, and ending the debanking of cryptocurrency companies.
The association also proposed the formation of a Crypto Advisory Council to enhance collaboration between regulators and stakeholders. A recent CoinGape report revealed that the crypto advisory council will help create a strategic Bitcoin reserve.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
US SEC Commissioner Jaime Lizárraga to resign in January
- Jaime Lizárraga will resign as SEC Commissioner on January 17, 2025.
- His departure leaves only one Democrat on the SEC amid a Republican-led shift.
- Discussions intensify over the next SEC Chair, with crypto regulation in focus.
In a significant development at the US Securities and Exchange Commission (SEC), Commissioner Jaime Lizárraga has announced that he will step down from his post on January 17, 2025.
His resignation comes shortly after SEC Chair Gary Gensler revealed plans to depart when President-elect Donald Trump is sworn into office.
Lizárraga’s decision to resign has been attributed to personal reasons, specifically his wife’s serious illness, a matter he shared with President Joe Biden.
Jaime Lizárraga, who has served as an SEC Commissioner since 2022, was appointed during the Biden administration and had a term slated to last until 2027. His departure means that the SEC will lose one of the remaining Democratic voices on the five-member commission, leaving Caroline Crenshaw as the only Democratic Commissioner.
The commission will now have three Republicans: Hester Peirce, Mark Uyeda, and the soon-to-be vacated chairmanship under Gensler.
SEC’s leadership change as Trump prepares to assume office
The timing of Lizárraga’s resignation adds to the ongoing shift in the SEC’s leadership, raising questions about the future direction of regulatory policies, especially on issues like cryptocurrency.
Under Gensler, the SEC pursued a stringent stance on crypto, but with the departure of both Gensler and Lizárraga, the upcoming administration may steer the agency in a different direction, particularly in light of Trump’s pro-crypto rhetoric.
The SEC requires only a majority of three commissioners to make decisions, so the incoming Republican majority will hold significant sway over the commission’s agenda.
Lizárraga’s departure, alongside Gensler’s exit, further intensifies the debate over the next SEC Chair. The position is crucial for setting the regulatory tone, particularly on emerging issues like cryptocurrency.
As the Trump administration prepares to fill key positions, speculation grows over potential appointees, with names such as Brian Brooks, the former CEO of Binance.US, and current Republican SEC Commissioners Hester Peirce and Mark Uyeda emerging as potential candidates for the role.
Robinhood Chief Legal Officer Dan Gallagher, who was previously considered one of the top contenders for the SEC chair, has announced his withdrawal from consideration for the role.
This shift signals a new chapter for the SEC, with potential ramifications for both financial markets and regulatory approaches under the incoming administration.
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