Ladies and Gentlemen:
The Bank Policy Institute[1] appreciates the opportunity to comment on the Request for Information on Climate Related Financial Risk published by the U.S. Commodity Futures Trading Commission on June 2, 2022 (the “CFTC RFI”),[2] which aims to better inform the CFTC’s understanding and oversight of climate-related financial risk as pertinent to the derivatives markets and underlying commodities markets.
BPI supports the CFTC’s efforts to better understand climate-related financial risks as well as the Commission’s climate leadership exhibited to date, including among other things through the CFTC’s recent Voluntary Carbon Markets Convening, establishment of the CFTC’s Climate Risk Unit, establishment of the Climate Related Market Risk Subcommittee of the CFTC’s Market Risk Advisory Committee, and the CFTC’s participation in the climate-related activities of the Financial Stability Oversight Council and other domestic and international bodies. Our members are likewise actively evaluating climate-related financial risks and their potential impacts, as well as engaging with various regulatory agencies, clients and other stakeholders.
Given the vast amount of climate-related work and outputs coming from the official sector, our comments are directed to one key concern, which pertains primarily to questions 2, 7-9, and 34 of the CFTC RFI. In particular, BPI seeks to emphasize the importance of any regulation adopted by the CFTC being developed harmoniously with, and taking into account the actions of, other U.S. federal financial regulators so as to avoid unnecessary regulatory overlap and burden. In establishing the statutory mandates of the different U.S. federal financial regulators, Congress has expressed a clear intention to encourage inter-agency coordination and regulatory harmony and to allocate regulatory responsibility according to distinct spheres of jurisdiction and expertise. Consistent with the CFTC’s past efforts in pursuit of this regulatory harmonization and inter-agency coordination, we urge the CFTC to pay heed to, and ensure any regulatory action by the CFTC is appropriately tailored taking account of the Congressional allocation of principal prudential oversight responsibility for swap dealers that are prudentially regulated to the U.S. prudential banking regulators.
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[1] The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ nearly 2 million Americans, make nearly half of the nation’s bank-originated small business loans and are an engine for financial innovation and economic growth.
[2] Request for Information on Climate Related Financial Risk, 87 Fed. Reg. 34856 (Jun. 8, 2022).
