Trump to nominate Chris Giancarlo as permanent CFTC chief

The White House intends to nominate Chris Giancarlo as the next chairman of the Commodity Futures Trading Commission, signalling changes in direction but not a hard break in US policy governing financial derivatives.

Mr Giancarlo, formerly an executive at swaps broker GFI Group, joined the CFTC as a commissioner in 2014 and became acting chairman after President Donald Trump was inaugurated in January. 

His appointment, which requires Senate approval, comes as the CFTC faces industry criticism over the extensive rules it has written to guide oversight of over-the-counter derivatives markets, a realm that was outside its purview before the Dodd-Frank financial reform law of 2010. 

Mr Trump last month said he would “do a number” on Dodd-Frank. Mr Giancarlo has been more circumspect, backing derivatives reforms such as swap data reporting, a mandate to send swaps to clearing houses and the registration of swaps dealers such as Wall Street banks. 

However, he has criticised some CFTC rules aimed at adding meat to the reforms. Two years ago he published an 89-page white paper arguing that many rules had overstepped their mandate from Congress by being overly prescriptive, burying big policy changes in footnotes and misapplying the model for trading futures to the swaps market. 

Mr Giancarlo also has taken up the cause of high-speed trading firms, battling a proposal to give the CFTC access to their computer codes. 

“His travels have given him a deep understanding of who uses our markets and why, and more importantly how overregulation imposes real burdens. He is prepared to lead the CFTC on day one,” said Mike Conaway, chairman of the US House agriculture committee, which oversees the CFTC. 

The derivatives industry accepts and benefits from aspects of Dodd-Frank, but has chafed under a number of CFTC rules passed by Gary Gensler and Tim Massad, the two previous chairmen appointed by former president Barack Obama. 

Walt Lukken, chief executive of FIA, said in opening remarks on Tuesday at the trade group’s annual conference in Boca Raton, Florida, that regulation had started to atrophy the futures markets. “In the years since the financial crisis, the scales have tipped too far in one direction,” Mr Lukken said. 

The CFTC has also pursued dozens of enforcement cases against market participants in recent years and extracted billions of dollars in penalties. 

Don Wilson, chief executive of DRW, a Chicago-based trading firm battling a CFTC case alleging he manipulated interest-rate futures, said the costs of new rules outweighed the benefits. 

“I describe the environment that we’re in as an era of ‘gotcha’ regulation,” he told the FIA conference. “Enforcement arms of regulatory agencies are more interested in collecting fines and generating headlines than in making markets better.”