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Lone Republican commissioner looks to head CFTC

The sole Republican commissioner at the main US derivatives regulator has thrown his hat in the ring to be appointed the next chairman, even as he embraced aspects of financial reforms that Donald Trump’s team wants dismantled.

Christopher Giancarlo, of the Commodity Futures Trading Commission, is set to assume the job of acting chairman after Mr Trump’s presidential inauguration on Friday, replacing Tim Massad, the sitting Democratic chairman.

In a speech on Wednesday he publicly expressed for the first time his desire to be named the agency’s permanent chairman, saying he would be “honoured to be nominated and confirmed” to run the agency. The role would empower him to steer the CFTC’s course in regulating the derivatives market over the next several years.

Mr Giancarlo, a lawyer and former executive at the interdealer swaps broker GFI Group, has served as a commissioner since 2014. His name has circulated for weeks as the likely replacement for Mr Massad, but Mr Trump has not yet nominated someone. The CFTC, normally led by five commissioners including a chairman aligned with the party in the White House, will be down to two commissioners after Mr Massad departs.

The Dodd-Frank act, passed in response to the global financial crisis, vastly expanded the CFTC’s oversight to include previously unregulated swap derivatives. An unseen build-up of risks in swaps exacerbated the crisis and necessitated the $180bn bailout of AIG, the insurance company.

The Trump transition website has said his team “will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”

Mr Giancarlo recommended changes to several swaps rules passed by the CFTC but said he backed ‘’the core reforms of Title VII of Dodd-Frank, namely swap data reporting and central counterparty clearing and registration of swaps dealers”.

He outlined changes to rules enacted under Mr Massad and his predecessor, Gary Gensler. These include adopting a more flexible approach to trading swaps and a better way of collecting data on transactions.

Before Mr Giancarlo spoke at a New York conference dedicated to new swaps trading venues set up under Dodd-Frank, Mr Massad complimented his fellow regulator — but warned against reversing financial reforms.

“It’s clear that many of the people who voted for the president-elect did so out of economic concern, not out of a desire to dismantle reforms that improve oversight of the financial sector,” said Mr Massad. “Certainly, that’s true for the Trump supporters I know.”

Mr Massad said US worries over trade agreements, a central focus of the presidential campaign, must not impede international co-operation among regulators.

“A lot was said in last year’s election questioning whether global trade — or at least recent global trade agreements — are in our best interest as a nation,” he said. “Whatever the merits of that criticism, we should not view international co-operation in the regulation of the global financial marketplace with the same scepticism. On the contrary, we saw in the crisis just how necessary it is, because the global financial marketplace had outstripped the ability of national regulators to oversee it.”

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