Markets ‘operating well,’ no sign of defaults amid extreme volatility – CFTC Chair

Merchants work on the ground of the New York Inventory Change (NYSE) in New York Metropolis, U.S., March 14, 2022. REUTERS/Brendan McDermid

BOCA RATON, Florida/WASHINGTON, March 16 (Reuters) – Markets are “working nicely” amid excessive volatility sparked by Russia’s invasion of Ukraine, though there are unknown dangers, the chair of the U.S. Commodity Futures Buying and selling Fee mentioned on Wednesday.

Whereas there may be “definitely” stress on the monetary system there are to date no purple flags of potential defaults, Rostin Benham informed the Worldwide Futures Trade Convention.

The company’s surveillance unit is “surgically targeted” on analyzing buying and selling for manipulative, inappropriate or disruptive conduct, however the markets are “reacting and working nicely” given the difficult state of affairs.

“There stay unknowns, particularly within the derivatives house, as we hit upcoming supply marks or if we now have any variety of provide constraints that would have an effect on totally different merchandise and asset courses,” he added.

A slew of Western retaliatory sanctions on Russia’s monetary system and oil exports this month sparked wild swings within the costs of oil, metals and different uncooked supplies and generated extra margin calls at clearinghouses and buying and selling corporations. learn extra

Which means some counterparties need to stump up extra liquid collateral they need to pledge to safe their trades. Sudden, massive margin calls can put monetary stress on establishments that don’t maintain sufficiently liquid belongings.

The U.S. Securities and Change Fee this week issued a uncommon public warning to dealer sellers that they need to “stay vigilant” to such counterparty dangers. learn extra

Benham mentioned U.S. and abroad monetary regulators are working collectively to take care of market resilience and stability, and that the CFTC was additionally coordinating with the U.S. Treasury to make sure market members may use sanctions waivers to cowl their exposures.

Reporting by John McCrank in Boca Raton, Florida
Writing by Katanga Johnson in Washington; enhancing by Michelle Worth and Jonathan Oatis

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