The Commodity Futures Trading Commission will hold a public discussion on disintermediation next month, with a proposal from crypto exchange FTX looming large.
Critical to the roundtable is the role of futures commission merchants, which FTX is proposing to do away with via its proposed model for clearing derivatives. The elimination of FCMs would streamline trading by reducing the number of times assets change hands, each layer of which entails separate requirements for liquidity holding.
However, it’s a new way of approaching clearing that has generated major blowback from both progressives suspicious of financial operations and entrenched financial institutions — including FCMs themselves.
The CFTC’s announcement does not mention FTX by name, instead referring to “a number of registered entities [that] have discussed with CFTC staff proposals to offer ‘non-intermediated’ or direct trading and clearing of margined products to retail customers.”
Representative David Scott (D-GA), the chairman of the House Agriculture Committee, took aim at FTX’s proposal at a hearing with CFTC chairman Rostin Behnam at the end of last month, announcing an oversight hearing on the subject that has yet to materialize on the Congressional calendar.