The Commodity Futures Trading Commission’s Division of Clearing and Risk and Division of Market Oversight issued a staff advisory reminding designated contract markets (DCMs) and derivatives clearing organizations (DCOs) of Core Principle and other regulatory obligations under the Commodity Exchange Act and CFTC regulations relating to controls designed to address market volatility. The advisory highlights that volatility controls can help mitigate market disruptions while supporting continued price discovery in stressed conditions, and points to the use of best practices developed by DCMs, industry groups, CFTC advisory committees, and others. Where volatility controls may be in effect at times critical to DCO decisions, DCOs are reminded to exercise careful discretion and informed judgment based on economic factors in the underlying market and to provide transparency to clearing members and end users on potential impacts, including on settlement prices. The advisory responds to a recommendation from the CFTC’s Global Markets Advisory Committee.
Commodity Futures Trading Commission 2025-05-22
Commodity Futures Trading Commission staff advisory reminds derivatives exchanges and clearinghouses of obligations for market volatility controls
The Commodity Futures Trading Commission's Divisions of Clearing and Risk and Market Oversight issued a staff advisory reminding designated contract markets and derivatives clearing organizations of their regulatory obligations under the Commodity Exchange Act concerning market volatility controls. The advisory emphasizes the importance of these controls in mitigating market disruptions and supporting price discovery during stressed conditions. It also advises DCOs to exercise discretion and transparency regarding potential impacts on settlement prices.