Comment Text:
I adopt Chairman Christy Romero's perspective, as presented in the linked comment (https://www.cftc.gov/PressRoom/SpeechesTestimony/romerostatement062823), which strongly opposes the potential integration of clearinghouses with customer-facing intermediaries. This integration raises concerns about market stability, investor protection, and increased risk. The suggested regulatory framework should be avoided due to its potential to concentrate risk and leverage within vertically integrated clearinghouses, weakening risk oversight and disciplinary mechanisms. Romero's statement highlights that existing rules were not designed to safeguard customers in such a scenario, leaving them vulnerable to abuse and reduced protection. The removal of intermediaries disrupts fair trade execution practices, diminishing competition and regulatory control. Vertical integration eliminates the competitive market's self-regulatory function, concentrating power and diminishing resilience. The absence of competition and oversight risks permitting unchecked risk-taking. Romero's insight on crypto platforms emphasizes that mirroring unregulated structures lacks prudence, given their inadequate investor protections. She also highlights potential cascading losses and contagion risks in an unregulated environment. This warning holds true for vertically integrated markets, which introduce additional risks and reduced visibility. This proposed integration, by historical evidence, threatens increased risk-taking without benefits, placing investors and customers in jeopardy.
