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CFTC Crumbling; Bowen’s Resignation Will Leave One Commissioner

Sharon Bowen, who has been a member of the U.S. Commodity Futures Trading Commission (CFTC) since 2014 and whose term isn't due to expire until June 2019, announced Tuesday that she will resign her position "within the next few months, or perhaps sooner if another nominee is confirmed."

Like the Federal Energy Regulatory Commission, CFTC has had only two members since January, when Timothy Massad resigned as chairman. That, Bowen said at a meeting of CFTC's Market Risk Advisory Committee (MRAC), led directly to her resignation.

"Why am I doing this? The answer is simple: because, since the departure of former chairman Massad, the work of this agency has been hampered by only having a two-person commission when we should be a five-person commission. In fact, we have not been a five-person Commission since the departure of commissioner [Scott] O'Malia in August 2014.

"Having just two commissioners makes routine business difficult, but makes important policy decisions almost impossible. Without a full complement of commissioners to consider the far-reaching implications of our decisions, we are frozen in place while the markets we regulate are moving faster every day.

“This fact is intolerable to me. I came here to protect investors, by supporting prudent collateralization, promoting robust transparency, and ensuring vigorous enforcement in the derivatives markets; and I intend to continue to do all in my power to reach that goal. My hope is thus that by leaving early, I can inspire the key decision-makers to confirm four nominees as soon as possible."

Bowen's resignation would leave CFTC with only one remaining member, Acting Chairman J. Christopher Giancarlo, who is a Republican. Bowen is a Democrat. No more than three CFTC commissioners may be from the same political party.

Within minutes of President Trump taking the oath of office in January, CFTC announced that Giancarlo had been designated as acting chairman of the regulatory agency. The Senate Agriculture Committee has scheduled a hearing Thursday to consider his nomination to be chairman.

The White House announced in April that the administration would nominate Brian Quintenz, former head of a Washington, DC-based investment firm, to be a CFTC commissioner for the remainder of a five-year term expiring April 13, 2020. Quintenz, a Republican, was previously a senior policy adviser to Rep. Deborah Pryce (R-OH), and was the founder, managing principal, and CIO of Saeculum Capital Management LLC. He also worked at Hill-Townsend Capital LLC.

Earlier this month, Trump nominated a second Republican to CFTC, Dawn DeBerry Stump, a former executive director of the Americas Advisory Board for the Futures Industry Association and vice president at NYSE Euronext. Stump has also served in staff positions at both the U.S. Senate and U.S. House of Representatives.

On Tuesday, CFTC’s two commissioners unanimously approved a Final Rule on Revisions to Commission Delegated Authority Provisions and Technical Amendments. The rule amends certain CFTC organizational and procedural provisions to facilitate the movement of the Division of Market Oversight Surveillance Branch to the Division of Enforcement. The rule is effective upon publication in the Federal Register.

Such votes are possible because the Commodity Exchange Act (CEA) does not specify a number of commissioners required for quorum at CFTC.

“Normally, a majority of sitting commissioners constitute a quorum under the common law,” a CFTC spokesperson told NGI. “If need be, the commission can operate with only one commissioner due to the vacancy clause in the CEA.” 

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