[UPDATED] Special Report - Senate Agriculture Committee holds hearing on CFTC nominees

3 August 2017

Update: On Aug. 3, the Senate confirmed the nominations of Brian Quintenz and Rostin "Russ" Behnam as CFTC Commissioners and Chris Giancarlo to serve as CFTC Chairman. The nominations were approved unanimously.

“We are pleased to report full Senate confirmation of three CFTC leaders. We look forward to continuing to work together towards confirmation of a full slate of Commissioners so the CFTC can function with all hands on deck,” Senators Pat Roberts (R-Kans.) and Debbie Stabenow (D-Mich.) said in a statement.

As soon as Quintenz and Behnam have been sworn into office, the CFTC will have four commissioners and one vacancy. Commissioner Sharon Bowen has announced that she plans to step down in the near future, however. The White House has nominated Dawn DeBerry Stump to fill the existing Republican vacancy and reportedly is looking for a Democrat to replace Bowen. Stump's nomination was approved by the committee following its hearing on July 27 (read FIA's summary of the hearing) and is now pending confirmation by the full Senate.

Quintenz comes from the private sector. He ran an investment fund that was registered with the CFTC as a commodity pool operator. Earlier in his career, he was a legislative aide to Representative Deborah Pryce (R-Ohio).

Behnam spent six years working for the Senate Agriculture Committee as an aide to Stabenow, working on issues related to the implementation of Dodd-Frank and CFTC reauthorization as well as other agricultural issues.

On July 27, three CFTC nominees testified at a Senate Agriculture Committee today, a key step in the process for confirming their nominations. The committee has not scheduled a vote on the nominations yet, but the hearing revealed strong support for the nominees from members of both parties. The two most senior members of the committee, Senators Pat Roberts (R-Kansas), and Debbie Stabenow (D-Mich.), welcomed the nominees as well qualified to serve as CFTC commissioners and expressed their support for filling the vacancies at the agency.  

"Whether it's market participants who rely on the CFTC to provide regulatory certainty, or consumer financial advocates who highlight the need for robust oversight of the market, I think everyone can agree that we need a functioning Commission," Senator Pat Roberts (R-Kansas), the chairman of the committee, said in his opening statement. "I am confident that the nominees we have today are well qualified and can further this mutual objective."

The three nominees are Rostin "Russ" Behnam, Brian Quintenz and Dawn DeBerry Stump. In their opening statements, each nominee highlighted their experience working on issues related to the CFTC and their commitment to the CFTC's mission. Both Behnam and Stump worked as legislative staffers for the Senate Agriculture Committee for six years and they received warm endorsements from committee members familiar with their work. Quintenz highlighted his work as an aide to Representative Deborah Pryce (R-Ohio) as well as his experience running an investment fund that was registered with the CFTC as a commodity pool operator.

The hearing also revealed the policy priorities for the members of the committee. Republican members of the committee tended to stress the need to reduce the regulatory burden on agricultural interests and other end-users, while Democrats urged the nominees to finish the speculative position limits rule and support higher funding for the CFTC. Both sides agreed on the importance of preserving end-user access to the futures markets and the value of the futures markets for price discovery and risk management.

Position limits:  In response to questions from several Democrats, all three nominees vowed to work with acting CFTC chairman Chris Giancarlo to finish the rule. They also reassured the committee that they would support defining bona fide hedges in a way that preserves the existing ability of end-users to manage their risks.

De minimis swap dealer registration threshold:  In response to questions from Chairman Roberts, all three nominees said the CFTC should carefully examine the most current data before reducing the threshold from $8 billion in notional value to $3 billion. Quintenz added that notional value is not a good measure of risk.

Data collection:  In response to questions from Senator David Perdue (R-Ga.) about the "mountain" of information collected by the CFTC, Behnam and Stump agreed that the CFTC's requests for data should be more "targeted." Quintenz expressed concern about the burden that CFTC rules put on market participants, and said the burden should correspond to the risk that the CFTC is trying to identify. Additionally, Quintenz expressed support for maintaining subpoena protections for CFTC access to proprietary source code. 

CFTC funding:  In response to questions from Senator Stabenow, Stump and Quintenz praised acting chairman Chris Giancarlo for doing a thorough review of CFTC spending and budget priorities. Behnam expressed support for increased funding so that the agency can manage the expansion of its responsibilities that was mandated by Dodd-Frank as well as new challenges such as automated trading and cyber security.

MF Global:  In response to questions from Senator Amy Klobuchar (D-Minn.), all three nominees stressed the importance of customer protections. Behnam noted that during the time he worked for the committee, he met agricultural producers affected by the collapse of MF Global and said customer protection must be a "core priority" for the CFTC. Stump noted that she worked with a coalition of agricultural groups to help enhance customer protections after MF Global's collapse, and said confidence in these protections is key to maintaining end-user participation in the futures markets.

Cattle futures:  Senators John Thune (R-S.D.) and Steve Daines (R-Mont.) asked the nominees to comment on concerns raised by livestock producers in their states about price volatility and other problems in the cattle futures market. The nominees did not offer any specific solution, but agreed that regulators and market participants should work together to address this concern.

  • FIA
  • Position Limits