On March 14, 2017, the White House announced that President Donald Trump intends to nominate J. Christopher Giancarlo, currently Acting Chairman of the Commodity Futures Trading Commission (“CFTC”), to serve as the CFTC’s permanent Chairman, subject to confirmation by the Senate. Acting Chairman Giancarlo joined the CFTC as a commissioner in 2014, and was named Acting Chairman on January 20, 2017, when Timothy G. Massad stepped down from that post.
Although the nomination of Acting Chairman Giancarlo as permanent Chairman has been expected, the move to make it official signals more clearly that, as we discussed in a previous client alert, the CFTC under the Trump administration will be moving in a significantly different direction. While we expect Acting Chairman Giancarlo to begin announcing his regulatory agenda in the near future, throughout his tenure at the CFTC he has articulated a clear vision of how the CFTC should operate as a regulator. Under Chairman Giancarlo, market participants can expect a shift in how the CFTC approaches a variety of issues, including swaps trading, cross-border harmonization, and technological innovation, in all cases adopting a flexible, forward-thinking approach in which the CFTC will encourage innovative solutions. Indeed, in remarks made since the election and since being named acting Chairman, he has made clear that he intends, as Chairman, to move the CFTC in the direction he foresaw as a commissioner. Moreover, in a recent speech, Giancarlo also announced an agency-wide review of CFTC rules, regulations and practices to make them “simpler, less burdensome and less costly.” This review, called “Project KISS,” is consistent with President Trump’s executive order to reduce regulatory burdens. Giancarlo further announced a reorganization within the agency, whereby the market surveillance function will be moved from the Division of Market Oversight (“DMO”) into the Enforcement Division. This will enhance the Enforcement Division’s ability to focus on market disrupting behavior, such as spoofing, manipulation and fraud. DMO will gain a new market intelligence branch, dedicated to identifying and analyzing current and emerging market trends. Finally, Giancarlo instructed the agency to undertake a financial technology review to make it a more effective and innovative regulator. Thus far, Giancarlo has shared his viewpoint that the CFTC should regulate in a manner that permits the markets to innovate and evolve.