Senate confirms four new commissioners to CFTC, restoring full complement

The US Senate has voted to confirm four new commissioners to the US Commodity Futures Trading Commission, bringing the derivatives regulator back to a full complement of five members after a period in which its numbers had dwindled to only two.

The action could bring renewed activity by the CFTC, which has been quiet in terms of action on energy derivatives regulation in the past year.

The Senate acted by voice vote March 28 to confirm nominations of four women -- two Democrats and two Republicans who moved through committee without opposition. The two Democrats are Christy Goldsmith-Romero, special inspector general at the Troubled Asset Relief Program, or SIGTARP, and Kristin Johnson, an Emory University School of Law expert in financial market risk management, specializing in complex financial products.

The Republicans are Summer Mersinger, who has served at the CFTC and on Capitol Hill, including working for Senator John Thune, Republican-South Dakota, and Caroline Pham, managing director at Citi, who previously served as an advisor to former Commissioner Scott O'Malia.

"The confirmation of these four accomplished professionals means that the CFTC has the most diverse set of commissioners in the agency's history," CFTC Chairman Rostin Behnam said in a statement March 30, in which he also thanked the Senate Agriculture, Nutrition and Forestry panel for its bipartisan approach to the confirmation process.

The new commissioners join the CFTC at a time when Washington policymakers are eyeing a potential increased role for the regulator in overseeing the digital asset marketplace and in ensuring financial markets can respond to the escalating risks posed by the climate crisis.

Speculative position limits

During the prior administration, the CFTC completed several remaining rulemakings affecting the energy sector driven by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Subsequently, some stakeholders have been looking to the CFTC to engage publicly on the implementation of its October 2020 regulation setting federal speculative position limits on physical commodity markets.

In a letter to Behnam March 24, Tyson Slocum, energy program director at Public Citizen, urged the commission to produce a status report on whether recently enacted position limits require strengthening, and to take a look at whether automated trading strategies are disrupting energy markets in light of recent market swings. Slocum also encouraged enhanced public data reporting in the CFTC's commitment of traders report in order to boost market transparency.

Upcoming priorities

In a speech March 16, Behnam laid out his upcoming priorities, including proposing regulation to address risk governance for derivatives clearing organizations and expanding the CFTC's stress testing program, as well as monitoring whether reforms put in place in the wake of the financial crisis "remain fit for purpose."

While acknowledging that the war in Ukraine had resulted in extreme volatility and record trading volume in global markets, he said the markets by and large were "reacting and operating well and as anticipated given the challenging situation."

Describing the CFTC's surveillance as surgically focused on analysis of trading for any manipulative, inappropriate or disruptive conduct, he said signaled some restraint in the CFTC's approach despite the heightened alert. The CFTC must "hold fast to our regulatory structures and resist the urge to make ad hoc decisions to avoid the natural outcomes of market forces," he said then.