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Trump's CFTC pick intends to slash financial regulations

Marcy Gordon, AP Business Writer

WASHINGTON (AP) -- President Donald Trump's choice to head the agency overseeing some of the riskiest corners of the financial world says he plans to ease regulations put in place following the 2008 market meltdown.

Trump announced Tuesday that he is naming former brokerage firm executive J. Christopher Giancarlo as chairman of the Commodity Futures Trading Commission.

The CFTC regulates futures and options markets as well as derivatives trading. Derivatives are traded in a $500 trillion global market and were blamed for helping ignite and escalate the financial meltdown that touched off the Great Recession.

Giancarlo, appointed by President Barack Obama in 2013 to fill a Republican seat on the five-member commission, has been acting CFTC chairman since Trump's inauguration on Jan. 20. If confirmed by the Senate, he would succeed Timothy Massad, a former Treasury Department official named by Obama who resigned after Trump's election.

In a speech Wednesday, Giancarlo said he intended to cut CFTC regulations to make them less costly and burdensome for industry. He called this effort "Project KISS" — stands for "Keep It Simple, Stupid."

Trump has urged the loosening or elimination of many of the stricter financial rules that regulators, including the CFTC, installed in recent years under mandate from Congress to prevent another crisis.

The CFTC brought the secretive derivatives market under regulation for the first time, with the goal of preventing another crisis and taxpayer bailout.

Derivatives are complex instruments whose value is based on a commodity or security, such as oil or currencies. They are often used to protect businesses that produce or use the commodities, such as farmers or airlines, against price fluctuations. But they also are exploited by financial firms to make speculative bets.

In his speech, Giancarlo said the elections in November were significant because "Americans have voted for a change in the direction of the country, a change back toward economic growth and broad-based prosperity."

The financial futures industry has a role to play in that change, Giancarlo told an industry conference in Florida. He laid out a "new agenda" for the CFTC that would advance the Trump administration's goals and would include "right-sizing" the agency's regulatory impact. He announced the launch of the "Project KISS" review of CFTC rules.

The agency also must fix its "flawed" rules for derivatives trading and allow financial firms to choose how their trades are executed, Giancarlo said. He also sketched out a planned restructuring of the CFTC.

Giancarlo, 57, is an attorney who also has worked in the brokerage industry. He currently is the lone Republican on the five-member CFTC. The other commissioner is Democrat Sharon Bowen and there are three vacancies — likely giving Trump a chance to make additional appointments.

Before being named a CFTC commissioner, Giancarlo was executive vice president of GFI Group Inc., a financial services firm. Prior to that, he was executive vice president and U.S. legal counsel for a software firm and a partner in the New York law firm Brown Raysman Millstein Felder & Steiner. He founded the law firm Giancarlo & Gleiberman in 1992 following his return from working several years in London at an international law firm.

Trump also announced Tuesday nominations to high-ranking positions in the Treasury Department: James Donovan, a managing director at Goldman Sachs, as deputy Treasury secretary; David Malpass, a Treasury and State Department official in the Reagan and George H.W. Bush administrations, as undersecretary for international affairs; Adam Lerrick, a visiting scholar at the American Enterprise Institute and former adviser on international economic policy in Congress, as assistant secretary for international finance; Sigal Mandelker, a former law enforcement and national security official at the departments of Justice and Homeland Security, as undersecretary for terrorism and financial intelligence; and Andrew Maloney, vice president of government and external affairs at Hess Corp., as assistant secretary for legislative affairs.