We spoke to Carl Kennedy, partner and co-chair, Financial Markets and Regulation at Katten. Carl has had a varied background – as a regulator with the US Commodity Futures Trading Commission (CFTC) and as senior in-house counsel at a large investment bank. He offers a diverse and highly informed perspective in relation to financial markets.

Carl’s career also has positioned him at the forefront of significant legislation and regulatory guidelines. While at the CFTC, he was a primary drafter of several rules and a key player in its adoption of guidelines for implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

Tell us about yourself

I’ve been a practicing attorney focused mainly on derivatives regulatory matters for 17 of my nearly 25 years of legal practice. During that time, I have worked as a regulator with the US Commodity Futures Trading Commission (CFTC), as senior in-house counsel at one of the largest dealers in the derivatives market, and as an attorney and lobbyist with Managed Funds Association (MFA).

I started my career at a large Philadelphia-based law firm as a corporate and tax associate. It was there, during my fifth year, that I was first exposed to derivatives contracts and was quite intrigued. I found the product to be fascinating in terms of how they were used, structured and documented, and interestingly how, at the time, they were not regulated.

Later in my career, I worked at MFA and represented the association’s global hedge fund membership on derivatives legislative and transactional matters. This was around the time lawmakers and others were squarely focused on enacting regulatory reform for the multi-trillion dollar over-the-counter derivatives market, because the unregulated market was cited as being a major contributor to the 2008 global financial crisis.

As a result, the bulk of my time with MFA was spent meeting with lawmakers on Capitol Hill, educating them about the benefits of the derivatives market to commercial users and other participants even as negative headlines about the industry ruled the day. My goal then was what it largely remains today: making clear the wide range of benefits of derivatives investment, how they can help achieve business goals, whether through hedging risks, leveraging or by way of income generation, among other strategies. It was at MFA that I decided to become a derivatives regulatory attorney.

I view my government service truly as a badge of honor.

That foundational experience was invaluable as it has shaped my way of working with my law firm clients today.

I have been a partner at Katten for over five years. I took on the leadership role as co-chair of the firm’s Financial Markets and Regulation practice in early 2023. I also serve on several firm committees. One of the positions of which I am most proud is my role as co-chair of Katten’s Partner Collective on Racial and Ethnic Diversity (PCRED). Through PCRED, I work with the firm’s DEI team to organize programs, enhance relationship building among the firm’s senior diverse attorneys, and provide input to the firm’s recruiting and retention of attorneys of color.

What are your areas of expertise?

I am a derivatives regulatory attorney, counseling all types of derivatives market participants, market infrastructure providers, and industry trade associations on a wide range of matters regarding their activities in US commodities and derivatives markets.

What has been the proudest moment of your career?

I view my government service truly as a badge of honor. I feel privileged and proud to have served in government at a crucial time in the evolution of the financial markets. My first day at the CFTC, July 21, 2010, was also the day when then-President Barack Obama signed the Dodd–Frank Wall Street Reform and Consumer Protection Act into law.

I believe that was foretelling in terms of my career as Dodd-Frank made changes affecting all federal financial regulatory agencies and throughout America’s financial services industry. At the CFTC, I drafted several rules and was a key player in its adoption of guidelines for implementing Dodd-Frank.

Don’t let ambition prevent you from enjoying the current experience.

What are the challenges and opportunities facing financial services?

As I see it, many of the challenges are also opportunities. For example, technology shapes the ways in which financial markets operate. About 20 or 30 years ago, electronic trading redefined financial markets, including derivatives markets. Today, technology continues to present challenges and opportunities for the ways in which financial markets operate. 

You can’t pick up any major financial publication without reading one or two articles about the uses or risks associated with artificial intelligence in financial markets. Each month, you unfortunately also hear about cyberattacks and threats to financial market participants. New technologies and cyber risks will require new regulations or adaptation of existing regulations to ensure that financial markets remain resilient, liquid, and safe.

Does your experience at the CFTC enable you to offer better advice to clients?

Having worked as a regulator absolutely helps me understand things that practitioners without government experience simply do not. I believe it deepens your understanding of financial regulations, compliance requirements, and enforcement practices. As lawyers, our goal is to help clients achieve compliance more effectively. Former regulators generally better understand what triggers enforcement actions, and this understanding can help clients anticipate and stave off potential issues.

Stop looking ahead so much that you fail to look around you.

So, yes, my experience as a regulator is without question a plus. My collective experience-law firm, in-house, trade association, government-has given me a rare, holistic perspective, enabling me to serve my clients and address their concerns from the mindset of a regulator, in-house practitioner, policymaker and trusted advisor.

Would you encourage people starting out in the industry to gain public service experience?

I would definitely encourage any lawyer (regardless of their years of experience) to work in public service; it is a great training ground that I believe deepens your understanding of the regulatory process and the perspectives of various stakeholders within financial markets. You also develop key relationships that will often last your entire professional career.

Appreciate where you are and soak up as many lessons as you can.

What advice would you give to your younger self?

Don’t get too far ahead of yourself. Enjoy where you are and lean into each step of the process. Put another way: Don’t let ambition prevent you from enjoying the current experience. Stop looking ahead so much that you fail to look around you. Appreciate where you are and soak up as many lessons as you can.

Tell us an amusing anecdote about your work.

The derivatives industry is smaller than the securities bar and, as a result, is a more close-knit group. So, friends become competitors, regulators become clients and so on. That’s the amusing part. The good thing is that while your hat may change, the civility and respect remain.

For example, when I served as in-house counsel at a large investment bank, a former CFTC colleague and friend of mine went on to become a competitor at another bank. But there was enough respect between us that we remained friends notwithstanding our changing roles. We maintained a healthy understanding that the competition was between our employers, not us.

When I moved to private practice, that friend then became a client. In this industry, you can go from being colleagues to competitors to clients or regulators all in the span of 10 years.

Can you recommend a good book?

My first inclination was to say Title 17, Chapter 1 of the Code of Federal Regulations, which is where you can find the CFTC’s regulations. But I suppose that misses the point of this question, at least somewhat. So, I would say that among the most recent good books I’ve read is the New York Times bestseller, Difficult Conversations: How to Discuss What Matters Most.

Stepping into my role as a practice leader, I knew I had to sharpen and better understand my EQ (emotional quotient). I didn’t want to think that just because I have empathy I would know how to have difficult conversations, a requirement in management. This book nicely reminds you that we all have feelings and gives good guidance on how to talk in ways that are not destabilizing but rather in a manner that is more efficient and effective.