Influential Senate Democrats on Wednesday blasted the US Commodity Futures Trading Commission for putting off a final rule to limit positions that traders can hold in commodity markets and pressed its outgoing chairman to finish up post-financial crisis reforms.
Ohio's Sherrod Brown, senior Democrat on the Banking Committee, and Maria Cantwell of Washington state, top Democrat on the Energy and Natural Resources Committee, joined Dianne Feinstein of California in a letter stating that the position limits rule "has been unnecessarily delayed and is now on track to be weaker." Last week, the commission said it was redrafting its proposal to carry out part of the 2010 Dodd-Frank Wall Street reform law calling for limits on futures, options and physical commodity swaps contracts in order to prevent fraud and manipulation.
CFTC Chairman Timothy Massad had previously said he anticipated the commission would finalize the rule before the end of 2016. But now Massad, a Democrat, will step aside as chairman once Republican President-elect Donald Trump takes office on January 20. Republican Commissioner J. Christopher Giancarlo, who has qualms about the position-limits regulation, will temporarily take over. "We are disturbed by the CFTC's action to delay this rulemaking and your inability to guide the rule to completion in the two and a half years of your tenure," the senators wrote to Massad. "You have simply kicked the issue into the future and created the uncertainty that you stated you were trying to avoid."
Dodd-Frank greatly expanded the CFTC's powers and gave it a long list of rules to enact. While the agency has led the pack in finalizing Dodd-Frank rules, the senators said this year the CFTC has delayed or weakened final rules on the de minimis exemption, capital and liquidity for swap dealers, margin requirements for uncleared swaps, and automated trading.
"We urge you to spend your remaining time putting the CFTC in a position to finalize strong Dodd-Frank rules for the derivatives market as contemplated by Congress," they wrote. Under a law known as the Congressional Review Act, though, any regulation that the CFTC has approved since May could be voided by the Republican-led Congress once Trump moves into the White House and can sign off on their disapproval.