News from the Futures: FIA Expo ’22 — Recap

FIA Expo returned to form this year with a new location — and a new perspective on crypto markets — along with some other added twists. Here are a dozen final thoughts on the proceedings.

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The one-on-one with Jackie Mesa of FIA (left) and John Davidson from the OCC was an Expo highlight

One Dozen Observations from FIA Expo 2022

1. In previous years the Exchange Leaders gathered on the stage at the same time for a rollicking, sometimes confrontational conversation that veered into the personal (e.g. Terry Duffy and Jeff Sprecher in 2021) but this year each exchange leader went one-on-one with either Walt Lukken or Jackie Mesa. In my opinion the old format was better because it offered more opportunity to highlight differences between the exchanges and their leaders. Speaking alone was often PR babble.
2. Speaking of exchanges, I wasn’t able to attend the briefing with Ed Tilly from Cboe Global Markets so I can’t report on what’s new with “the not so little exchange that does.” I look forward to seeing how they will innovate in 2023 and beyond.
3. I was surprised to see that ICE didn’t appear on the list of conference sponsors. ICE is one of the largest futures exchanges in the world so it’s curious that they didn’t step up to support their industry.
4. With the colossal cratering of FTX just one week prior to the conference, cryptocurrencies were obviously a hot topic for conversation. To most, the failure of yet another cryptocurrency exchange was a validation of the regulated futures trading model.
5. Other big topics of conversation included commodities and energy, particularly as they relate to the war in Ukraine. In all cases, the futures industry demonstrated once again how proactive they can be when it comes to both anticipating and reacting to risk.
6. The industry is also addressing the issues of ESG and climate change. Current solutions are only emerging but it’s highly likely that futures markets will have a big role to play as these issues continue to grow in importance.
7. One of the criticisms of FTX from the futures industry was their plan to introduce a vertically integrated clearing that disintermediates clearing firms (FCMs). That criticism hasn’t stopped either MIAX, which has already purchased a clearing firm, and CME Group, which is applying to do so. In short, this issue isn’t going away just because FTX is toast.
8. In the BBI (boring but important) category, the industries DMIST (Derivatives Market Institute for Standards) initiative highlights how the industry can cooperate to deal with pressing issues. Their first initiative deals with inefficiencies in the allocation and give-up processes. Both of these were a problem in March 2020 when volatility spiked simultaneously across all markets as the Covid 19 pandemic roared. These inefficiencies need to be addressed lest they lead to a catastrophe during the next volatility event.
9. The Innovators Pavilion is one of the highlights of Expo, focusing on new and emerging companies that are pushing the boundaries of the futures and capital markets. This year I had a chance to catch up with a previous Innovators winner and discuss how they continue to pivot in order to find the winning formula to grow and fly. Freightwaves was the winner in 2018 and they continue to develop indices to track and trade the shipping industry in the U.S. They had to take a step back in a couple of ways but they are likely well positioned to grow in the future. Keep an eye on Freightwaves.
10. The numerous panel appearances from CFTC commissioners and staff highlighted once again what a dynamic and effective agency the CFTC is. It’s likely that it is the first Federal agency to have 80% female leadership (4 of 5 Commissioners) but it’s not only a numbers game: the current slate of Commissioners is, in my opinion, the most universally qualified that I have ever seen.
11. That being said, I feel like I owe two apologies for comments relating to the CFTC that I made in my first Expo recap. In the first case, I intimated that every other word during Chairman Behnam’s conversation was about FTX. That was not the case: I was trying to be cute with a rhetorical device to emphasize how much EVERYONE was talking about FTX. In the other instance, I made a comment that Commissioner Johnson “had a hard time being succinct” during her panel appearance, a comment that was both irrelevant and uncalled for. In fact, I had the impression that Johnson was the smartest person on the stage for her crypto panel, making my snark all the more unwarranted. My apologies to both.
12. FIA Expo moved from the Hilton to the Sheraton this year and the facilities were a definite upgrade. The pastries, on the other hand, were a disappointment. I have always raved about the sweets at the Hilton and I found the desserts at the Sheraton to be underwhelming. There was a curious tiramisu “shot” that tasted like butterscotch pudding with an espresso bean on top. More critically, there were no chocolate offerings. Color me disappointed.

Walt Lukken’s all star band: Pork Belly & The Out-Trades (apologies to Emma Davey: this panoramic photo makes her look 4 feet wide and gives her 3 arms. She’s not that wide by a longshot and only has 2 arms.)

That’s all for FIA Expo 2022. You can read my recaps from Day One and Day Two on Medium and I’m always interested in your comments and questions.

Further reading:

News From The Futures: FIA Expo 2022 Day One

News From The Futures: FIA Expo 2022 Day Two