Chairman’s Letter – April 2017

“We do believe there are too many regulators…”

Sharon Brown-Hruska, 1960-

Sharon Brown-Hruska is a former Acting Chairman of the CFTC (2004-2005) and current director at NERA Economic Consulting. As a member of the Trump administration’s “landing” team, she told attendees at the New Risk in Energy Conference in Houston, TX earlier this month, that streamlining regulatory processes and relying upon fewer regulators is a Trump priority. Although she admitted there is no “game plan” as yet, she said regulatory reform is coming. The perennially proposed merger between the SEC and CFTC could be pursued “if it made sense, if there are real synergies there.” She went on to say that personally she didn’t think there were enough commonalities for the merger to take place, but the discussion is still open in this administration.

Additionally, Ms. Hruska said that another possible area of reform is to “put some teeth into the CFTC’s cost-benefit analysis requirement.” Holding regulators at independent agencies such as the CFTC and SEC to stricter economic standards will likely be a White House focus during the next four years.

Christopher Giancarlo, Acting CFTC Chairman responded to the possible merger of the agencies by noting that the “mission of the agencies” would have to be enhanced. Under Chairman Giancarlo, the Commission has plans to undergo organizational restructuring and to take steps to fix flawed swaps trading rules along with other moves designed to “run a tighter ship” at the agency.

These comments should be taken together with an announcement from U.S. Rep. Patrick McHenry (R-N.C.) that any legislation to revise the Dodd-Frank Act will likely have to wait until at least late summer because of the shift of the U.S. House priorities due to the administration’s continued efforts on health care and tax reform legislation.

Add to the discussion the fact that the CFTC and SEC are currently staffed with only two Commissioners each. Both agencies are meant to be led by five commissioners which  are appointed by the President and confirmed by the Senate. No more than three of the five can belong to the same political party to ensure that the Commission remains non-partisan. President Trump can nominate as many as two more Republicans and one Democrat to fill the vacancies at the Commission. Those nominees  could change the agencies stated current priorities and the direction of agency action.

What does this mean for NIBA members? We know both current CFTC Commissioners — Christopher Giancarlo (Republican; appointed 2014) and Sharon Bowen (Democrat; confirmed 2014) –  are experienced professionals who take their jobs very seriously. During our various conversations with the Commissioners, our Executive Board has always stressed NIBA members’ unique regulatory and business issues, and the very important, essential role of IBs and CTAs in the marketplace. Both commissioners are aware of the fundamentally different goals and purposes of the CFTC as compared to goals and purposes of the SEC. Mr. Giancarlo and Ms. Bowen are committed to uphold the core mission of the CFTC, which is to foster open, transparent, competitive and financially sound markets. Both commissioners encourage frank dialogue between the agency and industry professionals. This is a good, encouraging place to start.

How can you stay on top of changes in regulations and stay ahead of their effect on your daily business? That’s easy:

  • Follow the discussions and articles in this Newsletter contributed by industry experts.
  • Send your comments and concerns to me or anyone on the NIBA Board of Directors.
  • Attend and learn at NIBA membership meetings and forums. Registration is currently open for the NIBA Spring Forum, April 26 at the New York Athletic Club, NYC. There is no charge to attend the meeting which is sponsored this year by CME Group, OptionsCity, INT’L FC Stone, Phillip Capital and Straits Financial.

I’ll see you in NYC.

Best, Melinda

Melinda Schramm, Founder & Chairman

[email protected]