CFTC Commissioner J. Christopher Giancarlo delivered remarks before the U.S. Chamber of Commerce in which he laid out a set of principles that he plans to follow as Commissioner, and stated his belief that these principles are “well suited” to maintaining healthy financial markets and encouraging job creation.
According to Commissioner Giancarlo, it is the CFTC’s duty to promote financial markets for their own health and for them to be of service to the American economy, since they are “key to American economic growth and job creation.” Commissioner Giancarlo voiced his continued support for the “core tenets” of Dodd-Frank Title VII. However, he stated that he also believes that excessive regulation can affect adversely the economy and job creation.
Commissioner Giancarlo laid out a set of six principles that he plans to follow in order to ensure that the CFTC takes a “more measured” approach to the regulation of the derivatives markets than it has in the past:
- Regulation Must Not Restrain the Economy. In Commissioner Giancarlo’s view, federal regulations have become a “major drag” on the U.S. economy, costing more than ever and hindering U.S. economic growth. In derivatives markets, he stated, the CFTC should avoid increased compliance costs if possible, since those costs “will surely work their way into the everyday costs” for Americans.
- Regulation Must Not Threaten American Jobs. One particular action that Commissioner Giancarlo identified as a “serious threat” to jobs in the U.S. financial services industry is the CFTC’s “Staff Advisory,” issued in November 2013, which imposes complex U.S. trading requirements on swaps trades between non-U.S. businesses on U.S. soil. According to Commissioner Giancarlo, this advisory is “causing many trading firms to consider cutting off all activity with U.S.-based trade support personnel” and should be withdrawn.
- Regulation Must Be Impartial and Balanced.
- Regulation Must Be Competent. According to Commissioner Giancarlo, there is a direct link between “a government trying to do too much and a government doing things incompetently.” He cited the CFTC’s customer protection rule as an example of “flawed regulation rushed through in the wake of a crisis” and stated his intention to make sure that future CFTC rules solve “real problems, not invented ones.”
- Regulation Must Be Accountable. Commissioner Giancarlo referred to a recent Mercatus Center study, which argued that the informal mechanisms through which the CFTC regulates have undermined public confidence and “aggravated compliance burdens.” According to Commissioner Giancarlo, regulatory shortcuts must be curtailed and regulations “must not be produced in a vacuum with no oversight.”
- Regulation Must Not Create the Next Crisis. Commissioner Giancarlo voiced his concern that, in attempting to recover from the counterparty credit risk crisis, regulators could be setting up the industry for a future liquidity crisis.