This week one of the two remaining CFTC Commissioners, Kristin N. Johnson, confirmed her departure from the Commission (click here).
Commissioner Johnson will leave the Commission on 3 September. With no new Commissioners having been confirmed the CFTC will now be left with a single Commissioner in the form of Acting Chair Caroline Pham, who is set to leave the CFTC once the new Chair is sworn in. Brian Quintenz, the nominee for CFTC Chairman was due to be confirmed by the US senate on 28 July, but the confirmation was cancelled purportedly due to a late intervention by the White House which first nominated him. The standard complement for the CFTC is five Commissioners with no more than three from any one political party.
With no nominees announced to fill the other vacant spots, from 4 September the unprecedented situation of a single Commissioner prevails. This will not change when (or perhaps if) Brian Quintenz is sworn in as Chair and Pham departs. While there is no codified minimum quorum at the CFTC, meaning one Commissioner could legally operate standalone, it is hard to see how the Commission can operate efficiently under such conditions.
Regarding Quintenz, who has previously served as a CFTC Commissioner, several political journals have highlighted potential conflicts given his private sector involvement in several firms including a crypto firm and an events market platform. There is little information coming from the US administration as to its plans for the CFTC and there appears to be a pronounced sense of comfort in leaving the CFTC with limited leadership.
The above announcement comes in contrast to a significant development this week with the CFTC announcing (click here) that it has procured a well-known transaction surveillance platform to replace its “90s-era legacy system”. Firms operating in US markets are advised to take note of this development as it is likely, over the medium term, to have a significant impact in how the CFTC goes about its remit to ensure market integrity. Firms should expect more invasive scrutiny from the CFTC once the system is fully operational although no details have been divulged on when the system is likely to be fully implemented. It is also not clear whether the CFTC will be granted the budget to fully staff its surveillance team although there is a strong possibility that excess resources may be freed up from having to operate its legacy system which is likely to be resource intensive.
While the CFTC’s leadership is in a state of flux, the underlying divisions are clearly still operational. As such, firms falling into the CFTC’s jurisdiction should avoid any sense of complacency, including allowing key compliance processes and controls to degrade or lapse. RegTrail will continue to report on this topic.
