CFTC Commissioner Dan Berkovitz Warns Of Systemic Risk From Clearing Services Concentration

In a speech before the National Cattlemen's Beef Association, CFTC Commissioner Dan M. Berkovitz expressed concerns about the concentration in clearing services and the systemic risk resulting from the materially reduced number of futures commission merchants ("FCMs").

Mr. Berkovitz reported that due to the concentration in clearing services, the number of FCMs actively clearing futures and options on behalf of customers has fallen from 90 firms in 2007 to 55 in 2019. He said that clearing services are provided primarily by the affiliates of big banks, with ten of the largest FCMs holding 75 percent of all required customer margin.

First, Mr. Berkovitz said that the fewer number of FCMs has resulted in fewer clearing services options for commercial hedgers.