Keynote Remarks at ISDA Annual General Meeting

Thank you, everyone, and thank you for that kind introduction, Scott.

Before I begin, as is customary, I must note that the views I share today are my own as Chairman and do not necessarily reflect those of the Commission.

It's a privilege to be invited to speak at the ISDA annual meeting here in Boston. Since its founding in 1985, ISDA has played a vital role in promoting safe, efficient, and well-functioning derivatives markets. And as someone who spent many hours burning the midnight oil negotiating over-the-counter derivatives transactions as a junior lawyer, I can personally attest that ISDA's work in developing the ISDA Master Agreement and related swap documentation has significantly reduced legal and credit risk for thousands of swap counterparties across the globe.

Now, it's fitting to be discussing American leadership in financial markets here in Boston as we approach our nation's 250^th anniversary.

Boston is known as the "Cradle of Liberty." It's the birthplace of the American Revolution. The Sons of Liberty tossed hundreds of casks of British tea into the harbor not far from where we are today.

Just a day after the Boston Tea Party, John Adams wrote in his diary that "there was no other Alternative but to destroy [the tea] or let it be landed. To let it be landed, would be . . . subjecting ourselves and our Posterity forever to Egyptian Taskmasters-to . . . Oppression, to Poverty and Servitude."[1]

A few years later, on July 4, 1776, the United States declared its independence from the British Empire based on the premise that governments are instituted to secure certain unalienable rights and derive their powers from the consent of the governed.[2] As our founders stated in the Declaration of Independence, "whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government."[3]

Our founding fathers believed deeply in individual rights. And importantly, the right to disagree-or the freedom to innovate. Because it is those exceptional few-who choose to reject orthodoxy, create something new, and compete against the establishment-that raise the bar for the whole of society. Over the course of our country's nearly 250-year history, Americans have rejected dogmatic ideas, explored new frontiers, developed cutting-edge technologies, and invented novel financial instruments.

Consider the first over-the-counter swap that took place in 1981 between the World Bank and IBM.

High oil prices in the aftermath of the Iranian Revolution had caused global inflation, creating large gaps in interest rates between currencies.

The U.S. had inflation rates around 17 percent, while Swiss rates were at 8 percent. But currency controls around the Deutschemark and the Swiss franc blocked the World Bank from raising additional funds in those currencies.

In response, the World Bank engaged Salomon Brothers to swap $205 million worth of payment obligations with IBM, in exchange for taking over IBM's West German and Swiss obligations. With this simple transaction, an entirely new financial market was born.

By 1983, the World Bank had lowered its average borrowing rate by more than a full percent and increased its notional aggregate swap transactions to $1.7 billion. By 1985 that number rose to $5.2 billion.

ISDA was founded and published its first master agreement that year as the over-the-counter derivatives market continued to grow. In the years since, we have seen derivatives on a wide range of underlying assets-from interest rates to fine art to crypto.

The drafters of the Commodity Exchange Act, the Commodity Futures Trading Commission's (CFTC) authorizing statute, presciently envisioned that a derivative contract could be structured on virtually any underlying asset. The Act defines the term "commodity" to include all goods, articles, services, rights, and interests, except for onions and motion picture box office receipts.[4] And the statute's principles-based approach to regulation has allowed market participants to innovate quickly within a comprehensive regulatory framework that prohibits fraud, manipulation, and other abuses. Consistent with American values, the Act is designed to maximize the individual's freedom to transact in a wide range of contracts while protecting market participants from bad actors. This has made our markets the envy of the world.

American Leadership in Financial Markets

Today, the derivatives markets sit at the core of the global financial system. Data from the Bank for International Settlements (BIS) and the Futures Industry Association (FIA) show that for the first time, global notional outstanding exceeds $1 quadrillion-and these markets are where price formation and discovery now take place.

Across interest rates, agricultural commodities, metals, credit, and equities, derivatives set the reference prices underpinning real economic activity.

They determine borrowing costs, define credit spreads, anchor commodity pricing, and enable risk transfer while transmitting signals across markets and jurisdictions with speed and force.

In this context, the CFTC is centrally overseeing, directly and through cross-border frameworks, approximately 35% of global derivatives activity. We are the world's largest derivatives regulator.

The implication is clear: if these markets are where prices are formed and risk is transferred, then leadership in derivatives is leadership in global finance.

My priority as CFTC Chairman is simple: keep these markets efficient, resilient, and innovative-and keep them in the United States.

Right-Sizing Regulation to Maintain American Market Dominance

By now, many of you have likely heard me express my philosophical view that the government should administer the minimum effective dose of regulation. There are probably not many people in this room who would argue that the regulations implementing the Dodd-Frank Act meet this standard. Quite to the contrary.

Today, I want to touch on several unworkable rules that are ripe for an overhaul.

Basel III Endgame

But first, I want to commend the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency for their release of revised proposals addressing the regulatory capital requirements for banks, including a revised Basel III Endgame proposal.[5] The proposed Basel III Endgame revisions update methodologies for credit, market, and operational risk,[6] and the Federal Reserve Board's re-proposal refines the scoring methodology to better capture systemic risk.[7]

This audience has invested significant time and energy over the past several years to promote the development of a rationalized framework for bank capital. With the Commission's support, the prudential regulators have worked together to streamline capital requirements, better align regulatory capital with risk, and maintain the safety and soundness of the banking system.

Specifically, noteworthy improvements include:

• Mitigating concerns about a major increase in capital requirements for client clearing activities;
• Recognizing worries about the disproportionate impact of high capital requirements on agriculture, energy and other end-users;
• Lowering the market risk charge by excluding derivatives exposures arising from client clearing from the Credit Valuation Adjustment framework and lowering the G-SIB surcharge by excluding clearing;
• Reducing the operational risk charge by adopting a more appropriate indicator for futures commission merchants;
• Lowering the credit risk charge by eliminating the requirement for an investment grade obligor to be publicly traded-this is particularly beneficial for agriculture and energy producers and other end-users;
• Revising the Standardized Approach for Counterparty Credit Risk to permit the netting of settled-to-market and collateralized-to-market swaps; and
• Enhancing the viability of the internal model approach for market risk, providing critical support for swap dealers.

Swap Data Reporting

At the CFTC, we are also working to streamline, reduce burdens, and provide clarity to market participants.

I know that one area in which the CFTC has fallen short is in the context of reporting. To date, problems with the CFTC's reporting requirements have been addressed through a patchwork of no-action letters that are continually extended.

It is long past time to address those issues with clarity and finality through notice and comment rulemaking.

This audience has been telling the Commission for years that the ownership and control reports (OCR) rule contains problematic requirements that prevent compliance. The OCR rule,[8] which was finalized in 2013, has been the subject of a rulemaking petition filed by the industry, not once, but twice, seeking Commission action.[9] And yet, market participants are still operating pursuant to no-action relief. It is time to remedy the rule.

Similarly, as markets evolve and our data capabilities improve, we should evaluate whether legacy reporting regimes remain necessary in their current form. In that context, it is reasonable to consider whether certain requirements-such as those under Part 20-should finally be sunset.

This recognizes that every reporting obligation carries real costs. Market participants must build, maintain, and continuously update complex systems to comply with our rules. Ensuring that these requirements are justified, efficient, and aligned with clear regulatory objectives is part of our responsibility.

Commission regulations currently require swap execution facilities (SEFs), designated contract markets (DCMs), and reporting counterparties to submit swap reporting error notifications for all errors that cannot be corrected in a timely fashion. Without some sort of materiality threshold, I do not believe this requirement serves the CFTC or the market.

Last year, Commission staff issued no-action relief saying that the Division of Market Oversight will not recommend an enforcement action against a reporting counterparty that fails to submit a swap data error correction notification, if the reporting counterparty makes a reasonable determination that the number of reportable trades affected by the error does not exceed five percent of the reporting counterparty's open swaps for the relevant asset class.[10]

I have directed CFTC staff to assess the impact of this no-action relief and to consider whether our regulations should be amended to add this materiality threshold.

Relatedly, CFTC regulations currently require SEFs, DCMs, and reporting counterparties to correct errors in the swap transaction and pricing data they report to swap data repositories. Market participants have noted challenges with the error correction requirements and have highlighted instances where the costs and burdens of error correction requirements are not proportionate to their benefits. The Commission must properly calibrate the error correction requirements so that the benefits outweigh the costs.

And finally, we must revise our regulations to clarify which entities have which reporting obligations when a swap is submitted for clearing to a derivatives clearing organization (DCO) that is exempt from registration with the Commission. Currently, firms are operating subject to no-action relief.[11] We must address this outstanding issue with certainty and finality.

Swaps Trading

There are also outstanding issues in connection with swaps trading. For example, more than a decade of experience shows that there is little appetite for using a SEF's Order Book[12] to execute Permitted Transactions.[13] Why, then, do CFTC regulations continue to require that SEFs offer this functionality for those transactions?[14] A no-action letter issued last year effectively relieves SEFs of that obligation.[15] We will look to codify that relief via notice and comment rulemaking.

Market participants have been relying on no-action relief when trading a package transaction where at least one individual component is subject to the trade execution requirement and all other components are futures contracts.[16] I have directed staff to provide a recommended path forward to permanently address this long-standing issue, without having to rely on perpetual staff no-action.

Comparability Determinations

Because so many of you operate global businesses, I would like to note that substituted compliance determinations are another way to right-size regulation.

The Commission can reduce costs and burdens while still holding entities to robust standards through these determinations. We have issued four comparability determinations and orders allowing swap dealers domiciled in Japan, Mexico, the European Union, and the United Kingdom to satisfy CFTC capital and financial reporting requirements by meeting home country regulatory requirements.

We are currently considering additional substituted compliance determinations for swap dealers. These determinations will involve capital and financial reporting requirements applicable to smaller investment firms under relevant EU and UK laws.

The Commission is also undertaking efforts to provide additional appropriate substituted compliance regarding margin requirements for uncleared swaps and certain business conduct requirements, including swap trading relationship documentation.

Margin for Uncleared Swaps

Additionally, we plan to soon finalize a rule that was proposed in 2023,[17] arising out of the work done by the CFTC's Global Markets Advisory Committee, amending the margin requirements for uncleared swaps.

This rule will increase collateral flexibility by eliminating the "asset transfer restriction" that disqualifies otherwise eligible money market fund (MMF) shares from serving as initial margin collateral solely because the MMF engages in repos, securities lending, or similar transactions. The rule will also specify the haircuts relevant to MMF securities.

And finally, the rule will provide an exception for seeded funds that will effectively relieve swap dealers from the obligation to exchange initial margin with seeded funds for an initial period of up to three years. This modified approach will increase a fund's access to uncleared swaps in its early life and align CFTC regulations with approaches taken in other jurisdictions.

Treasury Clearing

The CFTC has also been hard at work in preparation for the implementation of the Treasury clearing mandate. Earlier this month, the Commission issued an exemptive order providing relief necessary for the Fixed Income Clearing Corporation (FICC) and the Chicago Mercantile Exchange (CME) to extend their cross-margining arrangement to customers.[18]

This cross-margining arrangement recognizes that the risks of positions held at each of the two clearinghouses can offset each other and, therefore, warrant lower margin requirements.

The CFTC exemptive order, combined with corresponding action by the SEC, provides a framework for appropriately offsetting correlated Treasury positions. This will result in more efficient collateral and capital allocation, while also retaining the key elements of customer protection and the segregation of funds.

Streamlining the Registration Process

CFTC staff has been reviewing many applications for new or amended registration orders. So far this year, we have approved a new DCM registration order and an amended DCM registration order. We have approved an amendment to one DCO's registration order to permit that DCO to expand its business and clear futures contracts on a margined basis. We also issued a new registration order to a DCO that plans to clear fully collateralized contracts on both a direct and intermediated basis. And we issued our sixth order of exemption from DCO registration.

I expect the CFTC staff to continue apace in reviewing applications. We are incorporating new software systems and instituting new policies to enhance efficiency in our review of applications so that well-prepared applications move more quickly than in the past.

Tokenization

Not only is the Commission committed to advancing swaps market reforms, it is also enthusiastic about the opportunities presented by tokenization. Over the course of America's history, we have witnessed our financial markets evolve from gatherings under a buttonwood tree to physical trading pits to electronic platforms. And now blockchains present an entirely new way of transacting value across peer-to-peer infrastructure.

Tokenization can make markets more efficient by improving how assets move, how transactions settle, and how risk is managed.

If we take a step back, it becomes clear that two of the world's most prominent digital commodities, bitcoin and ether, laid the foundation for the shift towards tokenization. They demonstrated that value can be transferred and stored onchain via programmable systems.

Market participants quickly took note. In August 2017, just two years after the Ethereum mainnet launched, ISDA published a whitepaper on smart contracts and distributed ledgers, and how they might be used in the derivatives markets.[19] In 2023, ISDA launched its Digital Asset Derivatives Definitions-an important step toward integrating tokenized assets into the existing market framework.[20]

One of the clearest opportunities presented by tokenization is the ability to create more efficient collateral. Tokenized collateral, which can move in real time and achieve near-atomic settlement, has the ability to reduce counterparty risk, enhance capital efficiency, and promote global participation.

The ability to use tokenized collateral as margin for innovative products is another exciting prospect.

I recognize, however, that these opportunities require a corresponding shift in how we think about risk management. If markets operate 24 hours a day-powered by onchain, tokenized assets-then risk management must operate on that same continuous basis.

A world of 24/7 markets demands 24/7 risk management. And while that may seem like a meaningful shift, it is, in many respects, simply the next step in a long arc of market innovation.

Not too long ago we moved from paper certificates to electronic systems, from multi-day settlement cycles to T+1.

Each step required us to adapt.

But each step ultimately strengthened our markets, shaping them into the gold standard that they are today.

SEC-CFTC Harmonization

Another opportunity that I have stressed is SEC-CFTC harmonization.

For too long, market participants were forced to navigate regulatory boundaries that become barriers to entry and encouraged regulatory arbitrage rather than productive investment.

Next month, I anticipate the Commissions will be issuing joint requests for comment as the first step to complete rulemakings in the areas of portfolio margining and swap data reporting.

ISDA has been active on these topics for many years.

We have heard what this group has said, and we think we have a great opportunity to respond to some of your concerns right out of the gate.

In addition to harmonizing rulesets, we have an opportunity to reduce the fragmentation that exists today across SEC and CFTC-regulated product markets.

One of the strengths of modern markets is that investors have more choices than ever to gain investment exposure and manage risk. These products are often economically similar instruments subject to different regulatory regimes. And, as a result, liquidity is fragmented across venues, investor types, and financial instruments.

This is why substituted or alternative compliance can bring long-term benefits to investors and end-users. By allowing market participants to comply with a single regulatory framework under a primary regulator, we can unlock more efficient markets where investors are better able to pool liquidity and hedge risk across product types. This can enable market participants to offer what SEC Chairman Paul Atkins has referred to as "super-apps," where a wide range of cross-jurisdictional financial products and services can be offered within a single platform without two agency registrations. I look forward to continuing to work together with Chairman Atkins to harmonize the CFTC's and SEC's regulatory frameworks to deepen liquidity, improve execution outcomes for investors, and unleash innovation in American financial markets.

Conclusion

Under my leadership, the Commission will continue to fulfill its vital mission and ensure America remains home to the most transparent, robust, and well-regulated financial markets in the world. America is, and will remain, the global leader in derivatives.

Our leadership is not just domestically focused; we know that consistency and collaboration always bear fruit with our overseas partners.

Principles-based regulation works for everyone. If we do it right, we will open up a new frontier in finance, at least as large, and possibly larger than we saw in the 1980s with the development of the swaps market.

Whatever challenges we face as a nation, economic freedom must win out, or we will lose our place as the greatest financial market in the world.

It's the job of government to embrace innovation and adapt regulations accordingly, not to strangle them through neglect or over-enforcement.

As Chairman, I'm committed to developing policies that help ensure innovation takes root on American soil, under American law, and in the service of American investors, businesses, and consumers.

We are the beneficiaries and the progeny of freedom that began as a spark 250 years ago.

Our founders firmly believed in the individual's right to think, to speak, to invent, to discover, to transact, and to choose. Our derivatives markets are an expression of this freedom. As we move forward, it is our responsibility to preserve and strengthen these principles so that our markets continue to thrive for future generations.

Thank you very much.

[1] "Something Notable and Striking": John Adams Writes about the Boston Tea Party, 1773, American Battlefield Trust https://www.battlefields.org/learn/primary-sources/something-notable-and-striking-john-adams-writes-about-boston-tea-party-1773.

[2] Declaration of Independence: A Transcription, National Archives (Nov. 1, 2015), https://www.archives.gov/founding-docs/declaration-transcript.

[3] Id.

[4] 7 U.S.C. § 1a(9).

[5] See Regulatory Capital Rule (Regulation Q): Risk-Based Capital Surcharges for Global Systemically Important Bank Holding Companies; Systemic Risk Report (FR Y-15), 91 FR 14908 (Mar. 27, 2026); Regulatory Capital Rule: Category I and II Banking Organizations, Banking Organizations with Significant Trading Activity, and Optional Adoption for Other Banking Organizations, 91 FR 14952 (Mar. 27, 2026); Regulatory Capital Rules: Regulatory Capital and Standardized Approach for Risk-Weighted Assets, 91 FR 15332 (Mar. 27, 2026).

[6] See 91 FR 14952

[7] See 91 FR 14908.

[8] See Ownership and Control Reports, Forms 102/102S, 40/40S, and 71, 78 FR 69178 (Nov. 18, 2013).

[9] See Petition for Amendment of the Ownership and Control Reports Rule (June 26, 2025), available at https://www.fia.org/fia/articles/fia-asks-cftc-amend-ocr-rule; Petition for Amendment of the Ownership and Control Reports Rule (June 14, 2018), available at https://www.fia.org/fia/articles/fia-and-cmc-petition-cftc-amend-ocr-rule.

[10] CFTC Letter No. 25-25 (July 31, 2025), available at https://www.cftc.gov/csl/25-25/download.

[11] CFTC Letter No. 25-18 (July 9, 2025), available at https://www.cftc.gov/csl/25-18/download.

[12] An Order Book means: (i) an electronic trading facility, as that term is defined in section 1a(51) of the Commodity Exchange Act; (ii) a trading facility, as that term is defined in section 1a(51) of the Commodity Exchange Act; or (iii) a trading system or platform in which all market participants in the trading system or platform have the ability to enter multiple bids and offers, observe or receive bids and offers entered by other market participants, and transact on such bids and offers. See 17 C.F.R. § 37.3(a)(3).

[13] A Permitted Transaction is any transaction not involving a swap that is subject to the trade execution requirement in section 2(h)(8) of the Commodity Exchange Act. See 17 C.F.R. § 37.9(c)(1).

[14] See 17 C.F.R. § 37.3(a)(2).

[15] CFTC Letter No. 25-24 (July 30, 2025), available at https://www.cftc.gov/csl/25-24/download.

[16] CFTC Letter No. 25-33 (Sep. 22, 2025), available at http://www.cftc.gov/csl/25-33/download.

[17] See Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants, 88 FR 53409 (Aug. 8, 2023).

[18] See Order Providing Exemptive Relief to Facilitate Cross-Margining of Customer Positions Cleared at Chicago Mercantile Exchange, Inc. and Fixed Income Clearing Corporation, 91 FR 20880 (Apr. 20, 2026).

[19] See ISDA, Whitepaper: Smart Contracts and Distributed Ledger-A Legal Perspective (Aug. 3, 2017), available at https://www.isda.org/a/6EKDE/smart-contracts-and-distributed-ledger-a-legal-perspective.pdf.

[20] See ISDA, ISDA Digital Asset Derivatives Definitions (Jan. 26, 2023), available at https://www.isda.org/book/isda-digital-asset-derivatives-definitions/.