On 19 December 2025, Caroline D. Pham, Acting Chairman of the Commodity Futures Trading Commission, issued a formal public statement welcoming the final report on pre-hedging released by the International Organization of Securities Commissions, reinforcing regulatory certainty for United States and global financial markets.
In her statement, Acting Chairman Pham underscored the legitimacy and maturity of pre-hedging as a market practice, stating: “Pre-hedging is a well-established risk management practice, underpinned by extensive industry guidance and expertise. I am proud that the CFTC played an active role in IOSCO’s efforts, contributing to the review of existing codes and practices, the survey of members and industry participants, the formal consultation process, and the stakeholder roundtables.”
The statement emphasised that IOSCO’s final report correctly recognises that member jurisdictions already maintain comprehensive regulatory frameworks governing pre-hedging activity. Acting Chairman Pham noted that these jurisdictional rules are further reinforced by globally recognised industry standards, including the FX Global Code, the Global Precious Metals Code, and the Financial Markets Standards Board Standard for execution of large trades in fixed income, currencies, and commodities markets.
She further stated IOSCO’s deliberate regulatory restraint, observing that the organisation has made clear that its recommendations are intended to support, rather than displace, existing national rules. As articulated in her statement, “IOSCO has made clear that its recommendations are designed to support existing rules and regulations, recognizing that many jurisdictional frameworks are already achieving the intended outcomes.” She added that IOSCO’s cross-asset recommendations align with established industry codes and standards, an alignment she characterised as essential to “avoid disruption of markets that are essential to the real economy, mitigate systemic risk and promote financial stability.”
She expressly confirmed that IOSCO’s conclusions are fully consistent with the Commodity Futures Trading Commission’s regulatory position, stating: “For the avoidance of doubt, the views expressed in the IOSCO report reflect the CFTC’s position on pre-hedging.” On that basis, she concluded unequivocally: “I do not anticipate the need for further CFTC rulemaking or guidance to address IOSCO’s recommendations.”
It provides clarity for derivatives dealers, asset managers, banks, and institutional trading firms operating in United States markets, confirming regulatory alignment between the Commodity Futures Trading Commission and IOSCO, and by expressly ruling out additional domestic rulemaking, the Commission has reinforced legal certainty, reduced the risk of duplicative compliance obligations, and affirmed the continued legitimacy of pre-hedging as a risk management tool within established regulatory and conduct frameworks with a broader policy approach favouring international coordination, proportional regulation, and deference to well-functioning market standards, positioning the Commodity Futures Trading Commission as a stabilising influence in cross-border regulatory harmonisation during a period of heightened scrutiny of trading practices and market conduct.
(Source: https://www.cftc.gov/PressRoom/SpeechesTestimony/phamstatement121925)
