CFTC should support new tools to manage risk and improve price transparency across a fast-growing market.
Washington, D.C. — MFA urged the Commodity Futures Trading Commission (CFTC) to support the responsible development of compute derivatives in a comment letter submitted today. The letter responds to the CFTC’s request for comment on listing derivatives tied to the price of computing power used to train and run artificial intelligence (AI) models.
“Compute derivatives will support the infrastructure buildout America needs to win the global AI race,” said Bryan Corbett, MFA President and CEO. “Investment in AI infrastructure is surging, and AI models are changing fast. That makes the future price and value of computing capacity harder to predict. Derivatives are designed to help companies manage that uncertainty and invest with more confidence.”
Prices for computing power vary by chip generation, provider, and region, and the underlying market is still taking shape. These differences are common across commodity markets and should not, on their own, prevent exchanges from listing contracts that offer useful price signals and meaningful partial hedges. The CFTC should let competing contract designs develop and allow the cash and derivatives markets to mature together.
MFA recommended the CFTC focus its review on the safeguards that make these markets reliable for participants. Specifically, MFA urged the Commission to:
- Ensure reliable price benchmarks. Exchanges should demonstrate that settlement benchmarks are representative, transparent, and auditable, with strong governance, conflicts-of-interest controls, and fallback procedures.
- Prevent market manipulation. Exchanges should have access to the information needed to detect and deter attempts to manipulate benchmark inputs or settlement prices.
- Tailor safeguards to each product. Clearing, margin, position controls, and disclosures should reflect each contract’s design and risks and evolve as reliable data, liquidity, and participation develop.
Read the full letter here.
About the global alternative asset management industry
The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.
About MFA
Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.
