The derivatives industry faces a busy second half of 2026, with regulators advancing rules and market participants preparing for major changes to market infrastructure. For the Futures Industry Association (FIA), key priorities include the implementation of central clearing for U.S. Treasuries, the growth of prediction markets, the move toward 24/7 trading and the potential of tokenization. FIA CEO Walt Lukken spoke with Traders Magazine about where these developments stand, what needs to happen next, and where greater regulatory coordination could have the biggest impact.

What are FIA’s biggest priorities for the rest of 2026?

It’s incredibly busy. It’s hard to even narrow the list. There’s a very active CFTC rule-making agenda, so we’re engaged on 24/7 markets and prediction markets. The CFTC recently put out a rule-making on conflicts, which is something we’ve been advocating for several years. Exchanges have begun to own more of the vertical stack of trading firms and intermediaries, so there needs to be proper governance and guidance around those arrangements.

The other big priority is Treasury clearing. We’re actively working with market participants, the buy-side and clearinghouses to make sure that when the mandate goes into effect for cash Treasuries on December 31, and for repos on June 30 of next year, the industry is ready.

Where does the U.S. Treasury clearing effort stand, and what are the biggest issues now?

We’re making progress toward the December 31 launch date. There are still some mechanical issues to sort out. Clearing is a system where, in certain cases, we’re merging the securities and futures worlds, particularly around cross-product arrangements.

The good news is that we’ve completed the agency clearing agreement for the buy-side, working with SIFMA and the buy-side. We’re still working on cross-margining arrangements. FICC and CME have an arrangement that has been submitted to the SEC and CFTC allowing cross-margining between the two clearinghouses, and that has been approved. There are still some things to work out to make the mechanics work and ensure the capital relief is what we expect.

There are no existential problems, but there are things that have to get done before year-end.

What would a successful implementation look like?

We want to bring as many market participants into the market and utilize clearing as much as possible. This is one of the deepest, most liquid markets in the world, and the last thing we want is for the transition to impact that liquidity.

Breaking apart clearing from execution opens the market to participants that previously didn’t have the capabilities to participate. We’re hoping this brings enhanced liquidity and greater safety and soundness. Success means large take-up at the end of the year without losing liquidity.

How do you see prediction markets developing, and what role should regulators play?

I’m amazed by the growth and take-up of prediction markets. The 2024 elections really brought them into the public eye, and sports betting has also contributed to their popularity. They’re simple, intuitive ways for retail participants to predict an economic, political or sports event.

We’re now trying to figure out what products should be regulated by the CFTC. That is a high-level public policy question that should really be decided by Congress or the courts. Right now, if you read the statute, sports and politics are included as part of the jurisdiction of these prediction markets. If Congress thinks that’s not in the public interest, it should tell the CFTC.

Where FIA is concerned is the regulatory regime for whatever products are ultimately within the CFTC’s jurisdiction. How do we oversee these markets? How do we ensure contracts are listed that can’t be manipulated? The CFTC has put out three pieces of guidance in this area, and we appreciate Chairman Selig’s approach. If an exchange is going to list a contract through self-certification, it needs to show that the 23 core principles are being met and that the contract isn’t susceptible to manipulation.

We think putting that burden on the exchange, with a healthy dialogue between the regulator and the market, will help improve the market. There may also be contracts that are simply too susceptible to manipulation to list.

How close are we to 24-hour trading, and what are the biggest hurdles?

It’s a trend that is coming, and we already see it in several products, typically crypto products that are fully collateralized.

Where we’re concerned is when 24/7 trading moves into commercial products that are leveraged and margined. If markets move over weekends without clearing and intermediation, you could have three days of volatile markets where risk builds up and then violent margin calls on Monday morning.

Margin is meant to be a stabilizer, not a destabilizer. If markets are moving to 24/7, clearing should move to 24/7. We need the operations, personnel and systems in place so that the infrastructure that de-risks our markets today is available overnight and on weekends. We also need the payment rails to be open 24/7.

Where could tokenization have the biggest practical impact?

We’re seeing some interesting experiments. DTCC recently hosted a tokenized securities experiment involving J.P. Morgan, Citadel and Goldman Sachs, testing the movement of securities and collateral through a tokenized blockchain. That was successful, and there is great promise that tokenization could speed up payments and collateral movement in the future.

The problem is timing. The promise is two or three years away, but markets are moving toward 24/7 trading now. We need to bridge those two worlds.

There probably needs to be regulatory guidance and principles around what tokenized assets mean, including whether they can hold value in times of stress and work in the post-trade environment. The industry also needs to do more experiments to understand the operational and legal ramifications. There is great promise, but a lot of work remains before we can get to a fully tokenized clearing system.

What would you like to see from regulators on harmonization?

In the United States, the biggest harmonization issue is between the CFTC and SEC. There have been turf battles between the two agencies for decades, but both Chairman Selig and SEC Chairman Paul Atkins have committed to stopping those turf wars.

We’re interested in areas such as security futures, where the regulatory burden from both agencies has historically prevented products from developing. Today, both agencies have direction from their chairs to work together and determine where agencies can defer to each other or recognize each other’s laws.

CME recently launched its first security futures product, so it is beginning to test this area. I hope this is an area where harmonization can have real market impact and allow a new product to develop that customers can use.

Where do you think the most progress needs to be made across the industry before the end of the year?

I think there’s a lot of legal uncertainty around both crypto and prediction markets. One of our priorities is advocating for passage of the Clarity Act, which would put a framework in place for cash crypto that doesn’t exist today.

We’ve been living with a fragmented tapestry of regulation across the states, the federal government and internationally. If Congress could pass the Clarity Act, with some adjustments, it would bring greater certainty to the crypto markets and could help position the U.S. as a leading center for the industry.

If legislation can’t be passed, I think Chairman Atkins and Chairman Selig are committed to doing what they can to bring more legal certainty to those markets. But there are legal limitations that ultimately need to be addressed at the legislative level.

The image for this article was generated using AI.