Michael Selig has placed derivatives regulation at the centre of the US competitiveness agenda, using his keynote at the ISDA annual meeting to call for a more proportionate rulebook, deeper SEC and CFTC alignment, and a clearer path for innovation in swaps, clearing, tokenised collateral and market structure.
He framed the CFTC’s task as keeping US markets “efficient, resilient, and innovative” while ensuring they remain anchored in the United States. His stated regulatory philosophy – the “minimum effective dose of regulation” – signals a preference for rules that can be justified by clear supervisory value, rather than obligations maintained by precedent or recurring relief.The most immediate target is the long tail of Dodd-Frank Act implementation. Selig argued that several areas of the swaps framework remain dependent on temporary or recurring no-action relief, creating uncertainty for market participants and operational complexity for compliance teams.
He said the CFTC is “working to streamline, reduce burdens, and provide clarity to market participants.” He continued, “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,” he said.
No-action relief impacts the compliance workload. Firms must track relief, map it to affected rules, interpret conditions and build controls around temporary positions that may persist for years. Moving from relief to final rules should reduce ambiguity, but firms still need to refresh policies, reporting logic, exception workflows and evidence trails.
Materiality in Focus
Selig’s comments on materiality thresholds for swap data error notifications extend the same burden-reduction logic. He pointed to existing staff no-action relief under which a reporting counterparty may avoid submitting a swap data error correction notification where it reasonably determines that the affected reportable trades do not exceed five percent of its open swaps in the relevant asset class.Selig said staff should assess whether existing no-action relief should be reflected in the rules, so that notification obligations focus on errors that are material to market oversight.
That would reduce low-value notifications, but it would not remove the need for strong controls. Firms would still need to identify reporting errors, assess materiality, document the judgement, approve remediation and retain evidence showing how the issue was corrected.
SEC-CFTC Harmonization
Selig’s keynote should be read alongside the formal SEC-CFTC Memorandum of Understanding announced in March. The MOU supports coordination on data sharing, market surveillance, risk monitoring, crypto assets and other emerging technologies, while the Joint Harmonization Initiative identifies clearing, margin, collateral frameworks and regulatory reporting as priority areas.
Selig said he expects the SEC and CFTC to issue joint requests for comment on portfolio margining and swap data reporting as a first step towards rulemaking in areas where product boundaries have fragmented liquidity across venues, investor types and financial instruments. His remarks align with the SEC-CFTC Memorandum of Understanding, which points to alternative compliance frameworks and “appropriately tailored and regulated ‘super-apps’” where coordinated oversight can reduce duplication while preserving investor protection and market integrity.
Clearing and Capital Efficiency
Selig also linked competitiveness to clearing, margin and capital. He welcomed revised Basel III Endgame proposals from US prudential regulators, highlighting changes intended to mitigate capital impacts on client clearing, agriculture and energy end-users, futures commission merchants and swap dealers. He also cited CFTC and SEC action supporting the extension of cross-margining between the Fixed Income Clearing Corporation (FICC) and CME to customers, enabling more efficient treatment of correlated Treasury positions while retaining customer protection and segregation requirements.Portfolio margining and cross-margining can reduce duplicative collateral demands, but only where firms can evidence exposure aggregation, product mapping, segregation, collateral eligibility and model governance.
Tokenised Collateral
Selig presented tokenised collateral as a way to improve settlement, collateral mobility, counterparty risk management and capital efficiency. In practice, tokenisation can make collateral easier to transfer, verify and reuse across trading relationships, reducing settlement delays and helping firms move eligible assets more quickly to meet margin calls. It can also improve visibility over collateral ownership, availability and status, supporting more timely risk decisions.
He did offer an important caveat: “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.”
The US competitiveness push has clear parallels in the UK, EU and APAC, although each jurisdiction is moving from a different institutional starting point. In the US, Selig’s emphasis is on reducing duplication, replacing recurring relief with durable rules and deepening SEC-CFTC alignment. The focus is inter-agency harmonisation and reducing product-boundary friction in derivatives and adjacent markets.
Across the Jurisdictions
The US competitiveness push has clear parallels in the UK, EU and APAC, although each jurisdiction is moving from a different starting point. In the US, Selig’s emphasis is inter-agency harmonisation: reducing duplication, replacing recurring relief with durable rules and lowering product-boundary friction in derivatives and adjacent markets.
The UK is pursuing competitiveness through a more explicit statutory mandate, with wholesale market reform, transparency, transaction reporting, consolidated tapes, digital securities and PISCES sitting alongside market integrity and resilience.
The EU is moving through simplification and single-market integration, with ESMA embedding burden reduction across its 2026 work programme. In the latest development, on 4 May 2026, ESMA published its simplification of EU reporting frameworks and set out a path towards more streamlined transaction reporting, including a longer-term “report once” framework EMIR, MIFIR and SFTR.
APAC remains more varied, with Singapore and Hong Kong using tokenisation and market-infrastructure policy to support institutional market development, while Australia proceeds more cautiously through licensing and perimeter reform.
Compliance Impact
Selig’s keynote points to a derivatives rulebook being recast around proportionality, competitiveness and supervisory utility. The sharper compliance challenge is 24/7 risk management: as tokenised collateral, extended settlement windows and cross-margining models move risk closer to real time, reporting, margin and collateral controls must be able to operate, evidence decisions and escalate exceptions on the same continuous basis.
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