Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. Washington is obsessed at the moment with near-term financial threats like the debt ceiling and banking instability. But Commodity Futures Trading Commission Chair Rostin Behnam is eyeing a plan to address a problem centuries in the making: climate change. Behnam told me on the sidelines of last week’s Milken Institute conference that he’s weighing new policies to shore up trading tied to voluntary carbon offsets — a type of credit that corporations buy and sell to manage their climate footprints. The carbon offsets market is seen as a critical tool to help mitigate greenhouse gas emissions. But it’s been dogged by credibility and transparency concerns. It’s unclear to what extent the offsets — like those tied to maintaining forests — can be trusted. Behnam — who began pushing for climate-risk oversight of financial markets before it was in vogue — is now considering laying out carbon offsets policy potentially in the form of guidance or an advisory. It could help reassure companies that have opted to stay on the sidelines because they don’t trust the market. The CFTC can’t directly regulate offsets trading. But it can police for fraud and manipulation thanks to its jurisdiction over futures contracts tied to the credits. So a move by the CFTC would have downstream effects. “If we can send a signal through some sort of regulatory action to the underlying market participants that this is what we expect in order for our markets to not be readily susceptible to fraud or manipulation, that will in theory raise the bar of how they conduct themselves and what rules they require of their market participants,” he said. The timing and exact form of the policy are TBD. “They're hard legal questions,” he said. “We're thinking about it and we're trying to come up with something as quickly as possible." It’s Monday — It’s good to be back after guest hosting Global Insider last week. Thank you to everyone who made contact while Sam and I were at Milken. Keep in touch: Zach Warmbrodt, Sam Sutton.
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