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Trump's pick to lead US CFTC unveils major new policy agenda

The top U.S. derivatives regulator laid out plans on Wednesday for a sweeping overhaul of the agency that will include everything from cutting regulation to restructuring the unit that conducts surveillance for market abuses.

In a wide-ranging policy speech, Acting Commodity Futures Trading Commission Chairman J. Christopher Giancarlo, who was nominated by President Donald Trump as permanent chairman late Tuesday, said it was time for the CFTC to "reinterpret its regulatory mission" by focusing on fostering economic growth, enhancing U.S. markets, and "right-sizing" its regulatory footprint.

In prepared remarks before the Futures Industry Association's annual conference in Boca Raton, Florida, he outlined plans to bolster how the CFTC polices the marketplace by restructuring its market surveillance branch and moving it into the agency's enforcement division. That unit, in charge of searching for manipulation and other abuses, is currently housed in the CFTC's Division of Market Oversight.

Giancarlo said it would be relocated inside the agency's enforcement division to bolster how the CFTC polices the marketplace.

A new "chief market intelligence officer" position will also be created, he said, to help oversee a new branch that will be tasked with keeping pace with new trends and technology.

Dodd-Frank criticism

Giancarlo often has been highly critical of the way the CFTC has implemented rules stemming from the Dodd-Frank financial reform legislation.

In his speech, he pledged to fix what he called "flawed swaps trading rules" which he blamed for driving business away from the U.S. He also said he hopes to work more effectively with international regulators while still looking out for American interests.

He also promised to soon release a review into the fintech sector that seeks to understand what the CFTC's role should be in regulating the sector.

Giancarlo, a Republican, has been acting chairman of the CFTC since Jan. 20 and first became a commissioner of the agency in 2014.

He promised to take a much more active role in his position as a member of the Financial Stability Oversight Council (FSOC), a body of regulators created by the Dodd-Frank law that reviews large financial firms to determine whether their collapse could pose broad systemic risks. Once designated, a company faces an extra level of regulations and oversight.

Giancarlo has accused the FSOC of failing to weigh the cumulative effect of regulations, particularly stricter bank capital standards which he said are harming market-making and economic growth.

"The CFTC must use its authority and influence to address the question of whether the amount of capital that bank regulators have caused financial institutions to take out of trading markets is at all calibrated to the amount of capital needed to be kept in global markets," he said.

Giancarlo unveiled a comprehensive CFTC regulatory review he dubbed "Project KISS" — for "Keep it Simple Stupid."

Project KISS will be an agency-wide review of CFTC rules, regulations and practices to make them simpler, less burdensome and less costly," he said.

This follows an executive order by President Donald Trump requiring agencies to conduct regulatory reviews, even though as an independent regulator, the CFTC is not bound by that order.