U.S. GOVERNMENT PUBLISHING OFFICE

29–637 PDF WASHINGTON : 2019

S. HRG. 115–591 

NOMINATION OF 

J. CHRISTOPHER GIANCARLO, 

OF NEW JERSEY, TO BE CHAIRMAN, 

COMMODITY FUTURES TRADING COMMISSION 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JUNE 22, 2017 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

Available via the World Wide Web: http://www.govinfo.gov/ 
COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

PAT ROBERTS, Kansas, Chairman 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

JOHN BOOZMAN, Arkansas 

JOHN HOEVEN, North Dakota 

JONI ERNST, Iowa 

CHARLES GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

STEVE DAINES, Montana 

DAVID PERDUE, Georgia 

LUTHER STRANGE, Alabama 

DEBBIE STABENOW, Michigan 

PATRICK J. LEAHY, Vermont 

SHERROD BROWN, Ohio 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

JOE DONNELLY, Indiana 

HEIDI HEITKAMP, North Dakota 

ROBERT P. CASEY, JR., Pennsylvania 

CHRIS VAN HOLLEN, Maryland 

JAMES A. GLUECK, JR., MAJORITY STAFF DIRECTOR

JESSICA L. WILLIAMS, CHIEF CLERK

JOSEPH A. SHULTZ, MINORITY STAFF DIRECTOR

MARY BETH SCHULTZ, MINORITY CHIEF COUNSEL

(II) 
(III) 

C O N T E N T S 

Page 

HEARING(S): 

Nomination of J. Christopher Giancarlo, of New Jersey, to be Chairman, 

Commodity Futures Trading Commission ......................................................... 1 

Thursday, June 22, 2017 

STATEMENTS PRESENTED BY SENATORS 

Roberts, Hon. Pat, U.S. Senator from the State of Kansas, Chairman, Committee on Agriculture, Nutrition, and Forestry ................................................. 1 

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan ..................... 3 

Witness 

Giancarlo, J. Christopher, Nominee to be Chairman, Commodity Futures 

Trading Commission ............................................................................................ 4 

APPENDIX 

PREPARED STATEMENTS: 

Giancarlo, J. Christopher ................................................................................. 16 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Roberts, Hon. Pat: 

Various organizations letter of support for J. Christopher Giancarlo to 

be Chairman of the Commodity Futures Trading Commission (CFTC) ... 24 

Giancarlo, J. Christopher: 

5-day letter, Committee questionnaire and Office of Government Ethics 

Executive Branch Personnel Public Financial Disclosure Report filed 

by J. Christopher Giancarlo ......................................................................... 26-63 

QUESTION AND ANSWER: 

Giancarlo, J. Christopher: 

Written response to questions from Hon. Pat Roberts .................................. 66 

Written response to questions from Hon. Debbie Stabenow ......................... 70 

Written response to questions from Hon. John Boozman ............................. 81 

Written response to questions from Hon. John Hoeven ................................ 83 

Written response to questions from Hon. John Thune .................................. 85 

Written response to questions from Hon. Steve Daines ................................ 88 

Written response to questions from Hon. Luther Strange ............................ 91 

Written response to questions from Hon. Sherrod Brown ............................ 94 

Written response to questions from Hon. Amy Klobuchar ........................... 100 

Written response to questions from Hon. Joe Donnelly ................................ 103 

(1) 

NOMINATION OF 

J. CHRISTOPHER GIANCARLO, 

OF NEW JERSEY, TO BE CHAIRMAN, 

COMMODITY FUTURES TRADING COMMISSION 

Thursday, June 22, 2017 

UNITED STATES SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, 

Washington, DC 

The Committee met, pursuant to notice, at 9:46 a.m. in room 

328, Russell Senate Office Building, Hon. Pat Roberts, Chairman 

of the Committee, presiding. 

Present or submitting a statement: Senators Roberts, Stabenow, 

Brown, Klobuchar, Bennet, Gillibrand, Casey, and Van Hollen. 

STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE 

STATE OF KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

Chairman ROBERTS. I call this hearing of the Senate Agriculture, 

Nutrition, and Forestry Committee to order. 

I welcome my colleagues as we consider the nomination of Mr. 

J. Christopher Giancarlo to serve as Chairman of the U.S. Commodity Futures Trading Commission. 

Mr. Giancarlo, it was a pleasure to see you in Montana a few 

weeks ago. It reminds me of a Merle Haggard song, but we will not 

go there. 

[Laughter.] 

Chairman ROBERTS. I thank you for being with us here today. I 

note that you have your wife, children, and other close family and 

friends in the audience today. Allow me to welcome the family and 

you all to the Ag Committee. Thank you for coming. 

As noted in the CFTC’s mission statement, this agency is 

charged with fostering open, transparent, competitive, and financially sound markets, while working to prevent systemic risk. 

Further, the Commission is tasked with protecting market users 

and their funds and consumers and the public from fraud, any manipulation, abusive practices related to derivatives and other products that are subject to the Commodity Exchange Act. 

The services provided by the CFTC allow farmers, ranchers, commercial companies, municipalities, pension funds, and others who 

rely on derivatives to hedge commercial risk and focus on what 

they do best—innovating and creating jobs and producing food, 

goods, and services for the economy. I might add that is a pretty 

big deal. 
2 

It is essential the CFTC have individuals in charge who truly 

take its mission statement and responsibilities to heart. Mr. 

Giancarlo, you have demonstrated your understanding of that mission during your time at the CFTC. In fact—and I want to underscore this—in fact, in 2014, this Committee voted unanimously to 

advance your nomination, and the Senate confirmed you by a voice 

vote. 

Happy birthday Let us not forget, it was not the farmer, rancher, 

rural cooperative, electric utility, nor other end users who contributed to the financial crisis of 2008. Many members raised concern 

during consideration of Dodd-Frank effort and insisted the legislation provide flexibility to those who rely on these markets but did 

not contribute to the 2008 crisis. It is important to note that this 

was a bipartisan concern, yet when Dodd-Frank became law and 

the CFTC began writing new regulations, limited flexibility was 

provided from the heavy hand of government overreach. 

Therefore, moving forward, I think it is imperative that both 

Congress and our Federal financial regulators work to provide necessary and appropriate relief to our nation’s providers of food and 

energy and to those who export U.S. goods. 

To do this, we need a functioning CFTC which handles regulations practically and looks to reduce Federal overreach. In fact, I 

believe the recent announcement of your initiative to apply current 

rules and regulations in a less burdensome manner is a perfect example of getting our Federal agencies back to how they were intended to function--governing, not ruling—and to be a true partner 

to our nation’s market participants. 

Further, I am encouraged by the CFTC’s launch of LabCFTC, 

which is intended to foster financial technological innovation, something that is happening at light speed today whether we like it or 

not. I am glad you intend to stay out ahead of the curve and engage with the modern derivatives marketplace. 

Mr. Giancarlo, it is imperative all Commissioners understand the 

historic nature of a portion of the markets the CFTC regulates, 

which is to provide risk management tools for producers of agriculture commodities. It is often lost on many in Washington that 

these financial markets create and allow for stability, stability that 

we all appreciate when we go to the grocery store on any given day 

and buy food at affordable prices. 

Functioning markets benefit every hardworking family in America. Those families would feel the effects if our agricultural producers lacked the market’s affordable and effective risk management tools to help lock in fair and reasonable prices. This is especially true today as the farm economy is struggling, as we have 

talked about. 

I am grateful you understand and are committed to fostering a 

functional marketplace for all participants, and I especially appreciate your commitment to our rural stakeholders. 

Again, I thank the nominee for being here today. I look forward 

to your testimony. 

I now turn to my distinguished colleague and our Ranking Member, former Chairperson, for her opening remarks. 
3 

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR 

FROM THE STATE OF MICHIGAN 

Senator STABENOW. Well, thank you very much, Mr. Chairman, 

and welcome again and congratulations, Mr. Giancarlo, on your 

nomination. I too want to welcome your family back again. Your secret weapon, your mom, is with you today, so we welcome her as 

well. 

Mr. Giancarlo, you testified last time before us in 2014 as a 

nominee for CFTC Commissioner. Back then, you shared the witness table with Commissioner Bowen and former Chairman 

Massad. I think it is fair to say the three of you worked hard to 

find consensus where possible in order to support the core mission 

of the CFTC to maintain transparency and competitive derivative 

markets. 

The CFTC Chairman has a wide range of responsibilities, as you 

know, that have a tremendous effect on farmers and families. If 

confirmed as Chairman, the decisions you make day to day will 

have a much larger impact on financial markets and consumers 

both here and abroad. 

As a Commissioner, I appreciate that you showed a willingness 

to work on a bipartisan basis to find consensus. 

I would like to also personally thank you for visiting Michigan 

last summer to listen to both farmers and manufacturers about 

their concerns and to discuss the importance of the CFTC. 

Having played a pivotal role at the Commission over the past 3 

years, you understand as well as anyone what work lies ahead for 

the CFTC. 

While Wall Street reform has brought much needed transparency 

to the previously unregulated swaps market, there is much more 

work to be done at the Commission. 

The 2008 financial crisis exposed gaping weaknesses in our regulatory system, left the economy in ruins, and put millions and millions of Americans out of work. 

Nearly nine years since the crisis, parts of our economy have 

shown great resiliency and progress. However, we should not be 

complacent with the improvements we have seen. We need to keep 

moving forward, not backward. 

This Committee and the CFTC must not forget some of the Commission’s crucial roles in overseeing the derivatives market: holding 

bad actors accountable, surveilling market participants, and monitoring systemic risk. From speculative position limits to capital requirements, the CFTC has unfinished business. 

It is critical that the Commission take action quickly on these 

issues to finish the rulemakings required under Dodd-Frank. The 

Commission should continue to build on the progress we have 

made and the progress we have seen in recent years. 

Mr. Giancarlo, I look forward to learning more about your plans 

for finishing this critical work. We cannot afford to delay any 

longer. 

Of equal importance is the CFTC’s insufficient budget. Less than 

2 months ago, the White House issued a budget proposal, which fell 

woefully short of what the CFTC needs to fulfill its mission. It is 

something you and I talked about. I appreciate that you courageously broke from the administration to issue your own proposal, 
4 

recognizing the CFTC must be better funded in order to be a worldclass regulator. 

I commend you for this, and I think it is very important that we 

work together to get the resources that are truly needed for this 

Commission to be able to do its work. I am committing my support 

to work with you on that. 

Simply put, the Commission cannot meet its responsibilities at 

the current funding level. The risks to our economy, which directly 

affect thousands and potentially millions of jobs, is too great to ignore any longer. 

I also note that on Tuesday, Commissioner Bowen announced she 

will be leaving the Commission in the coming months. With this 

announcement, Mr. Chairman, we need to confirm nominees for the 

four open Commissioner seats as soon as we can. We need to move 

quickly to ensure we have a full leadership team in place so the 

CFTC can do its important work. I look forward to working with 

you in that effort. 

Today, I look forward to learning more about your vision, Mr. 

Giancarlo, for the CFTC and how we can continue to build on the 

progress of reform to create more certainty for our agricultural producers, commercial businesses, and consumers. 

Whether we realize it or not, derivatives markets play an integral role in the everyday life of Americans. We must ensure regulators and market participants are fulfilling their responsibilities to 

promote safe and transparent markets. 

Thank you. 

Chairman ROBERTS. Mr. Giancarlo, as is the tradition and custom of the Committee, before we nominate witnesses, to provide 

testimony, I need to administer the oath. Please stand and raise 

your right hand. First, do you swear that the testimony you are 

about to present is the truth, the whole truth, and nothing but the 

truth, so help you God? 

Mr. GIANCARLO. I do. 

Chairman ROBERTS. Second, do you agree that, if confirmed, you 

will appear before any duly constituted committee of Congress if 

asked to appear? 

Mr. GIANCARLO. I will. 

Chairman ROBERTS. Thank you. Please proceed with your testimony. 

TESTIMONY OF J. CHRISTOPHER GIANCARLO, NOMINEE TO 

BE CHAIRMAN, COMMODITY FUTURES TRADING COMMISSION 

Mr. GIANCARLO. Thank you. Thank you, Chairman Roberts, 

Ranking Member Stabenow, and members of the Committee. 

I am honored to testify before you. With your permission, I would 

like to introduce members of my family: my wife and my joy for 28 

years, Regina; my dear brother, Dr. Tim Giancarlo; and my son, 

Henry Giancarlo. My older son, Luke, and my wonderful daughter, 

Emma, could not be with us this morning due to other responsibilities. But I would also like to introduce my wonderful mother, Mrs. 

Ella Jane Keegan. 

Mom? 

Chairman ROBERTS. You can stand. 

[Applause.] 
5 

Chairman ROBERTS. Thank you, mom. 

Mr. GIANCARLO. Mom taught my brothers and me three simple 

lessons, and that was arrive early to work, leave your workplace 

better than you found it, and give thanks every night for God’s 

grace. I am blessed to have her as a mother and blessed by my 

wonderful family. Thank you. 

I thank many of you on the Committee for meeting with me before this meeting and over the past several years. You have all 

taught me a lot about the issues facing American agriculture. 

I last appeared before this Committee in 2014 upon my nomination by President Obama. At that hearing, I presented my professional credentials, and I also admitted my personal shortcomings 

of not having been raised on a farm. Nevertheless, I promised you 

that I would learn about American agriculture. 

In the 3 years since, I have met with farmers, ranchers, energy 

producers, and small and large manufacturers who use our markets to hedge production and price risk. 

I have been to Kansas, Michigan, Indiana, Illinois, South Dakota, 

North Dakota, Iowa, Minnesota, New York, New Jersey, Missouri, 

Kentucky, Ohio, Louisiana, Florida, California, Texas, and just a 

few weeks ago, Montana. I am not done traveling. 

I have milked dairy cows with family farmers in Minnesota, and 

I visited with grain and livestock growers in Iowa. I have walked 

factory floors in Illinois, oil refineries in Texas, grain elevators in 

Indiana, and power plants in Ohio. I have been 900 feet underground in a Kentucky coal mine and 90 feet above ground on a 

North Dakota natural oil rig. 

In Kansas, I met with Mary and Pat Ross at their feed lot in 

Lawrence, called on corn farmer Ken McCauley in White Cloud, 

and harvested soybeans with Pat O’Trimble in Perry. In Michigan, 

I toured the Fort Rouge automobile plant, visited the Star of the 

West flour mill, and talked to grain growers at Crop Production 

Services warehouse in Henderson. 

Now, while these visits have been delightful in their own right, 

they have made me a much better regulator of our ag commodity 

markets, and I thank members of this Committee for encouraging 

me to make these visits. 

As you know, for over a hundred years, American farmers and 

ranchers have used futures to hedge volatile commodity prices. 

They are the reason why consumers enjoy stable prices in the grocery story, whatever the conditions out on the farm. 

But derivatives also stabilize the cost of heating our homes, 

powering our factories, supporting residential mortgages, and generating returns on retirement savings. In short, derivatives help 

moderate price, supply, and other commercial risk, and thereby 

free up capital for economic growth, job creation, and prosperity. 

When I last testified, I said that my best qualification to serve 

was my expertise in over-the-counter swaps and that I was a supporter of the reforms in Title VII of the Dodd-Frank Act. In fact, 

I may well be the most longstanding supporter of market reform 

from either political party to serve at the CFTC. 

When Congress began drafting the bills that would become Title 

VII of the law, I had already championed its three key reforms: 

central clearing of swaps, swaps data reporting, and regulated 
6 

swaps trading. My support is not based on academic theory or political ideology; it is based on my practical experience of 14 years 

in the markets. 

If confirmed, I have three priorities; first, to foster open, transparent, competitive, and durable derivative markets, free from 

fraud and manipulation. The day after the White House stated its 

intention to nominate me, I told a large gathering of industry executives that there would be no pause, no let-up, no reduction in 

our duty to enforce the law and punish wrongdoing, and I make 

that commitment again to you today. 

Second, we will conduct the agency’s regulatory mission in support of broad-based economic growth. That means completing 

swaps market reforms that underpin healthy, durable, and vibrant 

markets, and it also means getting from where we are today to 

where we need to be, and that is a 21st century regulator for 21st 

century digital markets. 

Finally, we will carry out our regulatory mission in a way that 

respects the American taxpayer. We will get back to regular order 

in our operations, carefully manage appropriated resources, and 

apply our existing rules in ways that are simpler and less burdensome to the economy. 

Chairman and Ranking Member, this Committee has a strong 

tradition of bipartisanship, and I believe that practice—I have followed that practice at the CFTC by working constructively with my 

fellow Commissioners. I have voted with the majority in over 95 

percent of the matters before the Commission over the past 3 

years, and if confirmed, I will continue to act without partisanship. 

I will work with each of you with candor and promptness in our 

common purpose of serving the American people and the agricultural producers on which we all rely. 

Thank you. I look forward to your questions. 

[The prepared statement of Mr. Giancarlo can be found on page 

16 in the appendix.] 

Chairman ROBERTS. Thank you, sir. 

Not long ago, you announced the launch of an agency initiative 

to review CFTC rules, regulations, and practices furthering the 

President’s executive order to reduce excessive regulatory burdens. 

I understand your initiative is meant to identify existing rules and 

apply them in a less burdensome manner. 

In addition to this initiative, how do you plan to address regulatory reform, and what limitations might you encounter? 

Mr. GIANCARLO. Thank you very much, Chairman. 

The CFTC has been in operation for almost—over 40 years now, 

and over the course of time, it is no surprise that regulations that 

have built up over time in some cases conflict with one another and 

other cases are out of date and in some cases just need a revisit 

and a refresh. 

I will give you an example. We recently revised a rule that at the 

time it was adopted years ago, it was considered to be very forward-looking in its technology application; that is, it required filing 

of information by fax. Here we are in 2017, and few people have 

fax machines anymore. 

So, over time, technology changes, market conditions change, and 

if rules are not occasionally and from time to time brought up to 
7 

date and relooked at, they become stale and they become burdensome on the market as a whole. 

So what we have done with our Project KISS is to look at our 

existing rules, not the policies behind them, but the rules themselves, the practical application of the rules, and see whether they 

can be applied in ways that are simpler, less costly, and more 

straightforward and still achieve our policy objectives. 

Chairman ROBERTS. Thank you for that. 

Senator Stabenow. 

Senator STABENOW. Thank you very much, Mr. Chairman, and 

welcome again, Mr. Giancarlo. 

As you and I have talked about, the Commission at this point 

has had multiple efforts to complete the position limits rule that 

was mandated by Congress as part of Wall Street reform to protect 

families from spikes in food and energy costs that are caused by 

speculation. Will you commit to completing this critical rule as 

CFTC Chairman without further delay? 

Mr. GIANCARLO. Yes. If I could add—— 

Senator STABENOW. Yes. 

Mr. GIANCARLO. —I think it is very important. I think the opportunity is at hand. As you know, I voted for the most recent 

iteration of this rule, the most recent proposal. The comment period is now closed. We are going through those comments, and I believe we can get a position limits rule done. 

Senator STABENOW. Thank you. 

As I said in my opening comments, you recently stepped forward 

with a different budget proposal than what was proposed by the 

White House. The question that I have is even though your proposal was better in my judgement, there are still additional resources beyond that that are needed. What market oversight and 

personnel risk will the Commission face if its budget is not increased? 

Mr. GIANCARLO. You know, before going into government, I spent 

30 years in the private sector and most recently 14 years as an executive of a public company. I will work with whatever budget the 

appropriators give us, and I will make sure the mission is done. 

However, we have put forward a budget that does have some new 

elements in it, some elements as the markets have evolved, elements that I believe are necessary for us to keep pace with the 

market. 

So I will be making my case next week in front of Senate appropriators for our budget, which as you know is more than last year, 

and I am hoping they will see their way to the money. But whatever appropriators give us, we will do our mission with it. 

Senator STABENOW. I understand. I mean, that is what the CFTC 

has been doing and the Chairman has been doing for years which 

is, unfortunately, in my mind, limping along and not having the resources to fully do what is needed to really enforce the laws of to 

gain the confidence of those who count on the Commission to be 

able to do its job. 

So you will be advocating for the number that you have proposed, 

then—— 

Mr. GIANCARLO. Yes. 
8 

Senator STABENOW. —as opposed to what the White House has 

proposed? 

Mr. GIANCARLO. We have put forward the number of $281.5 million, which is an increase of $31.5 million over the prior year’s appropriation. 

I believe the number we are asking for is the right number for 

the CFTC with the mission it has before it today. 

Senator STABENOW. Thank you. 

The Chairman talked about and you have talked about what you 

call Project KISS—— 

Mr. GIANCARLO. Yes. 

Senator STABENOW. Keep It Simple Stupid. We all appreciate 

that, reducing the regulatory burdens. 

But at the same time, we have the White House signing an executive order aimed at rolling back the Wall Street reforms. 

Mr. GIANCARLO. Yes. 

Senator STABENOW. So how do both of those proposals relate to 

each other? Please speak about whether the intention overall is to 

roll back critical reforms to Title VII and to the derivatives. 

Mr. GIANCARLO. So let me—— 

Senator STABENOW. —markets. 

Mr. GIANCARLO. Let me—thank you. Let me be very clear. 

Project KISS is not about rolling back Dodd-Frank or Wall Street 

reforms in any shape or fashion. I am a supporter of Title VII, of 

Dodd-Frank, which has amended the Commodities Exchange Act 

with regard to the swaps that we oversee. I support those reforms, 

and so we are not looking to use Project KISS in any way to address that. 

Project KISS is a complete approach to our—the way that our 

agency applies reforms to see if we can do that in a simpler, more 

straightforward fashion. 

Senator STABENOW. Thank you. 

Then, finally, as Chairman, knowing what we know now about 

the enormous risk of cyberattacks—— 

Mr. GIANCARLO. Yes. 

Senator STABENOW. —in terms of national security, what are 

your intentions to address this growing challenge. Do you believe 

that our Committee needs to provide additional authority to the 

CFTC to better protect the financial markets it oversees? 

Mr. GIANCARLO. Thank you very much. 

I have said before and I share with former Chairman Massad the 

view that cyber risk is the number one threat to the markets that 

we oversee, and therefore, it has to be a priority in everything we 

do. 

Since I have stepped in as Acting Chairman, our head of cyber 

security now meets with me monthly and reviews not only all the 

attacks we have seen in the markets as a whole but every attack 

that we receive at the agency itself. 

I believe that the approach to cyber needs to be both a public and 

private approach, and that is because the nature of the threats we 

face are both from private actors and from state actors. So I think 

there is a very vigorous role for us at the agency. We work with 

U.S. law enforcement agencies. We work with regulatory agencies 
9 

abroad as well as self-regulatory organizations as well as all of our 

major market participants. 

Cyber is a critical priority and will remain so. 

Senator STABENOW. I agree. 

Thank you, Mr. Chairman. 

Senator STABENOW. Senator Klobuchar. 

Senator KLOBUCHAR. Thank you very much. 

Mr. Giancarlo, congratulations. Congratulations to your mom 

and your family. 

I think we talked before about this, and I know you talked about 

it at your last hearing. The commodity markets you have oversight 

of involve essentially two kinds of participants, the commercial end 

users who base their trades on actual physical products and then 

financial institutions, like hedge funds and investors who base 

their derivatives trades, of course, on fluctuations in prices or the 

index. So that is a particular concern of mine, just because we have 

a lot of products and grouping of people who fall into the first category. 

I know you visited Mackinson Dairy Farm, Blue Diamond Dairy. 

Mr. GIANCARLO. Yes. 

Senator KLOBUCHAR. I am very impressed you milked a cow. 

Your mom raised you well. 

[Laughter.] 

Senator KLOBUCHAR. But what did you learn about the importance of the CFTC to these economic sectors, and what is going on 

with these sectors? How do you think that the CFTC could be responsive? 

Mr. GIANCARLO. Thank you for that. I mean, you are absolutely 

right. I mean, my experience with that family dairy near Melrose 

in your state was formative. I often think about the Frericks family 

when I think about really the most basic element of our market 

participants, and that is some of our America’s small-family farms. 

That even if they do not use these hedging instruments, they rely 

on the price signals that come from these futures markets to determine whether they are getting a fair price from their distributor. 

So that family, when they sell their milk, they are relying on price 

signals that come from our markets to know whether they are 

based on market fundamentals and not distorted by algorithms or 

speculators in the market. 

So that brought that very much home to me, and so our role as 

an agency is to make sure that the give-and-take of all the different market participants in our markets results in a fair price. 

Senator KLOBUCHAR. Exactly. 

Mr. GIANCARLO. It is a challenge in a world today that is increasingly dominated by these algorithmic traders. 

Senator KLOBUCHAR. Exactly. 

You mentioned that issue of speculation, and we have spoken 

about that before. I know in high-frequency trading, the CFTC has 

been working on this regulation, automated trading, and I think 

those best practices are a good first step. What other steps do you 

think the CFTC can take to ensure that the pricing is accurate and 

it is not influenced by things it should not be influenced by? 

Mr. GIANCARLO. Thank you. 
10 

You know, when I talk to farmers and ranchers and they ask me 

questions about what is the role of high-frequency trading in the 

markets, I hear a lot of anecdotal concerns, but what we do not yet 

have is the—we are getting the data, but we do not have the analytical tools to really know whether the role in the market of these 

traders is harmful or benign or what mixture of the two. 

They do provide important liquidity in the markets. You could 

not have a market of just naturals. You would not have a market. 

So what I have asked for in our budget request is 12 additional 

economists, because what we really need to do is go beyond anecdotal concern and get to—and to take our data and bring it down 

to really hard analysis so that will drive our policy decisions. If we 

need to make policy decisions that might restrict some participation in the market, it needs to be based on hard data, and so I am 

looking to really beef up our analytical capability. 

Senator KLOBUCHAR. Back to some of the product issues, in your 

testimony you note that the derivatives markets are not just useful 

for ag producers but impact many consumer issues like home heating fuels and propane. What steps are you currently taking to prevent the type of price hikes that we have seen in the past in the 

Midwest when it comes to heating? 

Mr. GIANCARLO. So we have got to get our position limits right. 

I will tell you a story about a visit I made to First Energy in 

Akron, Ohio, and they told me that—it does not happen often. They 

have a small trading desk. I actually met with the person who does 

their energy trading. They only do about six or seven trades a day. 

They never speculate. If they are buying forward, it is to protect 

a position. 

They say a couple of winters, when you have got a polar vortex, 

if one of their generators goes down, they need to go into the market and they need to buy forward. They may have to break a position limit, and they need to know that they can do that. Otherwise, 

they are going to turn off the lights in some homes and turn off 

some heat. So we have got to make sure we have the flexibility 

built into our limits, yet at the same time, we are all concerned 

about the role of excessive speculations. So getting that balance 

right is vitally important. 

Senator KLOBUCHAR. Very good. 

On the speculation front, what do you think needs to be done 

there? Then I will end. 

Mr. GIANCARLO. Well, Congress has said that we should use position limits as appropriate to address the issue of excessive speculation, and as I said in response to the Ranking Member, I think we 

can get this done, provided that we address the concerns that have 

been raised by our energy providers and by our agriculture producers. 

Senator KLOBUCHAR. Thank you very much. 

Mr. GIANCARLO. Thank you. 

Chairman ROBERTS. Senator Gillibrand. 

Senator GILLIBRAND. Well, thank you so much for being here, 

and thank you for your dedication to serving others. Thank you for 

visiting my state. I am very grateful that you were able to spend 

some time in New York. 
11 

In March of this year, you gave a speech where you remarked on 

your intention to comply with President Trump’s executive order. 

This was your Keep It Simple Stupid deregulation view, and you 

mentioned that this is not an exercise in repeal or rewriting rules 

but rather streamlining. Has President Trump or anyone in his administration identified CFTC regulations they would like to eliminate or rewrite under the executive order or under your program? 

Mr. GIANCARLO. No. 

Senator GILLIBRAND. One of the strengths of the CFTC’s regulation is the U.S. person rule or cross-border jurisdiction rule, which 

provides the CFTC the power to guard against financial risk 

around the world. 

It is clear from the 2008 financial collapse that pooled risk anywhere in the world can cause significant problems at home. How 

often have you heard from market participants on reforming or curtailing the current U.S. person rule specifically for U.S.-based entities? 

Mr. GIANCARLO. Well, I support it, the rule on capital for swap 

dealers, and I think Chairman Massad and I came to the right 

place on that rule. So I was proud to support him on that. 

I do not recall specific concerns raised on that in particular that 

has come to my attention. 

Senator GILLIBRAND. Do you foresee any changes to the U.S. person rules for the European or UK markets, especially as Brexit 

continues and you negotiate directly with the UK? 

Mr. GIANCARLO. So this is an area where I actually agree with 

Chairman Gensler in that when it comes to our rules that concern 

our swaps rules, that concern a systemic risk, we do need to take 

the view that risk that builds up anywhere in the globe can come 

back to the United States. 

When it comes to issues of mechanics, then I am in favor of a 

more territorial approach and not exporting our mechanical approach to, say, swaps execution abroad. But on systemic risk concerns, then I think we have to take a global approach. 

Senator GILLIBRAND. Do you believe that you will rewrite these 

rules, or do you anticipate any actions to dilute the CFTC’s jurisdiction? 

Mr. GIANCARLO. No, no actions to dilute the CFTC’s jurisdictions. 

I did propose in 2015—in fact, I wrote an 89-page white paper 

saying where I think the CFTC mis-implemented its swaps execution rules, and I said I think we got it wrong primarily because we 

did not follow Congress’ stated prescription in the law itself that 

swaps executions should be done through any means of interstate 

commerce. That is the area where I have been very clear that I 

think the rule is in need of a rewrite. I think the law is correct. 

As I said before, Congress got it right. I think the CFTC got the 

swaps execution rules wrong. When it comes to swaps clearing, I 

have said we have got it right, and swaps transparency in terms 

of swaps reporting to swap data repositories, I believe we have got 

that right as well. The disappointment is we still have not realized 

it, 9 years after the crisis. 

Senator GILLIBRAND. One of the things President Trump campaigned on and members of his economic team actually endorsed, 

the idea of separating commercial banking from riskier financial 
12 

activities. Has President Trump or anyone in the White House, including his economic team or the National Economic Council, spoken to you or anyone at the CFTC about reinstating an updated 

version of Glass-Steagall or any action that would divide commercial banking from riskier financial activities? 

Mr. GIANCARLO. No. 

Senator GILLIBRAND. Have you examined how the CFTC may be 

employed through regulation and enforcement to separate derivatives dealing from commercial banking under that kind of framework? 

Mr. GIANCARLO. I am not aware of any. 

Senator GILLIBRAND. Okay. The U.S. derivatives market is approximately worth $300 trillion. That includes $34 trillion worth of 

futures and options and $270 trillion in swaps. There are approximately 750 people that work at the CFTC. Currently, the budget, 

as the Ranking Member mentioned—currently, the CFTC budget is 

$250 million, far below other prudential regulators with similar 

regulatory responsibilities. 

Previous budgetary requests asked for a 30 percent increase, 

while your request is closer to 13 percent, and the President’s 

budget has flat funding. Don’t you think that Congress should look 

at how other prudential regulators like the SEC use mandatory 

funding mechanisms to provide a more reliable and standard funding source for the CFTC? 

Mr. GIANCARLO. So I know this is a conversation that has been 

going on for a long time, and I know that senior people, including 

presidents of both parties, have called for a funding mechanism. 

Yet, at the same time, we have self-funding in our markets and 

through our self-regulatory organization, NFA, which charges fees. 

I have been concerned and have been raising concerns for the 

last 3 years about the changing nature of liquidity in our markets. 

Last week, I had breakfast with some of America’s most prominent corporations, their corporate treasurers, including from Hershey’s chocolates to General Motors, and they raised with me their 

decreasing ability to access liquidity in the market. So I do not advocate transaction fees for the reason of trading liquidity in the 

markets. I am concerned about that impact, but ultimately, this is 

a decision for our appropriators and our authorizers, and if they 

were to see fit to provide this mechanism, then we clearly would 

work within it. 

Senator GILLIBRAND. Thank you, Mr. Chairman. 

Chairman ROBERTS. I thank the Senator. 

I wish to thank Senator Gillibrand, Senator Klobuchar for appearing in person. This is—I think this is the latest women’s movement here that we have on the Committee. I do not know what 

happened. Well, never mind. We are not going to go down that—— 

Senator STABENOW. You should be worried, Mr. Chairman. 

Senator KLOBUCHAR. Very, very worried. 

[Laughter.] 

Chairman ROBERTS. It is no problem. 

That will conclude our hearing today. 

In closing, I would like to bring attention to a letter from a coalition of nearly 20 agriculture groups in support of Mr. Giancarlo’s 

nomination, and that list includes some of the largest councils and 
13 

cooperatives and associations in the ag sector. I am grateful to 

them for voicing their support. 

Without objection, the letter will be entered into the record at 

this point. 

[The letter can be found on page 24 in the appendix.] 

Chairman ROBERTS. Thank you, Mr. Giancarlo, for taking time 

to address this Committee and to answer the Committee’s questions. It is clear that you are abundantly qualified to lead the 

CFTC and motivated to tackle the challenges that lay ahead. 

To my fellow members, I would ask that any additional questions 

you may have for the record be submitted to the Committee Clerk 

by 5:00 p.m. tomorrow, June 23. We look forward to receiving your 

responses, Mr. Giancarlo, and to further considering your nomination. 

The Committee is adjourned. 

Mr. GIANCARLO. Thank you. 

[Whereupon, at 10:23 a.m., the Committee was adjourned.] 

(15) 

A P P E N D I X 

JUNE 22, 2017 
16 

Statement of 

J. Christopher Giancarlo 

Acting Chairman 

U.S. Commodity Futures Trading Commission 

Before the U.S. Senate Committee on Agriculture, Nutrition, and Forestry 

June 22, 2017 

Thank you Chairman Roberts, Ranking Member Stabenow and members of the 

Committee. 

I am honored to testify before you today as the President's nominee to serve as 

the thirteenth Chairman of the U.S. Commodity Futures Trading Commission (CFTC). 

I want to thank many of you for the courtesy of meeting with me leading up to this 

hearing and over the past few years. I have learned a lot from you about the issues 

facing America's farmers and users of commodity futures. I am grateful for the 

opportunity today to listen to your concerns and answer your questions. 

With your permission, Chairman Roberts, I would like to introduce members of 

my family who are here with me today. I am joined by my wife and best friend of 28 

years, Regina, our sons Luke and Henry, and my brother Dr. Timothy Giancarlo. My 

daughter Emma could not join us because of work commitments. 

I am also pleased to introduce my mother, Mrs. Ella Jane Keegan, a registered 

nurse. Together with my recently deceased father, a physician, she founded a fiftyyear-old family business caring for the elderly, where I worked growing up. My parents 

taught my three brothers and me to arrive early to work, to leave things better than we 

found them and to give thanks at night for the blessings of this wonderful country. They 

also taught us that there is no job worth doing that doesn't require hard work and no 

service worth providing that is beneath your dignity. I am grateful for these lessons and 

for their love and constant support. 

I appeared before this Committee in 2014 upon rny nomination as Commissioner 

to the CFTC by President Obama. At that hearing, I presented my background in 

commercial law and business. I also acknowledged my rather obvious character flaw of 

not having been raised on a farm. Nevertheless, I committed then to learning 

everything I could about the agricultural sector. 
17 

When I was a practicing lawyer, I always tried to spend time with new clients at 

their business offices to learn what they did and how they did it. I believe you cannot 

truly serve someone you represent unless you first dig in and understand how they 

make a living. 

In the three years I have served at the CFTC, I have had the honor to meet with 

hundreds of Americans who depend on CFTC-regulated derivatives markets. I have 

travelled to Kansas, Michigan, Indiana, Illinois, Iowa, Minnesota, South Dakota, North 

Dakota, New York, Missouri, Kentucky, Ohio, Montana and more to meet with farmers, 

ranchers, energy producers, and small and large manufacturers, all of whom use our 

markets to hedge production and price risk. 

I have been 900 feet underground in a Kentucky coal mine and 90 feet above 

ground on a North Dakota natural gas rig. I have milked dairy cows with family farmers 

in Melrose, Minnesota, and met with grain and livestock farmers from New York to 

Montana and Iowa to Louisiana. I have walked factory floors in Illinois, oil refineries in 

Texas, grain elevators in Indiana and power plants in Ohio. 

In Kansas, I met Mary and Pat Ross at their feed lot in Lawrence, traveled to 

Ken McCauley's corn farm in White Cloud, and Pat O'Trimble's soybean farm in Perry. 

In Michigan, I toured the Ford Rouge automobile manufacturing plant, visited a grain 

mill and met with farmers and agricultural product suppliers at a fertilizer supply depot in 

Henderson. 

While these visits have been delightful in their own right, they have made me a 

better informed regulator of American commodity futures markets. I thank members of 

this Committee for encouraging these visits. 

As you well know, American farmers and ranchers have used listed derivatives 

markets to hedge their costs of production and delivery for more than 100 years. These 

markets allow the risks of variable production costs, such as the price of raw materials, 

energy, foreign currency and interest rates, to be transferred from those who cannot 

afford them to those who can. They are the reason why American consumers enjoy 

stable prices in the grocery store, whatever the conditions out on the farm. 

Even Americans not actively participating in the futures markets are impacted by 

the prices generated by them. Commodity futures markets provide a critical source of 

information about future harvest prices. For example, a grain elevator uses the futures 

market to accurately price grain when the local farmer comes to sell it. In return, 

farmers know they are getting a fair value for their crop and can make well-informed 

decisions. The U.S. Department of Agriculture (USDA) uses that same information to 
18 

make price projections, determine volatility measures and make payouts on crop 

insurance .

1 

But derivatives markets are not just useful for agricultural producers. They 

impact the price and availability of heating in American homes, the energy used in 

factories, the interest rates borrowers pay on home mortgages and the returns workers 

earn on their retirement savings. More than 90 percent of Fortune 500 companies use 

derivatives to manage commercial or market risk in their worldwide business operations. 

In short, derivatives serve the needs of society to help moderate price, supply 

and other commercial risks to free up capital for economic growth, job creation and 

prosperity. 

When I spoke to you in 2014, I explained that my best qualification to serve on 

the CFTC was my commercial expertise in the global over-the-counter swaps markets. 

I was then - and remain today- a supporter of the swaps reforms established in 2009 by 

the G20 leaders and embodied in Title VII of the Dodd-Frank Act. I said that my support 

for these reforms was not based on academic theory or political ideology. It was based 

on practical experience. 

I have not wavered in my support for these reforms in my three years on the 

Commission. Yes, I have criticized some of the agency's implementation of the reforms 

- almost always where I believed it was impractical, overly burdensome or out of step 

with Congressional intent. Yet, in all cases, I advocated alternative approaches I 

believe better support healthy markets and are more faithful to the law. 

That is why we must get our regulations right. And that is the basis for my three 

priorities for the CFTC: 

First, if confirmed, I will faithfully serve the CFTC's mission to foster open, 

transparent, competitive and financially sound markets -free from fraud and 

manipulation -for the trading of commodity and financial futures, swaps and other 

derivatives. 

The day after the White House announced in March its intention to nominate me 

as Chairman, I spoke publicly and said that, "There will be no pause, let up or reduction 

in our duty to enforce the law and punish wrongdoing in our derivatives markets. The 

American people are counting on us." 

1 USDA, Informational Memorandum: PM-17-012, 2017 Crop Year (CY) Common Crop Insurance Policy and Area 

Risk Protection Insurance Projected Prices and Volatility Factors; Malting Barley Endorsement Projected Price 

Component and Volatility Factor; and Hybrid Seed Price Endorsement- Hybrid Seed Corn Prices (Mar. 1, 2017). 

Available at https:/ /www.rma.usda.gov/bulletins/pm/2017/17-012.pdf. 
19 

Since then, I have appointed as our Director of Enforcement a well-regarded 

Assistant Attorney General from the Southern District of New York; strengthened our 

rules and procedures to better protect whistleblowers; reorganized our Market 

Surveillance Branch to report directly to the Director of Enforcement; requested 

additional funding for enforcement investigators and successfully concluded important 

enforcement cases, including imposing penalties and achieving monetary settlements 

for wrongdoing in markets for U.S. Dollar Interest Rate Swaps, retail foreign exchange, 

binary options and precious metals. These steps evidence my priority to oversee robust 

enforcement of our rules and root out bad actors and wrongful practices. 

Second, if confirmed, I will serve the CFTC's regulatory mission in a way that 

best fosters broad-based economic growth and American prosperity. In order for all 

segments of our economy to flourish, we need thoughtful rules and regulations that 

encourage participation and innovation in our markets. The CFTC must promote 

policies that do not needlessly impinge on the ability to hedge against adverse price 

moves. We must provide all market participants with legal certainty and regulations 

whose benefits unambiguously justify their costs. 

Yet, we must also look to the future. So much of our world today, especially 

farming, has undergone a digital transformation. And it should be no surprise that our 

capital, commodity and futures markets are going through the same digital 

transformation. The electronification of markets over the past 30 to 40 years and the 

advent of exponential growth in digital technologies have altered trading, markets and 

the entire financial landscape with far-ranging implications for capital formation and risk 

transfer. 

The world is changing. Our parents' financial markets are gone. The 21st 

century digital transformation is well underway, and the digital technology genie will not 

go back in the bottle. In order for the CFTC to remain an effective regulator, it must 

keep pace with these changes or our regulations will become outdated and ineffective. 

We recently launched an initiative called LabCFTC. Its purpose is twofold: The 

first is to provide greater regulatory certainty that encourages market-enhancing 

financial technology innovation to improve the quality, resiliency, and competitiveness of 

our markets. The second is to identify and utilize emerging technologies that will enable 

the CFTC to carry out its mission more effectively and efficiently in the new digital world. 

Simply put, LabCFTC is intended to help bridge the gap from where we are today 

to where we need to be: a 21st century regulator for 21st century digital markets. 

As derivatives markets continue to evolve, the CFTC must be a regulatory 

thought leader. This is especially so in its oversight of derivatives clearing houses. 
20 

Mandatory clearing of standardized swaps was a core component of the G-20 reform 

agenda. The world's largest CCPs, which collectively clear over 95 percent of the global 

cleared swaps market, are directly registered with CFTC as Designated Clearing 

Organizations (DCOs). These DCOs are located in the United States as well as in major 

financial centers in Europe and Asia. I am committed to ensuring that the regulatory 

approach to oversight over these global markets is effective and robust without 

fragmenting markets and trading activity. 

Third, if confirmed, I will serve our regulatory mission in a way that respects the 

American taxpayer. That means getting back to regular order in operations, conducting 

more thorough econometric analysis and efficiently managing appropriated resources. 

On February 24, 2017, President Trump issued an executive order furthering his 

regulatory reform agenda to stimulate economic revival. 2 To achieve it, our first step is 

to reduce excessive regulatory burdens. The President's executive order directs federal 

agencies to establish Regulatory Reform Task Forces. 3 Accordingly, I recently 

announced the launch of a new agency initiative: Project KISS. 

Project KISS stands for "Keep It Simple Stupid." It is an agency-wide review of 

CFTC rules, regulations and practices to make them simpler, less burdensome and less 

costly. As part of that effort, Project KISS recently issued a call for recommendations 

from the public on regulatory reform. We now have a portal on our website for the 

public to provide suggestions that we can look to implement. 

Project KISS is NOT about identifying rules for repeal or even rewrite. What it IS 

about is taking our existing rules as they are and applying them in ways that are 

simpler, and less burdensome. I believe the American taxpayer expects us to do 

nothing less. 

If confirmed, I intend to do alii can to focus on these priorities. I pledge to the 

Members of this Committee to always be available to listen to your priorities as well. 

Chairman Roberts and Ranking Member Stabenow, this Committee has a long 

tradition of bipartisanship. During my time on the Commission, I have mirrored that 

practice by working constructively with my fellow commissioners. I have voted with 

them on more than 95 percent of the matters before us. This has remained so in recent 

months as Commissioner Sharon Bowen and I have unanimously advanced a number 

of new initiatives, such as LabCFTC and Project KISS mentioned above. 

2 Exec. Order No. 13777, 82 Fed. Reg. 12285 (Feb. 24, 2017). Available at https://www.whitehouse.gov/the-pressoffice/2017 /02/24/presidential-executive-order -enforcing-regulatory-reform'agenda. 3 /d. 
21 

If confirmed, I will continue to put aside partisanship at the agency and will work 

with each of you, with candor and promptness, in our common purpose of serving the 

American people and the agricultural producers upon which we all rely. 

Again, thank you for the honor to testify before you. 

I look forward to answering your questions. 

(23) 

DOCUMENTS SUBMITTED FOR THE RECORD 

JUNE 22, 2017 
24 

June 21,2017 

The Honorable Pat Roberts 

Chairman 

Senate Agriculture, Nutrition, 

and Forestry Committee 

United States Senate 

Washington, DC 20510 

Dear Chairman Roberts and Ranking Member Stabenow: 

The Honorable Debbie Stabenow 

Ranking Member 

Senate Agriculture, Nutrition, 

and Forestry Committee 

United States Senate 

Washington, DC 20510 

The undersigned organizations write to express our support for confrrming Chris Giancarlo to be 

Chairman of the Commodity Futures Trading Commission (CFTC). We represent farmers, 

cooperative associations, grain dealers and millers, food processors, feed manufacturers and 

others who produce and distribute our nation's food, feed, fuel, and fiber. Our members rely on 

the agriculture and energy derivative markets both exchange-traded futures and options, and 

over-the-countet products- to hedge the commercial risks inherent to agricultural production, 

processing, and marketing. 

Given his financial industry background, we commend CFTC Acting Chairman Giancarlo for the 

considerable amount of time and effort he has devoted to understanding the agriculture sector 

and its use of the derivatives markets. In fact, Mr. Giancarlo has visited a numbet of our 

members' farms and facilities over the past few years to learn about the industry first-hand from 

those who are actual commodity producers and market participants. 

We believe Mr. Giancarlo, if confirmed, will strike the right balance in overseeing CFTC's 

regulation of the fmancial and commodity markets. This includes providing for reduced 

systemic risk, ensuring market integrity and regulatory consistency, while also considering the 

important role these markets play in the ability of commercial end users to effectively and 

efficiently hedge their commetcial risks. 

We appreciate your continued leadership in the support ofU.S. production agriculture and 

agribusiness. 

Sincerely, 

AM COT 

Ametican Cotton Shippers Association 

American Feed Industry Association 

American Soybean Association 

American Sugar Alliance 

Commodity Market Council 

Farm Credit Council 

National Association of Wheat Growers 

National Cattlemen's Beef Association 
25 

National Corn Growers Association 

National Cotton Council 

National Council of Farmer Cooperatives 

National Grain and Feed Association 

National Pork Producers Council 

National Sorghum Producers 

North American Export Grain Association 

North American Millers' Association 

USA Rice 

cc: Majority Leader Mitch McConnell 

Minority Leader Chuck Schumer 

Members of the Senate Committee on Agriculture, Nutrition, and Forestry 
26 

U.S. Commodity Futures Trading Commission fhree Lefayette Centre, 1155 21st Street. NW, Washinuton. DC 20581 

J. Chri:-.tophcr (iianl:itrlo 

Actin~! Ch.11nn;m 

The llnnorable Pat Roberts 

Chainnan 

.lunel9.2017 

Commitlcc on Agriculture. :-.lutrition. and Forestry 

United States Senate 

Washington. DC 20510 

The Honorable Debbie Stabenow 

Ranking :Vkmhcr 

(\nnmittel' nn Agriculture. !'\utritinn. and Fnrcslry 

United Stales Scnah; 

Washington. DC 20510 

Dear Chainnan Roberts and Ranking Member Stabenow: 

f 2:0.:! l 41 S-5030 

· JC(iiancarlo•fl (')-I Cgov 

!'lease be a<h·ised that pursuant to section IOI(h) of the Fthics in Go\'Cnuncnt Act of 197X. as 

amended. I ha\'e in limned the appropriate elhics ortkials thai the inlimnation required by seclion 

I 02(a) (I )(A) of the Act with respect to in~omc and honoraria contained in OliE h•m1 27Xc 

(Executive Branch Public Financial Disclosure Report) executed by me on March 27. 2017 is 

correct This infonnation is cwTent as of Monday. June 19,2017. This date is within live days 

prior lo the date of the first hearing scheduled to consider my nomination. 

uta~J-- j, f"hristophcr Giat).Carlo 

:;(cting Chairman / 
27 

U.S. SEI"ATE COi\liiiiTTEE ON AGRICULTURE, Nt:TRITIO:" & FORESTRY 

Questions for Executive Nominees 

115111 Congress 

I. Basic Biographical Information 

Please provide the following information. 

First Name 
28 

I\ Iiddle Name 

:\'Iaric Beyel 

Name Used To 

(MonthiYear) 

(Check box if 
29 

2. Education 

List all post-secondary schools attended. 
30 

3. Emplovmcnt 

(A) List all of your employment activities, including unemployment and self-employment. 

If the employment activity was military duty, list separate employment activity periods to 

show each change of militar·y duty station. Do not list employment before your 18th 

bit-thday unless to provide a minimum of two ycar·s of employment history. 

TYIJe of EmlJiovment 

(Acth·e Military Duty Station, Date 

National GuardiRescrvc, EmJllovmcnt 

USPHS Commissi(1ncd Corps. Date Ended 

Other Federal t.•mploynlCnt. Name of Your Most Recent Location Emnlovmcnt (month/year) 

State Government (!'\on- Emplovcrl ~ (City and Began (check box if 

Ft.-dcral Employment), Self- Assigned DutY State (month/year) estimate) 

employment, Uncmploym~.:nt, Station Title/Rank only) (ch~,-ck box if (check 

Ft--derul Contmctor, Non~ estimate) "prcscm" box 

Government Employment if still 

{excluding sc!f:·cmploymcnt}. employed) 

Other 

Non~Governmcnt GFI Group Inc. ExccutiYe V .P. Nev.' :\Ia~. :!0!11 .1unc.2UI4 

En1ployment York. 

NY 

Non-Government Fcnics Ltd. Executive, New Apri1.2flOO :\1ay21100 

Employment V.P. York 

NY 

nem Brown Raysman Law Partner New S~·pft·mhcr, 19t}i April.2HtH! 

Employment i\lillstdn & York. 

Steiner LLP K'r' 

Giancarlo & Law Partner Nc\V .l:mu;lr~·. 1992 Scpkmht-r, JfJ!J7 

Glciberman York. 

NY 

Curtis Mallet- Associate New (ktnlwr.I9S!i D<'ccmlwr,l')91 

r. 

LWf"UJWOW Provcst. Colt & York, 

rvtoslc NY 

Non-Go\·cmment M udgc Rose L LP A~s.ociatc New Stp!Nnfn•r, l984 I Octoh"· "" 

Employment 

NY 

(B) List any advism·y, consultative, honorary or other part-time sen·icc or positions with 

federal, state, or· local governments, not listed elsewhere. 

I 

l 
31 

4. Honors and Awards 

List all schola.-ships, fellowships, honorary degrees, civilian service citations, military 

medals, academic or professional honors, hononu·y society memberships and any other 

special recognition for outstanding service or achievement. 

Phi Belli Kappa (National Academic Honor Society.) Inducted: June 1981 

5. Memberships 

List all memberships that you have held in professional, social, business, fraternal, 

scholarly, civic, or charitable organizations in the last 10 years. 

Unless relevant to your nomination, you do l\:OT need to include memberships in 

charitable organizations available to the public as a result of a tax deductible donation of 

$1,000 or less, Parent-Teacher· Associations or other organizations connected to schools 

attended by your children, athletic clubs or teams, automobile support organizations (such 

as AAA), discounts clubs (such as Groupon or Sam's Club), or affinity 

memberships/consumer clubs (such as frequent flyer memberships). 
32 

I .. .. 6. Pohttcal Achvttv 

(A) Have you ever been a candidate for or been elected or appointed to a political office? 

v earl · icle~ti~-;;-

"'""'"" !l.£!!!:2!: Term of Service :'\ame of Office Candidate OnlY (if applicable) 

:\iadc 

Bergen County (:'\.J) Republican County !'lcctcd ~0\. 201-1 20iJi,;2o14 Committee 

(B) List any offices held in or services rendered to a political party or election committee 

during the last ten years that you have not listed elsewhere. 

Name of l'artv/Eiection 

Committee 

Republican: Romney 

Victory (NV) Finance 

Committee 

Republican: Giuliani 

for President Finance 

Committee (:"i'J) 

i 

Office/Services Rendered 

No Ofticc,'Fund Raising Scn·iccs 

No Office 'Fund Raising Scr\'iccs 

Responsibilities 

Fund Raising 

Fund Raising 

Dates of 

Service 

April- Nov 

2012 

Sept. 2007 

Jan. 2008 

I 

l 
33 
34 

(C) Itemize all individual political contributions of $200 or more that you have made in the 

past five years to any individmll, campaign organization, political party, political action 

committee, or similar entity. Please list each individual contribution and not the total 

amount contributed to the person or entity during the ycm·. 
35 

NJ Senate Republican majority $400 10122/13 

McConnell Senate Committee $1,100 10124113 

Holly Schepisi for Assembly $250 5/12/14 

National Republican Senate Committee $15,000 6121114 

New Jersey GOP $7,500 7115114 

Trump for America Inaugural Committee $2,500 1216117 
36 

7. Publications 

List the titles, publishc•·s and dates of books, articles, reports or other puhlislwd materials 

that you have written, including articles published on the Internet. 

Please sec supplement A ( attached ) and lin!; below to CFTC media list. 

Ii!.k ~ 

~~· 

.L "''P·· cllc.gov About l .llnnstopncr "" '"' , "" c.~~l;in1 t.:u£11<1 io 13 ~·hnstopncr 

Giancarl~ 

/\lay 23.2017 

I 

• 
37 

8. Lobbying 

In the past ten years, have you registered as a lobbyist? If so, please indicate the state, 

federal, or local bodies with which you have registered (e.g., Bouse, Senate, California 

Secretary of State). 

NO 
Nominee Report 1 U.S. Office of Government Ethics; 5 C.F.R. part 2634 I Form Approved: OMB No. (3209-0001) (March 2014) 

Executive Branch Personnel 

Public Financial Disclosure Report (OGE Form 278e) 

Filer's Information 

Giancarlo, james C 

Chairman, Commodity Futures Trading Commission 

other Federal Government Positions Held During the Preceding 12 Months: 

Commissioner, CFTC (6/2014- Present) 

Names of Congressional Committees Considering Nomination: 

• Committee on Agriculture, Nutrition, and Forestry 

Electronic Signature- I certify that the statements I have made in this form are true, complete and correct to the best of my knowledge. 

Is/ Giancarlo, james C [electronically signed on 03/27/2017 by Giancarlo, james C in lntegrity.gov] 

Agency Ethics Official's Opinion- On the basis of information contained in this report, I conclude that the filer is in compliance with applicable laws and 

(subject to any comments below). 

lsi Davis, Daniel), Certifying Official [electronically signed on 05/11/2017 by Davis, Daniel J in lntegrity.gov] 

other review conducted by 

u.s. Office of Government Ethics Certification 

lsi Shaub, Walter M, Certifying Official [electronically signed on 05/17/2017 by Shaub, Walter Min lntegrity.gov] 
1. Filer's Positions Held Outside United States Government 

# ORGANIZATION NAME CITY, STATE ORGANIZATION POSITION HELD FROM TO 

TYPE 

Estate of Family Member Del Ray Beach, Estate of Personal 10/2015 4/2017 

Florida deceased family Represenative/E 

member xecutor 

2 1995 Irrevocable Family Trust Del Ray Beach, Trust Trustee 10/2015 4/2017 

Florida 

3 2014 Family Trust See Endnote Del Ray Beach, 

Florida 

Trust Trustee 10/2015 4/2017 

4 Sora Montana, LLC See Endnote Kalispell, 

Montana 

Corporation Managing 

Member 

8/2016 4/2017 

5 181 South Woodland, LLC See Endnote Del Ray Beach, Corporation Managing 1/2015 4/2017 Florida Member 

2. Filer's Employment Assets & Income and Retirement Accounts 

None 

3. Filer's Employment Agreements and Arrangements 

None 

4. Filer's Sources of Compensation Exceeding $5,000 in a Year 

None 

5. Spouse's Employment Assets & Income and Retirement Accounts 
None 

6. Other Assets and Income 

# DESCRIPTION ElF VALUE INCOME TYPE 

Select 100 Life Insurance N/A $15,001- Dividends 

$50,000 

SILVERLAKE TECHNOLOGY ASSOCIATES See Endnote No None (or less Capital Gains SUMERU l.P. than $1,001) 2 

2.1 Inc. Application Strategies N/A See endnote at 

rnmr>"n" NY, NY item 2. 

2.2 

2.3 

2.4 

AVI-SPL Video Technology Inc. Tampa, FL 

LocaWeb Web Browsing Company San Paulo, Brazil 

Corp, Medical Software Company Rriminah;lm AL 

Advertising 

N/A 

N/A 

N/A 

N/A 

None (or less See endnote at 

item2. 

None (or See endnote at 

item2. 

None (or less See endnote at 

than $1,001) item2. 

None (or less See endnote at 

than $1,001) item2. 

INCOME 

AMOUN

$1,001-

$100,00

$1,000,0

2.6 Smart Modular Technology Inc., Memory N/A None (or less See endnote at 

-~---~dul:~ 

Compan:y,!::J~~~--~------~~-------------·-_than $1 ,0022_ __ _!t:_E:m 2. --·----------

2.7 Talend Corp., Data Architect Company, Los N/A None (or less See endnote at Altos, CA than $1,001) item2. 

2.8 Blackline Systems, Accounting Software N/A See endnote at 

Woodland Hills, CA item2. 

2.9 Foreflight Corp., Aviation Support Software, N/A See endnote at Asutin TX item2. 

3 1998 Life Insurance Trust 

3.1 Northwest Mutual ECL Life Insurance (whole N/A $100,001- Dividends $2,501 - 

$250,000 
# DESCRIPTION ElF VALUE INCOME TYPE INCOM

AMOU

Freedom 529 College Savings 

4.1 john Hancock Equity Portfolio 529-C Yes $250,001- $5,001

$500,000 

5 SEP FBO Filer 

5.1 American Funds AMCAP F-2 (AMCFX) Yes $100,001 -· $5,001 

$250,000 

5.2 Dodge & Cox Income Fund (DODIX) Yes $50,001- $2,501 

$100,000 

5.3 Fidelity Advisor Mid Cap Ill (FIIMX) Yes $15,001- $201 - 

$50,000 

5.4 METROPOLITAN WEST TOTAL RETURN Yes $15,001- $1,001 

BOND CL I (MWTIX) $50,000 

~·h-~·-,·---~·,·-·~---·· 

--

5.5 Drevfus/Standish Global Fixed Income I Yes $2,501 

5.6 Global Total Return Yes $1,001 $15,000 

5.7 Oakmark Select Fund I (OAKLX) Yes $50,001- $2,501 

$100,000 

Disciplined Value Mid Cap I Yes $15,001- $1,001 

$50,000 

5.9 MFS International Value Class I (MINIX) Yes $1,001 

ESTATE Yes $1,001 $15,000 $1 ,001 

5.11 Oakmark Small Cap (OAKEX) Yes $201 - 

5.12 Developing Markets Y Yes $1,001 

5.13 Vanguard Value Index (WIAX) Yes $50,001- $1,001 

$100,000 

5.14 Global Ex US Real Estate Index lnv Yes $1,001-$15,000 $201-$
# DESCRIPTION 

Strategic Income Opps lnstl 

5.16 Fidelity Advisor Total Bond I (FEPIX) 

5.17 NORTHERN SMALL CAP VALUE (NOSGX) 

5.18 FUND INVESTOR 

5.19 Oppenheimer Global Y (OGL YX) 

ElF 

Yes 

Yes 

Yes 

Yes 

Yes 

VALUE 

$15,001 -

$50,000 

$15,001-

$50,000 

$50,001. 

$100,000 

INCOME TYPE INCOM

AMOU

$1,001

$2,501 

$1,001 

$1 ,001 

$2,501 

5.20 Small Mid Yes $1,001

5.21 VANGUARD SHORT TERM INVESTMENT Yes 

GRADE ADMIRAL Cl (VFSUX) 

5.22 REIT Index Admiral Shares 

6 IRA FBO Spouse U.S. brokerage custodian 

account 

6.1 

6.2 

6.3 

6.4 

6.5 

6.6 

6.7 

6.8 

METROPOLITAN WEST TOTAL RETURN 

BONDCLI 

DFA Inti Real Estate (DFITX) 

DFA US Small Cap (DFSTX) 

JP Morgan Mid-Cap Growth OMGXZ) 

DFA INTL SMALL CAP VALUE CL 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

$15,001 . $2,501 

$50,000 

$15,001. 

$50,000 

$1,001-$15,000 

$1,001 • $15,000 

$1,001.$15,000 

$1,001-$15,000 

$1,001.$15,000 

$1,001 

$201 - 

$201 - 

$201 . 

None (

than $2

None (

_____ th_a.n $2
# 

6.9 

6.11 

6.12 

DESCRIPTION 

American Funds New World F-2 (NFFFX) 

Dreyfus/Standish Global Fixed Income I 

(SDGIX) 

JOHN HANCOCK DISCIPLINED VAL MID CAP 

ElF VALUE 

Yes $1,001-$15,000 Yes $1,001-$15,000 Yes $1,001-$15,000 Yes $1,001-$15,000 

INCOME TYPE 

None (

than $2

$201 - 

6.13 Small Mid Yes $1,001-$15,000 None (

.. _____________ __ n$2

6.14 

6.15 

Templeton Global Total Return Adv (TTRZX) 

Vanguard REIT Index Admiral Shares 

(VGSLX) 

-----·····-····- ·--·-···---------·-· -----------------------------···-------------

6.16 

6.17 

7 

7.1 

Vanguard Short-Term Investment-Grade (VFSTX) Vanguard Value Index Admiral Shares (WIAX) 

7.2 COHEN & STEERS REAL TV SHARES FUND CL 

N (CSRSX) 

7.3 !SHARES CORE HIGH DIVIDEND 7.4 ISHARES RUSSELL 1000 GROWTH 7.5 !SHARES SELECT DIVIDEND ETF 

7.6 LOOMIS SAYLES BOND FD INSTL 7.7 THE OAKMARK INTL FUND (OAKIX) 7.8 WESTERN ASSET CORE BOND FD CL I 

(WATFX) 

Yes Yes Yes $1,001-$15,000 Yes $15,000 Yes $1,001-$15,000 Yes $15,001-

$50,000 

$201 - $201 - $201 - 

-

$201-$201 - 
# 

7.9 

7.10 7.11 7.12 

DESCRIPTION 

U.S. brokerage Bank Deposit Program (cash) 

COHEN & STEERS REAL ESTATE SECURITIES 

FD I (CSDIX) 

CLEARBRIDGE AGGRESSIVE GROWTH FUND I 

(SAGYX) 

JP MORGAN UNDSCVRD MNGRS BEHAVRL 

VAL FD SELECT Cl (UBVSX) 

ElF 

N/A 

Yes Yes Yes 

No 

8.1 Allendale Nursing Home, Inc .. a closely held N/A 

private health care business (non-voting 

_ 

---------------

9 

9.1 

9.2 

10 

UTMA U.S. account FBO DC#1 

GUGGENHEIM S&PSOO EQUAL WEIGHT 

INDEX (RYDEX) (RSP) 

SPDR MSCI ACWI (ex-US) (CWI) 

account FBO DC#2 

- --····---"'---

Yes Yes 

VALUE 

$100,001-$250,000 $1,001-$15,000 $15,001-$50,000 $1,001 -$15,000 

$1,000,001 • $5,000,000 $1,001-$15,000 $1,001-$15,000 

10.1 400 Low Yes $1,001-$15,000 10.2 10.3 10.4 

11 

11.1 

GUGGENHEIM S&PSOO EQUAL WEIGHT 

(RYDEX) (RSP) 

SPDR MSCI ACWIIMI (ACWI) 

SPDR MSCI ACWI (ex-US) (CWI) 

UTMAU.S. account FBO DC#3 

PowerShares ETF Trust II S&P 400 Low 

--------

11.2 GUGGENHEIM S&P 500 EQUAL WEIGHT 

(RYDEX) (RSP) 

Yes $1,001-$15,000 

Yes $1,001-$15,000 

Yes $1,001-$15,000 Yes $1,001-$15,000 Yes $1,001-$15,000 

INCOME TYPE 

Dividends 

INCOM

AMOU

None (

than $2

$201 -$

$201 

$100,0$1,000

None (

than $2

None (

than $2

None (

than $2

None (

than $2

None (

than $2
# DESCRIPTION ElF VALUE 

11.3 SPDR MSCI ACWI (ex-US) (CWI) Yes $1,001-$15,000 

12 College Savings No 

12.1 BLACKROCK AGE 17 TO 19 YRS A (NAABF) Yes $15,001-

$50,000 

12.2 BLACKROCK AGE 17 TO 19 YRS C (NAAGA) Yes $100,001-

$250,000 

13 Merrill Lynch NextGen 529 College Savings No 

Plan (Maine) FBO DC#3 

13.1 BLACKROCK AGE 20+ YEARS C (NAAGB) Yes 

13.2 BLACKROCK AGE 17 TO 19 YRS C (NAAGA) Yes 

14 College Savings No 

14.1 Yes $1,001-$15,000 

15 No 

15.1 Strategies Institutional Yes $500,001 -

$1,000,000 

15.2 

15.3 

15.4 

16 

U.S. Brokerage Bank Deposit Program (cash) 

Sora Montana, LLC (holding company for 

personal property of late family member) 

(value not readily ascertainable) 

No 

N/A 

Woodland, LLC (holding company N/ A $1 ,000,001 -

of late family member) $5,000,000 En<•IPVIIOO'rl~ Estate of Family Member No 

INCOME TYPE 

$201 $

$2,501 

$15,00

$50,000 

None (o

than $2

None (o

than $2

None (o

than $2

None (o

than $2
# 

16.1 

16.2 

16.3 

DESCRIPTION 

Home, Inc., a closely held business (voting shares) 

(in-home nursing service) 

U.S. Brokerage Bank Deposit Program (cash) 

7. Transactions 

(N/ A)- Not required for this type of report 

8. Liabilities 

# CREDITOR NAME 

Bank of America, NA 

9. Gifts and Travel Reimbursements 

(N/ A)- Not required for this type of report 

Endnotes 

PART # 

1. 3 

ENDNOTE 

Owns 

ElF 

N/A 

N/A 

N/A 

TYPE 

Mortgage on 

Personal 

Residence 

VALUE 

$5,000,001 -

$25,000,000 

$250,001-

$500,000 

$1,000,001 -

$5,000,000 

AMOUNT 

$500,001-

$1,000,000 

INCOME TYPE 

YEAR 

INCURRED 

2013 

ownershio of the two LLCs 

INCOME 

AMOUNT 

None (or less 

than $201) 

None (or less 

than $201) 

None (or less 

than $201) 

RATE 

3.1250% 

TERM 

30 Yea
PART # 

1. 4 

1. 5 

6. 2 

ENDNOTE 

This entity is a holding company for personal property of my late family member and is wholly 

by the 2014 Family Trust. 

This entity is a holding company for real property of my late family member and is wholly owne

the 2014 Family ~~_ust. ·-----··--·--·-- -··----- -·---·----·--

Entire interest sold june 13, 2016. 
Summary of Contents 

1. Filer's Positions Held Outside United States Government 

Part 1 discloses positions that the filer held at any time during the reporting period (excluding positions with the United States Government}. Positions are rep

even if the filer did not receive compensation. 

This section does not include the following: (1} positions with religious, social, fraternal, or political organizations; (2} positions solely of an honorary nature; (3

held as part of the filer's official duties with the United States Government; (4} mere membership in an organization; and (5} passive investment interests as a 

partner or non-managing member of a limited liability company. 

2. Filer's Employment Assets & Income and Retirement Accounts 

Part 2 discloses the following: 

• Sources of earned and other non-investment income of the filer totaling more than $200 during the reporting period (e.g., salary, fees, partnership share

honoraria, scholarships, and prizes} 

Assets related to the filer's business, employment, or other income-generating activities that (1) ended the reporting period with a value greater than $1,0

produced more than $200 in income during the reporting period (e.g., equity in business or partnership, stock options, retirement plans/accounts and thunderlying holdings as appropriate, deferred compensation, and intellectual property, such as book deals and patents) 

This section does not include assets or income from United States Government employment or assets that were acquired separately from the filer's business

employment, or other income-generating activities (e.g., assets purchased through a brokerage account). Note: The type of income is not required if the amo

income is $0- $200 or if the asset qualifies as an excepted investment fund (ElF}. 

3. Filer's Employment Agreements and Arrangements 

Part 3 discloses agreements or arrangements that the filer had during the reporting period with an employer or former employer (except the United States 

Government), such as the following: 

Future employment 

Leave of absence 

Continuing payments from an employer, including severance and payments not yet received for previous work (excluding ordinary salary from a current 

Continuing participation in an employee welfare, retirement, or other benefit plan, such as pensions or a deferred compensation plan 

• Retention or disposition of employer-awarded equity, sharing in profits or carried interests (e.g., vested and unvested stock options, restricted stock, futu

a company's profits, etc.) 

4. Filer's Sources of Compensation Exceeding $5,000 in a Year 

Part 4 discloses sources (except the United States Government) that paid more than $5,000 in a calendar year for the filer's services during any year of the re

period. 
The filer discloses payments both from employers and from any clients to whom the filer personally provided services. The· filer discloses a source even if the 

made its payment to the filer's employer and not to the filer. The filer does not disclose a client's payment to the filer's employer if the filer did not provide the 

for which the client is paying. 

5. Spouse's Employment Assets & Income and Retirement Accounts 

Part 5 discloses the following: 

• Sources of earned income (excluding honoraria) for the filer's spouse totaling more than $1,000 during the reporting period (e.g., salary, consulting fees, a

partnership share) 

• Sources of honoraria for the filer's spouse greater than $200 during the reporting period 

• Assets related to the filer's spouse's employment, business activities, other income-generating activities that (1) ended the reporting period with a value g

than $1,000 or (2) produced more than $200 in income during the reporting period (e.g., equity in business or partnership, stock options, retirement plan

and their underlying holdings as appropriate, deferred compensation, and intellectual property, such as book deals and patents) 

This section does not include assets or income from United States Government employment or assets that were acquired separately from the filer's spouse's 

employment, or other income-generating activities (e.g., assets purchased through a brokerage account). Note: The type of income is not required if the amou

income is $0 - $200 or if the asset qualifies as an excepted investment fund (ElF}. Amounts of income are not required for a spouse's earned income (excludin

honoraria). 

6. Other Assets and Income 

Part 6 discloses each asset, not already reported, that (1) ended the reporting period with a value greater than $1,000 or (2) produced more than $200 in inves

income during the reporting period. For purposes of the value and income thresholds, the filer aggregates the filer's interests with those of the filer's spouse a

dependent children. 

This section does not include the following types of assets: (1) a personal residence (unless it was rented out during the reporting period); (2) income or retire

benefits associated with United States Government employment (e.g., Thrift Savings Plan); and (3) cash accounts (e.g., checking, savings, money market accou

single financial institution with a value of $5,000 or less (unless more than $200 of income was produced). Additional exceptions apply. Note: The type of incom

required if the amount of income is $0- $200 or if the asset qualifies as an excepted investment fund (ElF). 

7. Transactions 

Part 7 discloses purchases, sales, or exchanges of real property or securities in excess of $1,000 made on behalf of the filer, the filer's spouse or dependent ch

reporting period. 

This section does not include transactions that concern the following: (1) a personal residence, unless rented out; (2) cash accounts (e.g., checking, savings, CD

market accounts) and money market mutual funds; (3) Treasury bills, bonds, and notes; and (4) holdings within a federal Thrift Savings Plan account. Additiona

exceptions apply. 
8. Liabilities 

Part 8 discloses liabilities over $10,000 that the filer, the filer's spouse or dependent child owed at any time during the reporting period. 

This section does not include the following types of liabilities: (1) mortgages on a personal residence, unless rented out (limitations apply for PAS filers); (2) loa

secured by a personal motor vehicle, household furniture, or appliances, unless the loan exceeds the item's purchase price; and (3) revolving charge accounts, 

credit card balances, if the outstanding liability did not exceed $10,000 at the end of the reporting period. Additional exceptions apply. 

9. Gifts and Travel Reimbursements 

This section discloses: 

• Gifts totaling more than $375 that the filer, the filer's spouse, and dependent children received from any one source during the reporting period. 

• Travel reimbursements totaling more than $375 that the filer, the filer's spouse, and dependent children received from any one source during the reportin

For purposes of this section, the filer need not aggregate any gift or travel reimbursement with a value of $150 or less. Regardless of the value, this section do

include the following items: (1) anything received from relatives; (2) anything received from the United States Government or from the District of Columbia, sta

local governments; (3) bequests and other forms of inheritance; (4) gifts and travel reimbursements given to the filer's agency in connection with the filer's offi

(5) gifts of hospitality (food, lodging, entertainment) at the donor's residence or personal premises; and (6) anything received by the filer's spouse or dependen

totally independent of their relationship to the filer. Additional exceptions apply. 
Privacy Act Statement 

Title I of the Ethics in Government Act of 1978, as amended (the Act), 5 U.S.C. app. § 101 et seq., as amended by the Stop Trading on Congressional Knowledge 

2012 (Pub. L. 112-1 OS) (STOCK Act), and S C.F.R. Part 2634 of the U. S. Office of Government Ethics regulations require the reporting of this information. The p

of the information on this report is for review by Government officials to determine compliance with applicable Federal laws and regulations. This report may 

disclosed upon request to any requesting person in accordance with sections 1 OS and 402(b)(1) of the Act or as otherwise authorized by law. You may inspect 

applications for public access of your own form upon request. Additional disclosures of the information on this report may be made: (1) to any requesting per

subject to the limitation contained in section 208(d)(1) of title 18, any determination granting an exemption pursuant to sections 208(b)(1) and 208(b)(3) of title 

a Federal. State, or local law enforcement agency if the disclosing agency becomes aware of violations or potential violations of law or regulation; (3) to anothe

agency, court or party in a court or Federal administrative proceeding when the Government is a party or in order to comply with a judge-issued subpoena; (4

source when necessary to obtain information relevant to a conflict of interest investigation or determination; (5) to the National Archives and Records Adminis

the General Services Administration in records management inspections; (6) to the Office of Management and Budget during legislative coordination on priva

legislation; (7) to the Department of justice or in certain legal proceedings when the disclosing agency, an employee of the disclosing agency, or the United Sta

party to litigation or has an interest in the litigation and the use of such records is deemed relevant and necessary to the litigation; (8) to reviewing officials in 

office, department or agency when an employee transfers or is detailed from one covered position to another; (9) to a Member of Congress or a congressiona

response to an inquiry made on behalf of an individual who is the subject of the record; (1 0) to contractors and other non-Government employees working on 

contract, service or assignment for the Federal Government when necessary to accomplish a function related to an OGE Government-wide system of records; 

on the OGE Website and to any person, department or agency, any written ethics agreement filed with OGE by an individual nominated by the President to a 

requiring Senate confirmation. See also the OGE/GOVT-1 executive branch-wide Privacy Act system of records. 

Public Burden Information 

This collection of information is estimated to take an average of three hours per response, including time for reviewing the instructions, gathering the data ne

completing the form. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing 

burden, to the Program Counsel, U.S. Office of Government Ethics (OGE), Suite 500, 1201 New York Avenue, NW., Washington, DC 20005-3917. 

Pursuant to the Paperwork Reduction Act, as amended, an agency may not conduct or sponsor, and no person is required to respond to, a collection of inform

unless it displays a currently valid OMB control number (that number, 3209-0001, is displayed here and at the top of the f1rst page of this OGE Form 278e). 
52 

May 3, 2017 

Mr. Daniel Davis, Esq. 

General Counsel and Designated Agency Ethics Official 

Office of the General Counsel 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, N.W. 

Washington, D.C. 20581 

Dear Mr. Davis: 

The purpose of this letter is to describe the steps that I will take to avoid any actual or 

apparent conflict of interest in the event that I am confirmed for the position of Chairman and 

Commissioner for the Commodity Futures Trading Commission ("CFTC"). 

As required by 18 U.S.C. § 208(a), I will not participate personally and substantially in 

any particular matter in which I know that I have a financial interest directly and predictably 

affected by the matter, or in which I know that a person whose interests are imputed to me has a 

financial interest directly and predictably affected by the matter, unless I first obtain a written 

waiver, pursuant to 18 U.S.C. § 208(b)(l), or qualifY for a regulatory exemption, pursuant to 18 

U.S.C. § 208(b )(2). I understand that the interests of the following persons are imputed to me: 

any spouse or minor child of mine; any general partner of a partnership in which I am a limited 

or general partner; any organization in which I serve as officer, director, trustee, general partner 

or employee; and any person or organization with which I am negotiating or have an 

arrangement concerning prospective employment. 

I retain a vested beneficial interest in the Estate of a late Family Member and have 

disclosed the assets of this estate on my OGE Fonn 278e Public Financial Disclosure Report. In 

April2017, I resigned from my position as the executor of this estate. I will not participate 

personally and substantially in any particular matter that has a direct and predictable effect on the 

financial interests of the Estate of a late Family Member, unless I first obtain a written waiver, 

pursuant to 18 U.S.C. § 208(b)(l), or qualify for a regulatory exemption; pursuant to 18 U.S.C. § 

208(b )(2). For a period of one year after my resignation as executor of the Estate of a late 

Family Member, I will not participate personally and substantially in any particular matter 

involving specific parties in which the Estate of a late Family Member is a party or represents a 

party, unless I am first authorized to participate, pursuant to 5 C.F.R. § 2635.502(d). 

I also retain a vested beneficial interest in the holdings of the 2014 Family Trust, 

including vested beneficial interests in 181 South Woodland, LLC and Sora Montana, LLC, two 

limited liability corporations held in the 2014 Family Trust, and have disclosed the assets on my 

OGE Fonn 278e Public Financial Disclosure Report. In April2017, I resigned from my position 

as a trustee of the 2014 Family Trust, as the Managing Member of Sora Montana, LLC, and as 

the Managing Member of 181 South Woodland, LLC. l will not participate personally and 

substantially in any particular matter that has a direct and predictable effect on the financial 

interests of the 2014 Family Trust, Sora Montana, LLC, and/or 181 South Woodland, LLC, 
53 

unless I first obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(l), or qualif'y for a 

regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2). For a period of one year after my 

resignation as trustee of the 2014 Family Trust, Managing Member of Sora Montana, LLC, and 

Managing Member of 181 South Woodland, I will not participate personally and substantially in 

any particular matter involving specific parties in which any of these entities is a party or 

represents a party, unless I am first authorized to participate, pursuant to 5 C.F.R. § 2635.502(d). 

In Aptil 2017, I resigned as the trustee of the 1995 Irrevocable Family Trust. For a 

period of one year after my resignation as trustee of the 1995 Irrevocable Family Trust, I will not 

participate personally and substantially in any particular matter involving specific parties in 

which the 1995 Irrevocable Family Trust is a party or represents a party, unless I am first 

authorized to participate, pursuant to 5 C.F.R. § 2635.502(d). 

I understand that, if I am confirmed as Chairman and Commissioner of the CFTC, I must 

comply with the requirements of7 U.S.C. § 2(a)(8), 7 U.S.C. § 13(c), 7 U.S.C. § 13(d), and the 

CFTC's supplemental ethics regulations. 

If I have a managed account or otherwise use the services of an investment professional 

during my appointment, I will ensure that the account manager or investment professional 

obtains my prior approval on a case-by-case basis for the purchase of any assets other than cash, 

cash equivalents, investment funds that qualif'y for the exemption at 5 C.F.R. § 2640.201(a), 

obligations of the United States, or municipal bonds. 

I will meet in person with you during the first week of my service in the position of 

Chainnan in order to complete the initial ethics briefing required under 5 C.F.R. § 2638.305. 

Within 90 days of my confinnation, I will document my compliance with this ethics agreement 

by notifying you in writing when I have completed the steps described in this ethics agreement. 

I understand that as an appointee I will be required to sign the Ethics Pledge (Exec. Order 

no. 13770) and that I will be bound by the requirements and restrictions therein in addition to the 

commitments I have made in this ethics agreement. 

Finally, I have been advised that this ethics agreement will be posted publicly, consistent 

with 5 U.S.C. § 552, on the website of the U.S. Office of Government Ethics with ethics 

agreements of other Presidential nominees who file public financial disclosure reports. 
54 

UNITED STATES OFFICE OF 

GOVERNMENT ETHICS 

* -----------------------------------------

The Honorable Pat Roberts 

Chainnan 

Committee on Agriculture, Nutrition, 

and Forestly 

United States Senate 

V.lashington, DC 20510 

Dear Mr. Chairman: 

May 17,2017 

In accordance with the Ethics in Government Act of 1978, I enclose a copy of tl1e 

financial disclosure report filed by J. Christopher Giancarlo. who has been nominated by 

President Trump for the positions of Commissioner and Chairman, Commodity Futures 

Trading Commission. 

\Ve have reviewed the report and have obtained advice from the agency concerning any 

possible conflict in light of its functions and the nominee's proposed duties. Also enclosed is an 

ethics agreement outlining the actions that the nominee will undertake to avoid conflicts of 

interest. Unless a date fOr compliance is indicated in the ethics agreement, the nominee must 

fully comply withtn three months of contitmation with any action specified in the ethics 

agreement. 

Based thereon. we believe that this nominee is in compliance with applicable 1a\vs and 

regulations goveming conflicts of interest. 

Enclosures 

Sincerely, 

WALTER 

SHAUB 

Walter M, Shaub, Jr, 

Director 

1201 NE\N YORK AVE NW·SUITE SOO·WASHIJ'\GTON DC•20005 * * * * 
55 

U.S. Commodity Futures Trading Commission Three Lafayette Centre. 1155 21st Street, NW, Washington. DC 20581 

.1. Chri~h)pher Giancarl\' 

:\t"tln~ {"h.mm.ul 

Th~ llonorablc Pat Robats 

Chairman 

June 19.2017 

( 'ommittcc on Agriculture. Nutrition. and Forestry 

United States Senate 

Washingh\11. DC ~0510 

The Honorable Debbie Stabenow 

Ranking :>.·!ember 

( 'ommittcc on Agri.:ulturc. Nutrition. ami Forestry 

llnitcd States Senate 

Washington, DC 20510 

Dear Chainnan Roberts and Ranking Member Stabenow: 

t.:!02! ~I ~-50.;0 

J('( iJ.Ulclrlo a CFTC.~\)\ 

:\s discussed and agr.:ed to. the intonnation below and attadwd clarifies and updates responses 

to my Core Questionnaire submitted on :vlay 24. 1017. 

Included in the attached documents arc updates to the ft>llowing qut:stions: 

#3 (A) Empi0)1llcnt: !.is/ all o(your cmplormcnl aclil'ilics. including unemploymcnl and selfemployment. fl!hc employmenT actil'ity li'OS mi/it(tl:r duty. list separate cmph~rmcnt actirity 

periods to shmr CH1'!t change f~f militm:r dUly station /)o not list employment ht:/orc your /Rth 

hntlulay uulcss to proddc a minimum t~/ /1ru years t~{ employment histm:r. Included in the 

attached list of employment activities is a reference to governnwnt employment with the 

Commodity Futures Trading C'ommissi<>n. 

i:(, (C'l Political Acti\·ity: !tcmi;c all indiridualpolilical colllrihutiom o(S:!I!II or more lha/ rou 

lwn· made in the past/ire ,n·w·s w any indil'idual. campaign m:t:alli=ation. political party. 

political action commifln.', or similar entity. /'lease li:a ca<·h indil'idual conlrihution and nott!tt' 

Into/ amount cmllrihtt~t·d to the person or cwi~r during the year. lnduckd in the atta...:hcd list of 

contributions is a donation ofS250. made on II '8/1013. to Conaway f(>r Congn:ss. 
56 

" 7 Puhlio:ations: /Jit!hc liii<'S, publishers and dates of books. arliclcs. rcpor/s or OIIIL'r 

puh/isltcd materials !har rou haw IIFilfcn, inclllilinJ; a/'/ ides puhlishcd Oil/he lmemc/. Anadwd 

is a list of publications found on th..: internet at: 

llU.p: ·," \\'\\' .o:JkJ;<.>.':·.AI_1!.>_ttL~.:<>tnntissi• HJ£rs/J(_:hrisl• >ph.:rC~i;mcari<L indt;~Jll.!!l· 

If you han: further qucsti<>ns. pkasc dt> not h.:sitato: In o:onta.:t ( 'harlic: Thornhlll. my Din:cll>r of 

Legislati\·c Affairs alctllornt<~n~cn~,·.go~. 
57 

3. Employment 

(A) List all of your employment activities, including unemployment and self-employment. 

If the employment activity was military duty, list separate employment activity periods to 

show each change of military duty station. Do not list employment before ~·our 18th 

birthday unless to provide a minimum of two years of employment history. 

~~ ·--·1\·p~ ~;[ Emplovm~:~~---,. ~--

(ActiYc :\1ilitary Duty Slation. 

Nati(mal Guani/Rc:\crvc. 

l}SI'J IS Cmnmls.sinot--d (\1!-p:<. 

! Oth-..,- h.1h.:ml cmpln~1JH.:nt. Naml' of Your ;\lost Rocent i Location 

lli!.!£ 

Uatc 

Emphl\'ment 

~ 

State ( im·crnmcnl 1 ':mlM j Emplovt•r/ 

h:d;.·r.ll Lmplnymcn!). Self· ~ Assignt•d l>ut\· 

cnlplt~.\lllL'lll, h:dt:ral Cimlractor, 

l1n<:mp1t)YIIIL'llt, 

t\\Jil~ 

ll ~ 

Gm·cmmcnt Emplti')'IHI."nl 

tCity and 

State 

only) 

Emplo\'lnent 

Rcgma 

(month vc.1f) 

(check t;o\ i r 

C'-timatc) 

(nwnlh }Car) 

(chL"ck hu\ if 

c:-tim;th.:) 

tchcck 

··pn. .. "!-.imC hox 

,r~•m 

cmplt1ycd) {t.·~dtu~~tf! ~~1/~~~Jllll)·n~cnl). __ l _____ ~-

(lon~rnmt.·nt Employnl<.'l\1 Comnwdit:""'lc-' ,-,,,-,-.,-,-f-:-_,_-c:cti-ng-· ----'-;\;-:\.-~t:-.""'h-,.ir-,h-,t+1 .,,,::-.,c: 1;1=,,...,,:::-,.,-;,,:;,,t-:-,-l-;rc:,.:c,.,c: .•,-, ----

Chairman i on. IJ(' 

0

1 i 

i 

[ (;i-~~-.~:nuHent -(~~~~~))oyment 

I 

I 

Tradin!! (·~~mmi.,.~ion 

~-·~:;;U;JOdily ruturcs 

' I rading ( \1mmis~lon 

( \unmis~inner 1· \\'ashingt -,;;;;;: "'· iiili' ___ .. 1.1·"'"'"' ''': iiili-j 

Oil. tJC ! l 
58 

Q.,_ Political Activity 

(C) Itemize all individual political contributions ofS200 or more that you have made in the 

past lhc ~·ears to an~· individual, campaign organization. political par~·, political action 

committee, or similar entity. l'lcasc list cnch individual contribution and not the total 

amount contributed to the Jlcrson or· entity during the year. 

:\mount Yenr of Contribution 

! $250 
59 

?.., Publications 

List the titles, publishers and dates of hooks, articles, reports or other published matc1·ials 

that you han~ written, including articles published on the Internet. 

i Tillo 

I· (:onun:=n:r 

i J. ( "hristoplll'f 

Giancarlo 

i 

1-···--···· 

I 

W\\W 1.:!1c.gov·Abuu1 

·----····· .... 

Cnnunissioners 

l'nblisht~~----·· JChri:.-;tophcr(fi;uu.:arlo·indcx.htm ] 

! August 

;~ 2013 

!\lay ~3. :w 17 

, of fChri~l\l()ill..·r (fiancarlo Acling·Chairman. C(lll~nodity --.. ~. lunc R, 2017 

j Futures.: 'I n.tding. (·01 __ '_'_mis_s.ltm. he fore tin: ~LS. I h.msc of Rcpn:s~:···matl\·e~ · ConmHtlt't' on Appwpriat!Pn~ Suhcommllh:~· on Agrirultun.:. Rural 

: lkn:lPpnli."Jl! ami Rdatt·d A!!t'ltci~:s 

, · .. \ddr~:-:-·z,rcF 1'(~·:~\:titlg -('!,a·1~man J. (;l;rislnph~[(ii:~;;:.:;;J;, i,~j(~~-[1;~ ~cw ) :.ta~:t-f ~OJ·:, 

I Y0rk Fin I e..:h lnno\·ation I ah 

Remarks ol=j\~ting C'hairm:~;; J. Christopher Giancarlo hdl:;~c International 

i Swaps and Dcrh·iitin.·:-; A"S\lCI~Hion J2nd !\nnu.al i\kt:ting, Lt~h(ln. Portu!!al 

I May 10.2017 

·-·- 'i{~~~k; p·f· :\cti·;~g~C:-·1\;urman J ('hri~tl~[~her ( ii~mc;rf1) ht.:l(lr~-~h·~ 'ilill .. _._.-._ . ~Jar~h :w. 2017 

Annual Capnall\larkci Summll: Finandng Amcril'an Bu~mcs'\, lJS Chambt:r 1 j 

i ofCommcrcc _L__ I ~s of Acting Chairnl~~;~I-Chri!-ltopt;·~f(J~ancarlo bd(~~c~lilC.42nd ··- --- l March t5:-~Tlff-. Annual Intr:mational futun.·s Industry Conft.•rcncc in Bo.:~1 Raton. FL · 

. "~; Stah.:me;~, ~-,{_{·fK:\Ct·-.·i,-i·g· (-.h •. ·,i;;nan J .. ( 1{;-~:-; .. t.t;j;.}~;-(;-;~·.;·1~.-.".-,),l ·ftmc:eming ·---

StalfNn~AI.'tlntl Rclkffor Man.·h I. 20li lmpkmt.:nlallon ofVmiution 

!'vlarg.in nn \Jndcan:d Swnp~ 

-

1 Kt:y~~lh: .. \·J~f~-~;; ofCI:; f{' ('onlmiss-i~t;" .. r J. ('hn~tl}Pht:r (i;;;;;;;~r;~;~:·" 

' SEFCO'> \'II 

-l'chmary I f.' .... _.., 

~!117 ·-

January IN. 

' ~017 

~ .S'Wtcn};;;l ofc"-nmmis.-;.ionct < 'hris Glancarltl r~garding th~ R'Csignatinn(i~~- ·--~~, January 3. ~0 17 

I Chairman Tim Massad 

l 

-Ke:1u~ll.' :\dtlrc~~ tlf(·.,:~J C Cnmmis:;imwr J Chri.-.tnplK·r (iiam:;1rh) ht:fnrl· ----<-D~cc~cl~;.;·9, 

s;;;;·;:.:·lllt.'IH ll(l 'pt~;;;;r ...... ,(llll'l ·:,·. ( ·j~~~:;rlll'f ( i I<UK<I~i~~ on ,·1n lpt ISl'"J Rcl~ Ttlr I Capital Requirement.' pfSwap Dealer> ami ~!ajnr SwapParlicipant' 

! Statemc;lt ofDissent b-y Conu.1lissioncr J. Christ-~Ph~r <iia;l~;~rfo Rega-~di;{g 

Suppltmt..'ntal ~otlce of Proposed Rulcmaking on Regulation Auwmatcd 

Trading 

-; Statt.:mc.:nt nfC~m-unissinnL'r .L Christopl11.:r <ia~;)c~trlP ~.m·thc Sl1uthwc~t 

~ Pom .. ·r Ptlol hnal Orda ;md till' Amc.:nJ~:d H ro¥1SO On.kr 

lkccmht.•J ~. 

l

l 2016 

, NoYembcr 

cOJ6 

Octoh~!r JS. 

~016 
60 

I 

i 

Stah.'llh.:nl of C~•mml~:-.htJh,;r J. Chri..,IPphcr ( Ji:tnt·adt..' Rt'garding tl11.· ( k·tohL·r ( h.'h•ht·r ll. 

7. 2016 J b ... h Cr~1~h mtht: Bn11~h p,,und 2lll6 , 

\-s-ta_t_e_m~nl ~~-r_C_o_m-mis~io-nc_T_J. (11-ri-st-o-pl-tc_r_(_li~tnca-rl_o_o_n-thc fl_ro_p_o-sc:rJ·~<u-:k-· ---,:-o=-cl-cllh~+~-~-l-. -~·~ : on Cro~s~Bordcr Applil·ation vC the Rcgistn1tion Threshnlds and Extcmal 1016 . 

Bu~inl'.;s CPnduct StanJard~ Applicahk to s,,·ar lkakr:-. atltl ~fa;nr S''"P 

Parti~:::ipanb -~- __ ··------ --------~ __ _ __ Commissinw:r l Chnstnphcr Ciiancarln Releases I ;ttcst Potkn~t: ~1st 

Century l\1arkl.:'ts :--.lt•t..•\1 2 l-.1 ('t:mury Rcgulatit'll 

October), 

.:!Olfl 

-i

1 

Addrc~~ -~)f: CFTC-(~~-1-mi:-.sioncr .1. t:llrist~·pJ;~r- Gt;mcarllt-ln li;~ Am~~i-~,~~Pl~mher::! 1. 

Entcrpnst• [n.stJtutc :w 16 

i Statcm~·-nt \,{('nm~mj,,H·;~fJm~--~~;f;J;~; (fi<IIIl'i-;-rltt Rl'~arding Systt·m 

SafL."guard~ ·1 t:~tinr Rcqmn .. ·mcm' fnr lknvall\'l'' Clt:aring ( lrganizatwn..; 20lh 

i '1 S1-8K-Ilwnt (~J~Conunis ... iPncr T-chn~lopher Giant:arlt;-;;n th.: t\-lmparal;ility --isc·J;h:mhcr K. 

Dett!rmination for Jap<m: ~fargln lh:quirc-mt:nl~ for Unclc~lrL."d Swaps for · ' ~0 16 

1 Swap Dt:alcrs and ~f<tJ~'r Swap Participants 

~~ Statemcnl-of Commi~~-~~'ner J, ( 1l.ristophcr Gl:lilcarlo Regardl"ng~--~­

lmplcnH.'tllation DaH..' for :Vfargtn for Uncleared Swaps 

. s;;·l .. ·nll'lll {lf(~,mn{i,,H"~~~~'i,-(·hn~l~~phL'r (i~<uKari<1 S~v;1p lk·;dcr D~ Au1!u~t , 

I 

, I 

~1inunis 1:.\l't:ption I-' mal Rcp,,n 20th i 

____ , ---·------· ____ ,,,,_., __ 1 - ... _J ! Statcm.:nt ~-,fCommissJoiH::r J. Christopher Gi~uu.:arlo Regarding Final Aug11st 4. 2016 i 

' RcspDn~!..' to Distrk:t Court Rt:mand Order in S\.~cunllt~ fntlustry and 

I

, Finan.l.'lal :XIarkcts_ Association. t'l al. \',United State~ C.\1mmodity Futures 

'[mdi~:g (_'(~~~~mis:u_t~~~ "·-- .. .. "--~---. _ _ ---~· _ --·--'"···-

1 Openmg St~llt.'Illl.:nt of ( ·{lllllllis"iont.·r J. Chri~lophcr Ci1ancarln hcfnrt.• thl..' 

' CJ· I C Staff R~mnth~1blc llil Rr.:gubuon Autonmlt'd I'raJmg 

10.2016 

-~i-s-ta_t_e_m_ent oi·Com~l~isS-io-ne_r_.T.C:h~i-st-o-pl-te_r_(_ii<;·n~-~-tr-lo_R_e_·g-,a-;d:i:,-lg-----:-] !\,1a-y-26, 2016 "1 

Suppk·m!..'ntal Propo~al on Po~ition Limits tOr lkriYath·cs: CL·rtain 

. _l~xe!~l}ltHlll~ and Cil~t!~~~-l~_·c __ 

: Kc}notc Addn:ss (lf ('I· ll' ('ommi:-.:-.IPn.::r J. ( 'hn..,wphcr (itaw:arlo bl'fort• 

! the Amnttan Cotton Shtppcrs Assol'iation Annual Conl\:rnH:-L' 

-·Statcflit·nt -t~f Dis;~nt h)· ('onulli:-.~i~lflcr J. c·ilrl;t;;phcr Gi~;·JlCa~fj~.;{m-(j}L" 

Cros:->-Bordr.:r Apphcatit1!1 of the ~1argin RcLtUir~mcnt:> 

j Kcvnol~ Add;;:~, <•fl';>nillii,:'~i;;;;cr T'c"hr;;:!;~pirct-;c-:~--"·;--··;--;-";-----t-:-:·-.. -:~:;:-;-;-l 

' \J;rkn (iwup. 201£, :\nnual Cu!-lt.lUK'f Conlt:tL'Ih.T :\~w Y{lth 

-------~---;,---- ·---:----,.--;;:-,----,- ___ , 

Statl'!lll..'nt nfCTTC Commi:-;~!Oill.'r .1. Chri~hJph~r Giancarlo Regarding thl' 

Final Ruk <ln Anll.'ndmcnts to tlu..·l>cfinitinns of"Portf()ho Rccnnciliatwn" 

, tmd "\1att.Tial Tt•rm-.'' ll1r Purpt,st::-. ofS\.\'HP Pt~rtflllio Rl·t:mll'iliation 

· St;t;;;~;nt ;)f:G1ml;ll"~"lJ~~r J~fh;f~t~ph!..'r {i\-anCarhi -ht~i~\r~:ih~~1;-;h•t 

:\J\ b.ory Cnmm!lk't.' \kt.•Hng 
61 

J KcynotL' ~\ililn::-.:-. ofCI·;·i\.' CotlHilis~~~~~ncr J. Chrislupht•f' (il;ulca;ln lkfi.m.: 

th1..· ( ·aw ln!>-tlluli.:, ( 'rypto.:unetK~" lh1..' PPhl·y Chalkngl'"- of a lk('L'IHrah?cJ 

R~..·n,Jutlon 

~ -~· Sp-~~-i;~~A.~~;.,~·oi:CFTC_<.:~,r~n;i~~~~~~r J. {.lui:-toPT;~;·(~Iancarlo ~~~-t(,~c the 

lkpo~11ory I ru~t & C'lcurmg (_ orporatmn ::o1 r1 Blockcham Symposnun 

-~~i Sta!L'Hll.'nt of(T I(' Commiv .. iollt:r 1. Chn:-.tophcr {itath.';lrln-Comp;u:ah!lll~ 

Apnl 12. 20J(, 

D~..·ll.'nmn~Hitta 1\Jr th.: Eurl'jll'<lll Union: Du.tlly-Rcgls:tcl~o.'d Dl'fi\·aun·~ I ___ J_t'k<n ing_•_O_r_g<~~~~t.athl!~~!l~lll ( 't:nt:~_c_·,_,u_ntct113_u_l_t~-'-~ _ -·--·----"----L"- ------· ! KL"ytwtt: Addn:s~ ofCFTC Commi~siom.•r J. Clmstopha (iiancarlo lwfnre i !'vlan.:h 1-t 2016 

th~o.· ~allonal Grain and Fe;;:-d :\v .. oclati0n Annual Confcn:ncc 

-·------ : Stilh.'lll~IH ofCnmmlssioner 1. Christopher (ii;mcarlo. Spon;tlf oft!;\: CFTC Ma~d~-lf2())"(; 

; hll.:rgy and Fndn1nmcntal rvtatkct:-; Ad\'isnry Commiu~.·c 

Stah.•mcnt ofCnnunis~l~t·r J. Ch~~~;pher (liaw:arlo nn Fun1pc:u\ timon 

Dt·tcnninatinn of l J,S. (\·ntnd ( 'ountcrpany ( 'lt:aringhousr.: l:qui,·akm:t• 

( 'omnussion.:r J. Christoph~.·r < iian~ arlo Rdt·ascs 

l"r\."ntls faclng 21st Century Financial Mark~ts 

Sta1cn1cn1 of('tlllliJJi..,.sit)fll.'f ,1, ('hri~topht,·r (iianr;trl,l Regarding Full 

1 Rt.'~l..;tratl\111~ \'fSwap I:.\t'l.;Ulhlll Facililit·' 

·j·~"\(;~·~-~·,n;c-·n-t-~.i·(:~-muniS~i~ncr rl~:-hr-i!"-.lo-t;l~-;. (i~;n-c:._<r_k;-l{cgardi;Jg·i:j~,ail{~-~~~~­ ('11 Records of ( ·ummodity lnll'n:st and Rdatt.•d Cash or Forward 

i ·1 ran.,actions 

! 

2016 

.f.<1nuary 

~01(1 

'ilccl·mi;crlx~·-· 

2015 

----........ -.. -----;c-· 0f('nm-,lli~~ioner J. t'hristopht•r (i~mcark;Rq:~m_hng Fin:1l ~~-l;j~:~:cmhcr lh. --~· 

on ~largm ReqUircmcnls lin lindc::~d-Swal'> ~--- -~~ __ -~~- .. _.J .. 201:\ ···-~···~ ... 

Sta!t.'I1R'Ilt ofCommi.;sh'nl'r l Chn~wphl-"r (itant'arlo Rt.•!!;_m.hng Pwpl1:-.1 . .'d ! Dc\,'t.'lllher 16. 

Ruh: llll Sy~tt'fll ~al~·guard:-. I t:..,lmg Requln:mcnb ~OJ 5 1----·- --k,,;~;;,-cn_l_o_f_Co~~~~lll;-is-si-on-,-.r T (:1-m-.s-lo-p-hc-·r-(;i;;,-,c-·a-rl_o_o_n_l~,\-a_c_tm-cr-lt .. ~;-(th-~---! {)~~ember 7. 

I F,\S I Act 201" 

< iuc~t l.cctlln.· (\fConuni~~IOth:r L Chnslnpht•r <tiancarlo, ll;tr\'arJ I <I\\ 

Sdwol, Fidelity (iucst LcclliiL' St.:rics mllntt•rnational hnatKl' 

, Jlcl."t:mhcr 1. i 2015 

----S-t~l-h:mt'nt of('Pmmissi~~~t J. Chriswph\..·r (fl~utt:.arlu Rcgar~fing >.:l'licc ~-,~--~l,\t'mbt:r 2-t. 

I Prnpo:'-t;od Rukmal-.1ng on Rt::gulation Automated Trading 20 I) 
62 

Statement ofC\1nunissioncr J. C'hrisl~lPh~r (i·i~n.:arlo on 11;,,: l·oufthNn::--- ~; (>~i\~hcr 14. 

Action I eth:·r Dt·by fi.1r C ('flam Pal·kagt.· TransactiDlb j ~015 i 

;--Stak·mL·n17,rcPmm~:-.~wtKT .l.Cl·l~:; .... tophcr (flattcarh) tlnlllL· 1:-.suant\.-:-t~-- ~ ·s·~rtt.·mi~r .:!~. 

! ComlitiPnal TmH:wl lllllh:d ;..!o~.·\dwn Rt.•lu.:ffwm Certain ( h\n~r~hip and ! 2015 i 

Contn1l Dala J{~.,·,wnmg Rcquircm~.·nts umkr Part...; 17. IN and 20 ofth~ I 

Commis::-;ion's Rct!ulations 

K-eynote .AJJ.;css" {~-f C.T rc Co~TI~tli-;:~~i·~,;l~r J. Christopher {'iii"~lcarl~ befOre ·s~piclnber 24, -

the 13th Annual i'tm?x ~etwork Chicago 2015 · ~015 

j ____ """ Stah.:ml'nt 11f ( -tllllllll'~lPncr J ( 'hri:-.tl~plwr (i1an~arh' t'H tht.• 

Chang~o.'' hi A_;!grq.!.lflilll Ruh:~ a..; Part 11f tht• CFTC [\1:-.ltt(lll I mut:o:. Rcgim(' , 20 I :'1 

-~~~S-,t-at_e_m_c_;lt (;(( ·<it~\mJs~iOlle(TThfiStol;ll~f -(-ii-m-,c-~n-rl-o ·ft,r lf11..' :\g~~~-t~it-u-ra-1 ~" I' Scpi~"mhcr 22. 1' 

Advis0rV ComnHtll•c rvtcetiiH! 2015 

l - "' l 

"----· ~~~"~""·- Kcynntc--<:\ddrL'..;~ t)fCFTl Cl'mmi~sit~fl~~"f-(~hri~tt)phcr (Jtatlt..:arl(l bt:-fOre 1 Si..·ptcnlhcr lh. 

thL' 7th Annual C~tptwl I mk (!hlbal CommotliliL·s. Enagy & Sluppmg 2015 

hl!'Uill 

. Stat~,;~~nt pf(-ommt-..,-;:~,~;~~-i t;hrishlpl~\.;~-<-i-;~;~;u·lo ~;~~-the Pniptls:l! ,-,,--~~ S-~.j;it•m\;~;-J·5~~ 

; A. mend th~...· llclinitillll of"~fat.:rial TL'm1s'' for Purposes of Swap .. ' ..'". rtfoho 1· 2015_j I RcconciJiatum 

-t'Statemcnt or"f;,;nlnissioner J. Ch~istorhcr Giancarlo. ~~)tic~-of:Pr:;};~ ~.\~Ust 19. i 

Rulemaking on Amt'IHhncnts 10 Swap Dat~1 R~..·\.:ordkt'cpmg and Reporting : 2015 i 

K~tuir:_~~nt~ fnt ( 'k~rcd Sw~1r::__. 

Stalt:fllL'nl nf ( 'nmmi~"JOTll:r J. ( 'hnsltlph~~(i~an('arl\1-llt~-th~..· hlih :\'tl~-:\~ti\'n ·-·~\~;gu~t 13. 

i I l'th:r Ddav tlf St<~ff A,.h i:->on' 1.1-0l) (\\'ashmt.;ti:Hl. f)(') I 2111 :'i 

1 " " - 1 : 

I Slatcmc;;;···~·-~<llH ( 'omm.is~i-;~~;· (iian~·~·rl~) on tile Pas~g- ~~J·t ~-~::-~~fA(: Member .j A·~gu~i-·5. 2015 I : Andre"' Snto (Washington, DC) : 

.Statement 7;f(~'llli1H~~HlfH~r .I (:·hri..;ttlphet:·(i~·ancari(1:"S'i~.,.~fon-t1; ·~)~ngrcs~ --~··::\t;g~,;t4-: :!015 'I 

lh;port nn Cl· I(' Swap:- Tradm~ Ruh:>\: IncomplL'tC :\cth>tl and holgmcntl·d 

i ~tarkcts { \\'otshmgtPn. DC l 

i <:>Pen in~· Stalcnlcnt-~~t· c~lmmis~i~~nn j. f·hfi~t~~Phcr7i 1at11:m fo 

! Second .. Meeting of the crTC's Energy and Environmental tvtarkcts 

Acl\'i:Sory Commith:c (\\'ashington. DC) 

Statem('nt ofCnmmissioncr J. Christoph~r Giancarlo on lh'~ IJ~10 Made 

:\\'ailahk tn rradt.• Pw..:~ss. Roundtabk (\\'a~hingwn. DC) 

StatL'nh.'llluft\mums .... uma J. Chn~tilph.:l Ci1ancarh~ 1111 Crn:-.:-.~HNdl.'f 

, t\largm (\\'a-.hingh,n. DC} 

~=~"--" "_" ________ " Kevnotc AclJn:s..-..; ofCFTC Commi~siona J. Christopher Ciiam.:arlo before 

' thc.Cato Summit nn Fmanda1 Rt:guhuion 

· Stat~m~:Jlt t1l\\mtml~.:;oncr J. -( 'hrt..,tol~l;l.:'r ii~t~-~t;~ln ~~-;ttl~ ~~;~rk~t Risk 

:\d\"ISllfY {'omnuth.·t.· :-.h,.'cting 

2:J Ju1v 1~. 2015 I 
63 

JKl'~l1llll" :\Jdil.';-o.:-. pf('F rc Conl,ll"is!-oiOill'l J. Chn-.,tPpht.'f (ii~mcar!o hl·f(l]\,' 

th.: En .... rgyJh .. h Sum mil l .

1

S.·\ 

-···-Statcmcm of ConumsstPncr 

' Op!ion~ Ruk 

Stali.."lllt:nt ofCotnmi:-..~iont'l l Chnstophcr <iiancarlo on the CtHllllHldity 

httures 'I rmling Comnus..;hm's Recent Step:; to lmpron: its Swaps Trm.ling 

Rl'gulalJon~ 

"!c;ti-;~;~·} .. ~~ft :,Hluni-.s~~~ncr J. Chri~topllcr <iianc;lfln b~~fi~fC~ti1e u-:s~~jf~,~;,t.. 

Committee on :-\griculturL·. Subcommiucc t'n Ct)mmodity Exchange.'":\-. 

En~rgy. and Crt:dH 

!'tatl'ment ofCPmml~"!nfll'f J.-~C'hristophcr (iiancari~) in Supp(\rt of..\dopt;-l;·n· 

, of ,\tnc!H.lnwnh tn tTl(" Rl.'l.!Ulatmn 1.22 ( R•.:!-tidual lnh:n:st Dt.'<Jdlinc !'or 

: Futurc.s Comm1ssiPn M~.-·1l'ha;1ts) 

,. !5P~ning-St:;t~mt.•nt 11f t\;,;;·~~~;ioncr J. (:Jl'ri:-.11Jphcr {;;~~~~Z.~Io ~~~~~~;:.the 

First Mcding oftht.• CFll"s Energy and f'll\'IHIIlmcntal Markets Advisoty 

Committee 

Kr)·notr :\ddn .. •!-is hy ('FTC Commissioner J_ <:llrisi~"'Pher Giancarlo 

('!·'I C (\lllltni~SHtlll.'l' .1. ( ·ft';-j~t .. )phcr (;'t~;-~)-z:~~-h·,·J<l'ie;I"L':--~ S;;ap~lf~,-\f';;~g 

Rule~ \\'hitc Potp~r 

----~1· Keynote Address hy CFTl:·Conunisslonef-T.·t-:ilristophcr Giancarlo. ·- ·· 

Commodity Markt·ts CounciL State of the Industry Conference 

·!- -- ·- ·- - ' -- --------.-~-

1 .>\ddr6:-; hy ( ·F_I ( · ~ ·.,mmls..;Jnt~cr J. ~·hn!->tophl't ( l~>t:lt·arl~~ Bdt~r~: tlll• :\B.-\ 

: Bu,mcss I :m St."..:Hnn. J),;nval!n.:~ & hnun::-. I ;m ( {llllilllltcc \\ mh..'r 

Ope-ning Stakmcnt nfC\'Illmissioncr J. Chn"h1phcr (iwn-.:arlo bdiJrc the 

CFTC Agricultural :\d\ isnry (·ommittcc ~It:\.-'lillg 

L·-----··-·· -·---- ~----~--- ------···· 

1

1 Remark!' ofCFlC Conuui~sion~r J. Christopher <liancarlo hcforc tht..• U.S. 

( 'hamher of ( 'omnK·rrc 

l 

1 Statcllll'll! fn\lll ( .I.HlHlllS!-ollHll.'~--f. ('hri~·~;;J~i~L·r ( ilaJK>ll h1: J{~~~~~-~~i~i~nn~ ~tht.• 

CF l C'!« Swaps ·1 radmg Rule:-. for Gr(;"atcr I· fl~· .. :un·nt:..;;; in the Global 

f:CtlUOnl) 

~ Opening Swtcmcnt 

i Ort·n !\ftcting 

Keynote Addrr:ss t)f' ('I· I(_' ( 'tmunissioncr .1. t 'hrl:-hlpllcr (iian~:arlo at The 

(ilohal hmun for lk·ri\'ntin:s :'vtarh·ts. J5th Aunu;.tl Burgcnstock 

Conference. (icncva, Swl_l<_.c_rlc-a-cnd_--c-c-c-

• i Opening Stah:nll'nt o(C~mmis~ionL"r J. Ch;~-.. ~~)phr:r (i"i;ncarlo. Open 

~tccting on Proposed Rule 011 \fargin Rc4uircmcnts for Cnc1cared Swaps 

_ ,._,_,!nd Final Ru1~_''!: ~·uhty __ Spt.:cial E~..!_~~~~ 

~vLty 13.2015 

i- ----

l

l·chmary 26, 

~015 

January 29. 

! 2015 

January 29. 

. cOI5 

JJmmrv 26. I 2o1s -

l :---;:-:---

! 

2015 

~ -I)CCember 9.·-

! 2014 

I Nn\'L"Illbcr 20. 

2014 

I 

:--.Jp\cmbcr 12. 

~OI..f 

(65) 

QUESTIONS AND ANSWERS 

JUNE 22, 2017 
66 

Senate Committee on Agriculture, Nutrition, & Forestry 

Hearing to consider the nomination of J. Christopher Giancarlo 

to be Chairman of the Commodity Futures Trading Commission 

June22,2017 

Questions for the Record 

Chairman Pat Roberts 

(1) The derivatives market has its origin in agriculture. The earliest futures contracts were 

for agricultural commodities, with their federal regulation beginning under the Grain 

Futures Act of 1922. In the modern era of markets, and especially during these tough 

economic times in agriculture, it is important for producers, and other end-users, to 

manage their risks. Last Congress, I moved a CFTC reauthorization package out of 

this Committee in an effort to address some of the most pressing issues for market 

participants, such as setting an appropriate "de-minimis" level and defining what 

constitutes a "bona fide" hedge. What options are available at the Commission to 

address these issues? 

Response: I am concerned that a drop in the de minimis threshold from $8 billion to $3 

billion would have the effect of causing many non-financial companies to curtail or 

terminate risk-hedging activities with their customers, limiting risk-management options 

for end-users and ultimately consolidating marketplace risk in only a few large swap 

dealers. Furthermore, it appears that the potential drop in the threshold may be already 

having a negative impact on the marketplace and hurting small players who have fewer 

swap counterparties with which to hedge. I will also note that the phase in period for the 

threshold was established by the Commission over five years ago, during a time when the 

available swap data was in its nascent stages. I believe it makes sense to obtain the latest 

and most complete data to inform the best path forward in terms of managing risk to the 

financial system. To that end, I have recently asked the Division of Swap Dealer and 

Intermediary Oversight to gather and analyze new data on the subject and I look forward 

to their findings. 

I am committed to presenting to the full Commission a workable position limits 

rulemaking that balances the public interest in restricting excessive speculation while 

allowing America's farmers, ranchers, energy producers and manufacturers to hedge 

bona fide risks of production costs and volatile commodity prices. Such rule should 

strike an appropriate balance among key levels and standards, such as deliverable supply 
67 

levels and position limits, set by the Commission and those set by exchanges and selfregulatory bodies that is in the best interest of America's agricultural producers upon 

which we all rely. 

(2) Distributed Ledger Technology has been touted as an innovation that might transform 

clearing and settlement, including in particular those processes in the international 

commodities markets. What is the appropriate regulatory role for the CFTC? 

Response: I believe that the CFTC and its fellow U.S. market regulators must 

affirmatively embrace innovation. That means that our rules must "first, do no harm" to 

"blockchain" and other promising FinTech innovations using the same forward-thinking 

approach American regulators took two decades ago in the early days of the 

Internet. Embracing innovation also means regulators must take positive steps to 

promote American innovation, such as hiring innovation-savvy regulatory staff who 

speak the language ofFinTech. It also means regulators must give Fin Tech firms 

"breathing room" to develop, collaborate with them in commercial Fin Tech experiments, 

listen and learn about the rules that need to be adapted to allow for technical advances 

and collaborate with other regulators both here and abroad. 

I have previously spoken about the great promise that distributed ledger or "blockchain" 

technology holds for regulators in meeting their mission to view and analyze accurate 

trading data, oversee healthy markets and mitigate financial and operational risk. It is 

imperative that we open wider our agency doors and regulatory minds to benefit from 

Fin Tech innovation. Regulators must engage in a constant and evolving dialogue with 

innovators precisely because we need to understand the impact they are having on the 

very marketplaces we are charged to supervise. We must partner with them, experiment 

with them, learn from them and innovate alongside them, if we are ever to keep pace with 

the digitization of modem markets and protect their 21st century participants. 

(3) Commercial end users, such as electric companies, rely on commodity derivative 

contracts with embedded optionality to protect themselves and their customers from 

volatile changes in the prices of commodities. However, while the CFTC has acted to 

provide clarity, these contracts that are intended to be physically settled are still 

classified as a swap, which increases uncertainty and regulatory costs. Does the 

Commission have any plans to re-visit its guidance and clarify that stand-alone or 

embedded options that are intended to be physically settled are excluded from the 

defined term "swap"? 
68 

Response: In April2012, pursuant to section 4c (b) of the Commodity Exchange Act 

("CEA"), 1 the Commission issued a final rule to repeal and replace part 32 of its 

regulations concerning commodity options. 2 The Commission undertook this effort to 

address section 721 of the Dodd-Frank Act,3 which, among other things, amended the 

CEA to define the term "swap" to include commodity options.4 There is no distinction in 

the statute between financially- and physically-settled commodity options. 

In response to requests from commenters, the Commission in 2016 amended part 32 such 

that commodity options that are intended to be physically-settled, termed "trade options," 

between two commercial end-users are exempt from all requirements in the CEA and the 

Commission's regulations that are otherwise applicable to swaps, except for certain 

antifraud requirements. 5 

The 20 16 trade options rulemaking was generally intended to permit commercial parties 

to hedge or otherwise enter into commodity option transactions for commercial purposes 

without being subject to the full Dodd-Frank swaps regime. This limited exemption 

(limited in the sense that antifraud requirements still apply) continued the Commission's 

longstanding practice of providing commercial participants in trade options with relief 

from certain requirements that would otherwise apply to commodity options.6 

1 7 U.S.C. § 6c(b) (providing that "[n]o person shall offer to enter into, enter into or confitm the execution of, any 

transaction involving any commodity regulated under this chapter which is of the character of, or is commonly 

known to the trade as an 'option' ... contrary to any rule, regulation, or order of the Commission prohibiting any 

such transaction or allowing any such transaction under such terms and conditions as the Commission shall 

prescribe"). 

2 See Commodity Options, 77 FR 25320 (Apr. 27, 2012) ("Commodity Options Release"). 

3 Public Law 111-203, 124 Stat. 1376 (2010). 

4 See 7 U.S.C. § la(47)(A)(i) (defining "swap" to include "[an] option of any kind that is for the purchase or sale, or 

based on the value, of 1 or more ... commodities ... "); 7 U.S.C. § 1a(47)(B)(i) (excluding options on futures from 

the definition of"swap"); 7 U.S.C. § la(36) (defining an "option" as "an agreement, contract, or transaction that is 

of the character of, or is commonly known to the trade as, an 'option' ... "). The Commission defines "commodity 

option" or "commodity option transaction" as "any transaction or agreement in interstate commerce which is or is 

held out to be of the character of, or is couunonly known to the trade as, an 'option,' 'privilege,' 'indemnity,' 'bid,' 

'offer,' 'call,' 'put,' 'advance guaranty' or 'decline guaranty' and which is subject to regulation under the Act and 

these regulations." See 17 C.F.R. § 1.3(hh). 

5 See 17 CFR 32.3; see also Trade Options, 81 FR 14966 (Mar. 21, 2016). 6 See Regulation and Fraud in Connection with Commodity and Commodity Option Transactions, 41 FR 51808 

(Nov. 24, 1976) (adopting an exemption from the general requirement that commodity options be traded onexchange for commodity option transaction for certain transactions involving commercial parties); Suspension of the 

Offer and Sale of Commodity Options, 43 FR 16153, 16155 (Apr. 17, 1978) (adopting a rule suspending all trading 

in commodity options other than such exempt trade options); Trade Options on the Enumerated Agricultural 

Commodities, 63 FR 18821 (Apr. 16, 1998) (authorizing the off-exchange trading of trade options in agricultural 

commodities). 
69 

With respect to embedded volumetric optionality, in the joint rulemaking with the 

Securities and Exchange Commission further defining the term swap, the CFTC adopted 

an interpretation that identifies when an agreement, contract, or transaction would fall 

within the forward contract exclusion from the "swap" definition in the CEA even though 

it contains embedded volumetric optionality. In providing its interpretation, the CFTC 

was guided by, and sought to reconcile, agency precedent regarding forward contracts 

containing embedded options with the statutory definition of"swap."7 

In 2015, the CFTC adopted a clarification of its interpretation. In this clarification, the 

CFTC noted that embedded volumetric optionality offers commercial parties the 

flexibility to vary the amount of the nonfinancial commodity delivered during the life of 

the contract in response to uncertainty in the demand for or supply of the nonfmancial 

commodity. Accordingly, the CFTC focused its interpretation on whether (among other 

factors) the embedded volumetric optionality is primarily intended, at the time that the 

parties enter into the agreement, contract, or transaction, to address physical factors or 

regulatory requirements that reasonably influence demand for, or supply of, the 

nonfinancial commodity. 8 

(4) I am concerned about protecting customer funds - the money our farmer co-ops often 

put up in my home state of Kansas while managing risk. What are your views about 

providing clearinghouses with the option to deposit these margin funds at the Federal 

Reserve, as is currently the practice for those clearinghouses deemed to be systemically 

important? Is this a policy which mitigates overall systemic risk? 

Response: Offering clearinghouses the option to protect their customer funds in Federal 

Reserve accounts is an important tool in mitigating systemic risk. These funds- which 

represent the collateral of agricultural, energy, and other market participants using futures 

and swaps to lay off risk- should have the option of being safeguarded at the Fed like 

other reserves rather than left to be levered up in the private banking system. Such 

safeguarding of funds reduces the likelihood of a run at a clearinghouse during a shock to 

the financial system. I believe that the criterion for such Fed account access should be 

registration with the CFTC as a DCO, rather than designation by FSOC. 

7 See Further Definition of "Swap," "Security-Based Swap.'" and "Security-Based Swap Agreement"; Mixed 

Swaps; Security-Based Swap Agreement Recordkeeping, 77 FR 48207, 48236-42 & n. 335 (Aug. 13, 2012). 

8 See Forward Contracts with Embedded Volumetric Optionality, 80 FR 28239,28241 (May 18, 2015). 
70 

Senator Stabenow 

(18) I look forward to having a close working relationship with you, if you are 

confirmed. The work in this very important area is truly a bipartisan effort. If 

confirmed, do you agree without reservation to: 

a. Reply promptly to any request for information from me? YES 

b. Reply promptly to any request from other members ofthis Committee and other 

Senators? YES 

c. Respond to my requests for data and technical assistance in drafting legislation? 

YES 

d. Notify me or my staff in advance of making public any major changes CFTC 

decides to make or major decisions CFTC makes during your tenure? YES 

e. Provide to this Committee any reports provided by CFTC to the Senate 

Appropriations Committee or the Financial Services and General Government 

Subcommittee? YES 

(19) During your nomination hearing you committed to promulgating a final position 

limits rule without further delay. I thank you for this commitment. This rule is long 

overdue and is an important part of Wall Street Reform. 

a. Will you make finalizing the position limits rule a priority? YES 

b. What is your timeline for promulgating this final rule? Please provide me with a 

specific deadline by which CFTC will adopt the final rule. 

Response: It is my intention to direct the CFTC's Division of Market Oversight to 

complete as soon as possible its review of the many comments received on the current 

position limits proposal. I will also direct the staff to present recommendations for 

appropriate amendments, if any, to the earlier proposal. I will then instruct the staff to 

incorporate any such amendments into draft rules that thereupon will be presented to the 

full Commission for their review and consideration for final adoption. Any final rule will 

require the affirmative vote of the Commission. 
71 

c. Will you commit to providing Senate Agriculture, Nutrition, and Forestry 

Committee staff with quarterly briefings on the status of adopting a final rule 

until the position limits rule is adopted? YES. 

d. Will you commit to having the CFTC implement its own speculative limits and 

not simply outsourcing limits solely to exchanges and other self-regulatory 

organizations? 

Response: I am committed to presenting to the full Commission a workable position 

limits rulemaking that balances the public interest in restricting excessive speculation 

with allowing America's farmers, ranchers, energy producers and manufacturers to hedge 

bona fide risks of production costs and volatile commodity prices. Such rule should 

strike an appropriate balance among key levels and standards, such as deliverable supply 

levels and position limits, set by the Commission and those set by exchanges and selfregulatory bodies that is in the best interest of America's agricultural producers upon 

which we all rely. 

(20) One ofthe CFTC's most important oversight tools is market surveillance. As Acting 

Chairman, you created a Chief Market Intelligence Officer, moving market 

surveillance from the division of market oversight into the division of 

enforcement. Will this change have an adverse effect on the CFTC's ability to monitor 

systemic risk? What was your motivation in making this change? 

Response: Elements of the market surveillance branch, currently housed in the 

Division of Market Oversight (DMO), will move to the Division of Enforcement 

(DOE). This realignment will strengthen our mission to identif'y and prosecute 

violations of law and regulation, such as spoofing, manipulation and fraud. It will 

foster increased efficiencies through knowledge-sharing and cross-training under 

unified leadership; thus benefitting the Commission's surveillance mission and 

enforcement responsibilities. 

Other elements will be reorganized within DMO as a new market intelligence branch, 

the function of which is to understand, analyze and communicate current and 

emerging derivatives market dynamics, developments and trends- such as the impact 

of new technologies and trading methodologies. 

By separating the two units -surveillance within DOE and market intelligence within 

DMO- we will sharpen our surveillance capability while increasing our knowledge of 

evolving market structures and practices to inform sound policymaking at the 

Commission and promote efficient and sound markets. The overall goal is to make the 

CFTC more adept in each of the two disciplines. 
72 

The Chief Market Intelligence Officer (CMIO) will report directly to the Chairman. 

The CMIO will engage with industry participants, other regulators and the new 

Market Intelligence Unit. The CMlO will help activate our agency's latent capability 

for market intelligence, giving us better insight into the needs of participants in the 

futures and swaps we oversee. 

The CMlO will also be tasked with helping the public understand risk transfer markets 

and why they are so important to prosperity. Too many people, including investors, 

don't know what we do or why we do it- both from a marketplace and regulatory 

perspective. Greater understanding of why the risk transfer markets are vital to 

economic growth will enable the CFTC to enact policy reforms. 

(21) Your 2015 white paper on SEF reform called for changes to the existing framework 

arguing a less prescriptive model would encourage more transparent trading. More 

than two years since you released the paper, do you believe the trading of swaps on 

SEFs still suffers from the same issues you highlighted in 2015? YES 

(22) If you were to propose changes as Chairman, would they contradict the main 

principles of market reform under Title VII of Dodd-Frank? NO. They will further such 

principles. 

(23) The swaps de minimis threshold is set to drop to $3 billion in December. The 

CFTC, under Chairman Massad's leadership, finalized a report last year, which you 

critiqued because it did not provide recommendations to the Commission. You have 

also stated that you believe a lower threshold would hinder risk management activities, 

specifically among smaller entities. 

a. Have you received any new data that has changed your position, and do you 

believe the de minimis level should be increased? 

Response: We have received a considerable amount of current data since the phase in 

period for the threshold was established by the Commission over five years ago when the 

available swap data was in its nascent stages. 

I believe it makes sense to obtain the best and most up to date data that will inform the 

best path forward in terms of managing risk to the financial system. I have instructed the 

CFTC's Division of Swaps and Intermediary Oversight (DSIO) to analyze the most 

recent market data and formulate a recommendation to the Commission as to whether a 

lower threshold would bring additional market participants under CFTC regulatory 

oversight without hindering bona fide risk management activities. I look forward to that 

recommendation. 
73 

b. Will you follow current law and let the threshold drop to $3 billion in 

December? 

Response: I will be guided by an analysis of relevant data in accordance with the 

law. 

c. Many are deeply concerned about the prospect of the threshold not dropping to 

$3 billion, often citing the rolling black outs on the west coast as an example of a 

large physical trader influencing the retail, while not being subject to 

appropriate regulatory oversight. Do you think if the threshold is unchanged, 

certain market participants will escape necessary and meaningful CFTC 

regulatory oversight? 

Response: I look forward to the analysis I have requested from the DSIO as to 

whether a lower threshold would bring additional market participants under CFTC 

regulatory oversight without hindering bona fide risk management activities. 

(24) What market oversight and personnel risks will the Commission face ifits budget is 

not increased? If CFTC's budget is not sufficiently increased will you support 

regulatory fee for service? 

Response: A common criticism of the rule-making process has been the lack of 

quantitative assessments of costs and benefits. While there was a paucity of relevant data 

for Dodd-Frank implementation, we believe that market participants and the public will 

be expecting the CFTC to leverage the data sources now available to inform future 

rulemaking. The current staff dedicated to economic analysis is inadequate to address the 

level of econometric analysis required by a regulatory agency with oversight of more 

than 35 percent of the global derivatives markets. 

Derivatives markets are distinct from the constant liquidity and trading volume in the 

equities markets. It my belief that additional user fees on these particular markets would 

be a negative drag on liquidity, further diminishing their value to end users and 

hampering U.S. economic growth. 

(25) What are the most important actions the CFTC needs to take on cybersecurity? 

Who are your most important partners to address the ever growing threat to our 

cybersecurity? 
74 

Response: The CFTC has ratcheted up its cybersecurity program since January, and in 

the wake of recent worldwide attacks like the ransomware episode. The Chairman's 

office now gets brief every month (rather than quarterly) by the agency's cybersecurity 

lead. We have also recently turned on and calibrated our anti-phishing security tool that 

had been dormant in order to protect our infrastructure against a commonly used breach 

tactic. The CFTC's next step in this area will be to conduct a tabletop cybersecurity drill 

and a live one that spans the entirety of the agency. We are working with Treasury and 

the Department of Homeland Security, which recently collaborated on a tabletop 

exercise, to plan this. 

The CFTC's partners in the cybersecurity space include its counterpart financial 

regulators led by Treasury under the auspices of the Financial and Banking Information 

Infrastructure Committee (FBIIC), which meets quarterly at the direction of Secretary 

Mnuchin. This collaboration extends from safeguarding the agencies themselves to the 

cybersecurity of the financial system and its most systemically important institutions. The 

institutions the CFTC regulates and supervises for cybersecurity- namely, registered 

deiivative clearinghouse organizations and swap data repositoiies - are also important 

partners in this effort. We also rely on the work of and collaboration with Congress 

through its oversight of the federal government's cybersecurity posture and review of the 

most pressing threats to America's cyber infrastructure. 

(26) On March 14,2016, the CFTC and the EPA entered into a Memorandum of 

Understanding (MOU) on the sharing ofinformation available to EPA related to the 

function of renewable fuel and related markets. The MOU stated that CFTC will use 

information to advise EPA on techniques for and conducting investigations into 

potential fraud, market abuse, or other violations and trading in Renewable 

Identification Numbers. 

a. Please describe in detail what actions have been taken under this MOU. How 

has CFTC assisted EPA in conducting and providing techniques to EPA for 

investigations into potential fraud, market abuse, or other violations and trading 

in Renewable Identification Numbers? 

Response: On March 15, 2016, the CFTC and EPA signed an MOU to address the 

sharing of information in the possession of the EPA with the CFTC. Under the MOU, the 

CFTC, subject to the availability of appropriated funds and the agency's budget priorities, 

uses information shared by the EPA to advise the EPA on techniques that could be 

employed to minimize fraud, market abuses or other violations, and to conduct 
75 

appropriate oversight in RIN and renewable fuel markets to aid the EPA in successfully 

fulfilling the EPA's statutory functions under the Clean Air Act. 

Thus far, this MOU has been utilized to assist the EPA in responding to a request from 

the Renewable Fuels Association ("RF A"). In this letter, the RF A expressed concerns 

about "potential manipulation of the Renewable Identification Numbers ("RIN") market. 

The EPA provided the CFTC with a dataset of matched transactions from its EMTS 

system. The CFTC's Division of Market Oversight Surveillance reviewed the matched 

transactions for indications of possible manipulative behavior and provided a 

memorandum to the EPA. 

(27) Dodd-Frank included requirements for the creation of swap data repositories 

(SDRs) to provide central facilities for swap data reporting and recordkeeping -

including for security-based swaps. You have said that you plan to help bring greater 

transparency to the swaps market. Both the CFTC and the SEC have promulgated 

regulations to address these requirements, however differences exist. The CFTC's rules 

have already been implemented, but the SEC's rules have not yet been implemented. A 

complete picture of the swaps market requires transparency into the securities-based 

swaps market. As you work towards bringing greater transparency to the swaps 

market will you coordinate with the SEC to help ensure the rules work together? 

Response: Yes. I will coordinate with the SEC. 

At the heart of the 2008 financial crisis was the inability of regulators to assess and 

quantity the counterparty credit risk of large banks and swap dealers. The legislative 

solution was the establishment of swap data repositories under the Dodd-Frank Act, 

which I support. Yet, nine years after the financial crisis and despite much hard work and 

effort, SDRs still cannot provide the full transparency into global counterparty exposure 

that Dodd-Frank was designed to provide. 

Of all the many mandates to emerge from the financial crisis, visibility into counterparty 

credit risk of major financial institutions was perhaps the most pressing. The failure to 

accomplish it is certainly the most disappointing. The truth is that global regulators 

cannot by themselves achieve the objective of full counterparty credit risk transparency. 

What is needed is a concerted effort by regulators, academics and the private sector that 

draws on the emerging network science of fmancial markets. It is well past time to make 

that happen. 
76 

(28) Will you commit to protecting whistleblowers who identify problems with CFTC 

related issues? If yes, what specific measures will you take to ensure whistleblowers are 

protected? 

Response: YES. In 2011 the CFTC adopted Part 165 of its Regulations to implement 

rules required by Section 748 of the Dodd-Frank Act with regard to whistleblowers who 

provide information to the Commission relating to violations of the Commodity 

Exchange Act. In May 2017, the Commission amended Part 165 to strengthen antiretaliation protections for whistleblowers and add transparency to the Commission's 

process for deciding whistlcblower award claims. 

In addition, the Whistleblower Protection Act (P.L. 101-12) addresses whistleblower 

protections for federal employees and contractors. If confirmed, I will ensure that the 

anti-retaliation protections for whistleblowers embodied in Part 165 of the Commission's 

Regulations and the Whistleblower Protection Act are followed. 

(29) What will you do to ensure transparency in settlements in enforcement actions? 

Response: It has been a long-standing practice for the CFTC, when it reaches a 

settlement in an enforcement action, to issue a press release on its website describing the 

action and the terms of the settlement, and to provide a link to the relevant CFTC order. 

If I am confirmed the agency will continue this practice of publicizing settlements in 

enforcement actions. 

(30) What is your approach to managing staff, and how has it developed in your 

previous management experiences? 

Response: My approach to management derives from my rearing in a three-generation, 

small family business and from thirty years in the private sector, including as a senior 

officer of a publically traded company. My approach has three key elements: (1) active 

leadership from the top; (2) clear objectives; and (3) recruiting and empowering effective 

managers. 

(31) What actions in your past executive experiences demonstrate your style and 

approach in the area oflabor-management relations? 

Response: I do not have professional experience in labor-management relations in a 

union setting. Nevertheless, T respect the right of the CFTC workforce to choose to be 

represented by a union to include negotiations with management over working 
77 

conditions. I have endeavored and will continue to endeavor to engage with the CFTC's 

union representatives with goodwill and in good faith. 

(32) What do you believe CFTC can do to recruit and hire the personnel needed to 

achieve results? 

Response: By adopting a standard of operational excellence in every aspect of the work 

of the CFTC, I believe the agency will be able to recruit and hire highly talented and 

motivated men and women wishing to render public service to their country. 

(33) What role would you like to see unions play at CFTC, and what style or 

arrangements involving labor and management do you intend to foster? For example, 

will you foster labor-management partnerships at the CFTC or do you believe that 

other kinds of arrangements would be preferable? What steps would you take to 

achieve the kind of labor-management relationships you want? 

Response: Since taking the reins of the Commission as acting chairman I have made a 

constructive relationship with the CFTC's two unions, the National Treasury Employees 

Union ("NTEU") and the American Federal of Government Employees ("AFGE"), a 

priority. One of my first meetings as acting chairman was with our union Presidents, and 

they know my door is always open to their concerns. 

You may know that under the previous leadership, the Commission and one of those 

unions, the NTEU, were unable to come to agreement on pay for employees for 2016. 

This issue was ultimately sent to the Federal Services Impasses Panel. The panel's 

decision in March 2017 resulted in: (1) a one-time lmnp smn bonus of I percent of each 

individual employee's total salary as of March I, 2017; (2) a !percent pay increase 

retroactive to October, 2016. While the final decision from the impasse panel was 

welcome to both employees and the management of the Commission, the many months 

of uncertainty were extremely negative to the morale of the agency. I am pleased to 

inform you that under my leadership the Commission has already come to an agreement 

with our unions for pay this year. This agreement brings certainty to both employees and 

the Commission's budget for 2017. 

We are in the process of negotiating a multi-year collective bargaining agreement with 

the NTEU. While this process has not been without some obstacles, I believe the 

negotiations between the union and the management have been conducted in an 

atmosphere of mutual concern for the long-term health of our employees and the 

Commission. 
78 

(34) The CFTC has important enforcement authority which should be carried out 

impartially. Both Republican and Democratic administrations have had written 

policies limiting White House contacts with agencies that have investigatory and 

enforcement responsibilities. 

a. Do you agree that it is important to keep political influence out of CFTC 

decisions regarding investigations and enforcement, such as whether to launch 

an investigation, continue it, go forward with an enforcement action or close the 

matter? YES. 

b. Will you commit to restricting communications between the CFTC and White 

House staff regarding specific investigations and enforcement matters? 

Response: The CFTC has a long-standing policy of keeping specific investigations and 

enforcement matters confidential. If confirmed, I will ensure that the Commission 

continues to follow that policy. 

(35) Will you commit to providing staff of the Senate Agriculture, Nutrition, and 

Forestry Committee quarterly briefings on the status of Project KISS? YES. 

(36) Has the CFTC observed a decline in market liquidity directly attributable to the 

development and delivery of crop insurance products? 

Response: This issue has not been addressed in recent liquidity studies by staff. 

(37) Following the issuance of a report regarding position limits by the Energy & 

Environment Market Advisory Committee, which you sponsored, Senator Leahy and I 

sent a letter to the Commission asking for more transparency into the conduct of each 

of the Commission's advisory committees to ensure that every advisory committee 

member is included in the discussion, drafting, and delivering of any advisory 

committee work product. Has the Commission taken any action since our 2016 letter to 

address these concerns? If so, what? Please explain in detail. 

Response: Yes. Following your 2016 letter, the charters of each of the Commission's 

advisory committees were amended to include the following language: "Reports and/or 

recommendations shall be developed in consultation with all members of the [committee] 

and any transmission to the Commission shall include dissenting or minority views, if 

any." 
79 

(38) What is your general position towards the role of the CFTC versus self-regulatory 

organizations? Do you agree that the CFTC should have a more rules based, hands on 

approach to monitoring the market for function and bad actors? 

Response: I believe that self-regulatory organizations (SROs) play a vital role in 

overseeing the futures, options, and swaps markets. Congress has recognized the 

complementary relationship between the CFTC and SROs and has granted the CFTC 

delegation authority in the Commodity Exchange Act. SROs serve as the first line of 

defense against bad actors and in market oversight. The CFTC and the SROs work hand 

in hand to monitor the market. I believe that more cops on the beat are always better than 

fewer. 

(39) As you know, the CFTC is currently seeking to establish a regulatory framework 

overseeing automated trading, including oversight of individuals and market 

participants that utilize the technology in the marketplace. You have publicly critiqued 

the Commission's approach, opposing the November 2016 supplemental notice of 

proposed rulemaking for several reasons, including the strong tension between 

preserving the intellectual property rights of automated traders and trading firms, 

specifically source code and algorithms that drive the automated trading strategy, 

versus the importance of appropriate regulatory transparency within the technology, 

which may include access to source code and algorithms. For obvious reasons, 

appropriate regulatory transparency can be used as a critical tool in enforcement 

actions seeking to stop market manipulation, and prevent future market disruptions 

like the 2010 and 2015 flash crashes. 

If confirmed, what factors will you consider when determining the balance between 

regulatory access to information and data, possibly including source code and 

algorithms within the automated trading context, versus protecting the intellectual 

property of individuals and firms participating in the marketplace? 

Response: I support regulatory access to infonnation and data, including as appropriate 

source code and algorithms of automated trading systems. In fact, the CFTC can today 

obtain the computer source code of market participants pursuant to a subpoena. The 

issue is not whether the CFTC can examine source code of automated traders where 

appropriate to investigate suspected market misbehavior the CFTC can and does today. 

(In my time on the Commission, I have supported issuing subpoenas to obtain such 

source code.) The issue is whether the rights of property owners are adequately balanced 

with the government's legitimate interest in regulatory transparency. 
80 

The subpoena process provides property owners with due process oflaw. Its purpose is 

to provide an opportunity to review the scope, timing and manner of discovery and 

whether any legal privileges apply to the process of surrendering intellectual property. 

The subpoena process therefore provides a fair compromise between the rights of 

property owners and the government's legitimate interest in regulatory transparency. 

(40) Risk and leverage associated with bilateral, over-the-counter swaps played a 

significant role in the financial crisis. Recognizing this, Congress mandated, among 

other things, central clearing of certain standardized swaps under Section 723 of the 

Dodd-Frank Act. Since 2010, the transition to mandatory clearing has been long and 

challenging; however, a majority of standardized swaps are now being cleared through 

registered derivatives clearing organizations (DCOs). Since this transition, there have 

been many discussions by policy makers, regulators, and market participants regarding 

the new risk profile of DCOs. Ultimately, the question has become, with the new 

mandate, have clearinghouses, and the market "plumbing" services they now provide, 

become too systemically risky. Another question that has arisen deals with which 

parties are responsible for ensuring that clearinghouses are properly capitalized in case 

of a market disruption. 

What role do you believe a clearinghouse plays vis a vis its clearing members in terms 

of responsibility for appropriate capital contributions as a measure to alleviate market 

stress during a bankruptcy, dissolution scenario, or capital shortfall? 

Response: These ate all valid and highly critical questions. Given the global nature of 

the swaps markets, and especially the extensive cross-border reach of the largest DCOs, 

there is broad consensus that the regulatory approach to these and related issues ought to 

be hatmonized and standardized at the international level. CFTC is continuing to engage 

closely with the relevant authorities and DCOs and their members, as well as members' 

clients, to address these complex and interconnected issues. 
81 

Senator John Boozman 

(5) When we talked in my office, we discussed cybersecurity at length. As the CFTC 

collects more and more data, it is imperative that we keep this information protected 

and secure. 

If you are confirmed as Chairman, what steps will you take to ensure that data collected 

by the CFTC will be kept safe? 

Response: The CFTC is compliant with the Federal Information Security Modernization 

Act (FISMA) and the Federal mandates as pertains to the protection of its data and 

information systems. The Commission leverages the National Institute of Standards and 

Technology (NIST) guidelines and Federal Information Process Standards (FIPS) as 

directed by FISMA to ensure the protection its information systems. 

The Commission demonstrates its successful compliance with FISMA and the Federal 

mandates on an annual basis through annual FISMA audits conducted by the CFTC 

Office of Inspector General (OIG) and the annual FISMA report submitted to congress by 

the Office of Management and Budget (OMB). The CFTC is committed to continue 

improving its security posture by utilizing the NIST Cybersecurity Framework (CSF) as 

directed by the Executive Order on Cybersecurity and leveraging industry best practices 

to protect its information systems and the data collected from the market participants. 

Here are some of the important steps the CFTC takes to ensure that the data collected by 

market participants is safe: 

• Access control: The CFTC limits access to data to those who have legitimate 

business need to access it. Access to data sets is usually approved by the business or 

information owner 

• Encryption: The CFTC utilizes encrypted tunnels when data is transferred between 

the market participants and the CFTC 

• Hardened Systems: The CFTC stores market participants data on hardened serves 

and computer systems to prevent unauthorized access 

• Malware and antivirus protection: The CFTC network and computers are 

protected with professional grade enterprise malware and virus protection software 

• End user Security and Privacy Awareness Training: The CFTC conducts an 

annual end user security and privacy awareness training that is required by anyone 

who has access to CFTC information systems 
82 

• The Use of PIV Cards and Two-Factor Authentication: CFTC users are required 

to log on to the CFTC network with their PIV cards to authenticate when accessing 

the CFTC network locally or remotely. 

• Perimeter Protection: The CFTC is utilizing a myriad of security devices and tools 

to protect the network and the computer systems from hackers and unauthorized 

users, this includes but not limited to: Firewalls, Intrusion Detection Systems, Data 

Leak Prevention software 

Additionally, several financial regulators, including the CFTC, SEC, Fed and others, 

have proposed or finalized cybersecurity regulations. However, I have heard some 

concerns regarding how these various regulations will work together. What role do you 

think the CFTC should play in helping to provide a more harmonized approach when 

dealing with cyber threats? 

Response: While each financial regulator is best suited to craft cybersecurity regulations 

for the parts of the system where they exercise primary oversight, it is very important that 

these various regulations -just like the overlapping regulations besides cyber - are 

harmonized to the extent that they enable rather than hinder the financial system in 

putting on the best possible cybersecurity defense. The CFTC can play a role in this 

objective by using its position on FSOC and the Financial and Banking Information 

Infrastructure Committee (FBI! C) to share with other regulators the purpose and effect 

behind its cybersecurity regulations and working with those counterparts to determine 

whether any rules needed to be amended to work more effectively as they overlap. 

Secretary Mnuchin has stated that FSOC should be empowered to coordinate 

regulation and supervision when it comes to cybersecurity. What are your 

views on this approach? 

Response: I agree with Secretary Mnuchin that FSOC should be used coordinate 

regulation and supervision when it comes to cybersecurity, the way it should be used for 

other important issues facing our financial system. FSOC's most important purpose is for 

the financial regulators to share, collaborate, and come to terms on methods to mitigate 

systemic risk. This includes cybersecurity threats. 
83 

Senator John Hoeven 

( 6) Mr. Giancarlo, as you know Title VII of Dodd-Frank directed the CFTC and the SEC 

to further define the term "swap dealer" and to include a de minimis exception. The de 

minimis exception provides that a person is not a swap dealer unless its swap dealing 

activity exceeds an aggregate gross notional amount of$3 billion. However, to date, 

there has been a phase in period during which the threshold has been $8 billion. Under 

the CFTC's rules, absent further action by the CFTC, the phase-in period will end on 

December 31,2018. Once the CFTC's temporary delay expires, the threshold will 

decrease to $3 billion. 

What are your thoughts regarding the CFTC retaining a swap dealing de minimis 

threshold of$8 billion? 

Response: As I have previously stated, I am concerned that a drop in the de minimis 

threshold from $8 billion to $3 billion would have the effect of causing many nonfinancial companies to curtail or terminate risk -hedging activities with their customers, 

limiting risk-management options for end-users and ultimately consolidating marketplace 

risk in only a few large swap dealers. Furthermore, it appears that the potential drop in 

the threshold may be already having a negative impact on the marketplace and hurting 

small players who have fewer swap counterparties with which to hedge. I will also note 

that the phase in period for the threshold was established by the Commission over five 

years ago, during a time when the available swap data was in its nascent stages. I believe 

it makes sense to obtain the latest and most complete data to inform the best path forward 

in terms of managing Jisk to the financial system. To that end, I have recently asked the 

Division of Swap Dealer and Intermediary Oversight to gather and analyze new data on 

the subject and I look forward to their findings. 

(7) To calculate whether a would-be swap dealer exceeds the CFTC's de minimis swap 

dealer threshold, the dealer must include its own swap dealing transactions, as well as 

those entered into by its affiliates under common control. Under the CFTC's "crossborder guidance," a non-U.S. person generally is not required to count its swap dealing 

activity with non-U.S. person counterparties towards its corporate group's de minimis 

threshold. However, on October 18, 2016, the CFTC proposed rules that would require 

a corporate group to count towards its de minimi.~ threshold the swap dealing activity of 

a foreign consolidated subsidiary with non-U.S. counterparties. This proposal is a 

departure from the CFTC's previous guidance and an expansion of Dodd-Frank. 
84 

What are your thoughts on the FCS rule, should the commission adopt this rule or 

should the commission find an alternative? 

Response: In May 2016, the Commission defined the term Foreign Consolidated 

Subsidiary (FCS) for purposes of the cross-border application of uncleared margin 

requirements for swap dealers and major swap participants (Cross-Border Margin Rule). 

81 Fed. Reg. 34818 (May 31, 2016). While I dissented from the Cross-Border Margin 

Rule on various grounds, I did not specifically object to the definition ofFCS for 

purposes of that rule. Id. at 34853-54. 

In its October 18, 2016 proposal, the Commission proposed to apply the FCS concept in a 

manner consistent with how that term was defined in the Cross-Border Margin Rule for 

purposes of determining which swaps would count toward the swap dealer de minimis 

threshold. In the preamble to that proposal, the Commission stated that "[i]f adopted, the 

Commission intends that [this] definition would be relevant not only within the context of 

the proposed rule, but for purposes of any subsequent rulemakings specifically addressing 

the cross-border application of other substantive Dodd-Frank requirements, unless the 

context or a specific rule or regulation otherwise requires." 81 Fed. Reg. 71946, 71947 

(Oct. 18, 2016). The comment period for the proposal closed on December 19, 2016. 

CFTC staff are currently analyzing the comments received and will be preparing 

recommendations for the Commission to consider. Before reaching a decision I intend to 

carefully consider the public comments and any staff recommendations. 
85 

Senator John Thune 

(8) For the past several years we have beard that resources, including personnel at CFTC, 

are insufficient to meet required operations and oversight. What are your thoughts on 

staffing and resources? Will you be asking for more? 

Response: To effectively oversee the evolving derivatives markets, the Commission is 

requesting $281.5 million and 739 full-time equivalents (FTE) for fiscal year 2018 

operations. This is an increase of $31.5 million and 36 FTE over the FY 2017 level. The 

increase is not a formulaic or superficial number. Instead, it is the result of my initiative 

to perform a bottom up budget review this past spring. In building the budget from the 

ground up I identified several areas where the agency could run more efficiently and save 

taxpayer dollars. However, I also discovered several areas that needed additional 

investment to provide more effective oversight. These areas of investment include the 

following: 

• Enhancing cost benefit/economic analysis to analyze large volumes of trade data and 

improve our understanding of markets- including monitoring systemic risk in the 

derivative markets, in particular with regard to central counterparty clearinghouses. 

• Conducting all required examinations, including the London Clearinghouse (LCH), 

and enabling the Commission to keep pace with the explosive growth in the number 

and value of swaps cleared by designated clearing organizations (DCOs.) 

• Implementing the CFTC Fin Tech initiative that addresses three fundamental issues 

arising from transformations in Fin Tech: 

o How the CFTC can leverage Fin Tech innovation to be a more effective 

regulator. 

o How Fin Tech can help the CFTC identify outdated rules and regulations for 

today's digital markets. 

o The role of the Commission in supporting U.S. Fin Tech innovation in CFTC 

regulated markets. 

• Increasing the IT budget to support the existing systems and infrastructure of the 

CFTC. 
86 

Under my direction the Commission has utilized its ability to provide a budget 

directly to the Congress. I did not take this rarely used step lightly. This is the first 

budget submission under my leadership, and I thought it important to articulate the 

needs of the Commission based on my perspective and vision for a renewed and 

refocused CFTC. The FY 2018 budget submitted by the Commission reflects the tme 

needs of a policy setting and civil law enforcement agency that has the duty to ensure 

the derivatives markets operate effectively. This budget will give the Commission 

the resources it needs to put in place and oversee responsible regulations that allow 

for innovation and allow our markets to remain cooperative and safe at home and 

abroad. 

(9) We've heard complaints, especially from our livestock producers, that the Chicago 

Mercantile Exchange, or CME, is uot performing as it should, which they say is 

negatively impacting cattle prices. What are your thoughts on this? With your 

oversight of CME is there anything it is doing that raises concerns with you or CFTC 

regarding lack of transparency or price manipulation? 

Response: We were approached by the National Cattlemen's Beef Association with 

concerns about the impact of high frequency trading on prices in the Live Cattle futures 

contract on certain dates in 2015 and 2016. We take such concerns very seriously. 

Our agriculture futures market specialists in the CFTC's surveillance and market 

intelligence branches did a thorough analysis of trading data across our markets. They 

examined the trading patterns and practices of all major types of market participants, 

including natural hedgers, market speculators, proprietary and high frequency traders and 

large asset managers. From that analysis, our market experts did not see patterns of 

behavior by any particular group that had an overall negative impact on the marketplace. 

Nevertheless, our market intelligence and market surveillance branches will continue to 

carefully observe and analyze trading patterns and activities in these markets. Should we 

observe any inappropriate or improper activity, we will take any and all action that may 

be necessary or appropriate. 

We are also aware of concerns raised by the Ranchers-Cattlemen Action Legal Fund 

about whether meat packers negatively impacted prices in the cash and futures markets in 

2015. Chairman Grassley asked the Government Accounting Office (GAO) to investigate 

these concerns, and we are helping the GAO in that effort. 

In addition to responding to concerns with market participants' trading of the Live Cattle 

futures contract, the CFTC Ag Team analyzed the contract itself to ensure that it was 
87 

designed appropriately. Our Ag Team worked cooperatively with the Chicago Mercantile 

Exchange (CME) and the cattle industry. We identified design issues that, when 

addressed, preserved and strengthened the stockyard delivery system and made the terms 

of the contract more transparent to market participants. Two weeks ago, the CME 

published for comment a set of proposals that arc designed to improve the contract's 

price discovery and risk management functions. The proposals seek to make the delivery 

process more efficient and ensuring the contract reflects cash market practices. The CME 

should be commended for these sensible improvements. Nevertheless, the CFTC will 

continue to monitor the contract as these improvements come into effect. 

(10) With the agriculture economy suffering from a criticany depressed economy, do you 

think this environment will result in any increase in fraud, price manipulations or 

abusive trading practices? 

Response: The CFTC's vigilance to enforce the laws in the derivatives markets suffers 

no let-up, whatever the business cycle. Its enforcement arm studies market dynamics 

closely to help monitor bad behavior. At this time, we do not observe any noticeable 

change in instances of fraud, price manipulations or abusive trading practices, but we 

continue to study whether there is any linkage. 

(11) As in production agriculture, advancing technology is changing how commodity 

crops, livestock and financial products are marketed. How is CFTC using technology 

to better regulate an ever evolving industry? 

Response: CFTC continues to invest in new technologies and analytical tools to study 

and surveil the commodity derivatives markets. Among other things, it is developing 

capabilities to look across futures, swaps, and the underlying spot markets. 

The CFTC's 2018 budget request seeks funding for erthanced technological and 

economic capabilities so that the agency can keep pace with an ever evolving 

marketplace. 
88 

Senator Steve Daines 

(12) Vacant CFTC Commissioner Positions 

(a) Commissioner Sharon Bowen announced her intention to retire early in the 

coming months, although her term doesn't expire until April of 2018. Could you 

share your thoughts on the practical impacts of not filling all five commissioner 

slots? 

Response: The practical impacts of not having the Commission at full strength with 

all five commissioners are: (i) loss of full range of views and perspectives on 

proposed Commission policies and regulations; (ii) loss of important points of contact 

with stakeholders in markets under Commission oversight; and (iii) loss of effective 

sponsors for the five advisory committees established by the Commission. 

(b) Will you commit to filling this office as quickly as possible? 

Response: l will provide any assistance requested by the Administration in 

considering nominees for open Commission slots and, as requested, assist the Senate 

Agriculture Committee in considering such nominees for confirmation. 

(c) Given your perspective and experience in working with other commissioners, 

what traits do you believe are most important for us to consider to ensure the 

CFTC functions properly to ensure market integrity and price stability? 

Response: I believe the most important traits to consider in confirmation of 

nominees for the CFTC are readiness to meet with and understand the concerns of 

farmers, ranchers, manufacturers, market participants and others who use and rely on 

the market integrity, durability and vibrancy of American futures and swaps markets. 

(13) Futures Commission Merchants 

There's a Brookings Institution report which shows that since March 2017, the number of 

futures commission merchants has dramatically fallen from 171 in March 2007 to 64 in 

March this year. That is an over 62 percent consolidation in the market. 

(a) What are the practical impacts of this reduction? 
89 

Response: The practical impacts of this reduction are loss of service providers 

offering access to the risk hedging function of futures and other derivatives markets 

for farmers, ranchers, manufacturers and other smaller market participants which do 

not have the financial magnitude and wherewithal to obtain the services of large 

futures commission merchants integrated with large global banking institutions. 

(b) What are the culprits of the consolidation and is there any action Congress 

should consider to reverse this trend? 

Response: I believe there are three primary culprits: (I) fraud and mismanagement, 

which was the cause of failures ofFCMs like MF Global, Refco and Peregrine 

Financial; (2) the U.S. monetary policy of near zero interest rates, which has 

eliminated a source of income for FCMs through reinvestment of excess customer 

money; and (3) burdensome regulations. The collapse ofMF Global and Peregrine 

Financial prompted a series of new customer protection rules,9 some of which were 

undoubtedly needed. However, these new rules have impacted small FCMs. The 

CFTC's new rules on ownership and control reporting imposed new compliance and 

paperwork requirements for FCMs. 10 The CFTC also further expanded FCM 

recordkeeping obligations to include the recording of oral and written 

communications leading up to the execution of a transaction. 11 The supplementary 

leverage ratio (SLR) rule issued last year by U.S. prudential regulators is likely to 

make it more expensive for bank-owned FCMs to clear customer trades. That is 

because the SLR requires banks to hold more capital for the assets on their books, 

even margin held for clients on cleared trades of commodity futures, leading to 

diminished FCM margins and increased client costs. 

(14) Bona Fide Hedge Exemption 

In Montana, a lot of farmers and utility companies use futures to hedge against crop and 

energy price volatility, but we don't have many speculators. 

To keep prices low for both these businesses and consumers, it important that these parties 

are recognized under the bona fide hedge exemption. 

9 Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives 

Clearing Organizations, 78 FR 68506,68510-12 (Nov. 14, 20!3) (discussing recent customer protection initiatives). 10 Ownership and Control Reports, Forms 1021!02S, 40140S, and 71,78 FR 69178 (Nov. 18, 2013). 11 17 C.F.R. !.35. The rule applies to transactions in a commodity interest and related cash or forward transactions. Oral 

communications that lead solely to the execution of a related cash or forward transaction are excluded. 
90 

(a) Can you explain how tbe CFTC's re-proposed rule in December 2016 would 

provide greater flexibility for farmers and utility companies? 

Response: Hedging is a critical tool for risk management and therefore a primary 

way that producers with variable cost structures - such as farmers and power 

suppliers - can mitigate those risks. The CFTC' s 2016 re-proposal ( 1) eliminated 

certain redundant provisions from the previously proposed bona fide hedging 

definition; (2) removed a twelve-month constraint on certain anticipatory hedges for 

agricultural commodities and the condition that a utility be required or encouraged to 

hedge by its public utility commission; and (3) eliminated the previously proposed 

safe harbor quantitative test for cross-commodity hedges, among other things. 

While this was a step in the right direction, it is critical that any final definition of 

bona fide hedging and any list of enumerated bona fide hedges recognize important 

risk management practices that farmers and utility companies have used for decades, 

including anticipatory and merchandising hedges. 

Before adopting a final position limits rule I will carefully consider the public 

comments to ensure that maximum flexibility is provided for legitimate bona fide 

hedging while protecting the markets from excessive speculation. 

(b) How will consumers, who purchase groceries and pay utility bills, benefit from 

the greater flexibility provided by this rule? 

Response: When producers of food and energy are able to mitigate the variable costs 

associated with their products, their customers will see the benefit of more stable 

prices at the check-out line and in their utility bills. It is therefore crucial that the 

Commission get the final position limits rules right. As noted above, I am committed 

to providing maximum flexibility for legitimate bona fide hedging while protecting 

the markets from excessive speculation. 
91 

Senator Luther Strange 

(15) As you know, the commodities industry has a significant interest in legal certainty 

around the definition of"actual delivery" for cryptocurrencies. However, the CFTC 

has never undertaken any rulemaking initiatives with respect to this issue, only having 

finalized interpretive guidance in 2013 as it relates to the "actual delivery" of 

commodities in general. Please comment on whether the CFTC currently is 

undertaking or has considered undertaking a rulemaking to define what constitutes 

"actual delivery" of cryptocurrency, and if so, what your definition of"actual delivery" 

would be. 

Response: The CFTC has received two petitions urging the Commission to undertake a 

rulemaking concerning the requirements of"actual delivery" in the context of 

cryptocurrency markets utilizing blockchain technology for executing transactions. It has 

also received several requests for no-action relief in this area. CFTC staff are currently 

analyzing the requests and will be making recommendations for the Commission's 

consideration. If the Commission were to undertake a rulemaking, the definition of 

actual delivery would be determined by a Commission vote, only after proper notice and 

comment, as required by the Administrative Procedure Act. 

Of course, the concept of "actual delivery" extends beyond the realm of 

cryptocurrencies to other types of commodities. If the CFTC were to engage in such a 

rulemaking during your tenure as Chairman, would this rulemaking be limited 

specifically to cryptocurrencies as a commodity, limited to certain categories of 

commodities, such as foreign exchange or precious metals, or be applicable to all 

categories of commodities? 

Response: As noted above, CFTC staff are currently analyzing various requests for more 

clarity with respect to what constitutes "actual delivery" in the context of cryptocurrency 

contracts executed through blockchain technology. If the Commission were to undertake 

a rulemaking, it would consider all public comments regarding whether such a 

rulemaking should cover only certain categories of commodities or all categories of 

commodities. 

(16) In 2013, the CFTC finalized interpretive guidance addressing the standard for 

effecting "actual delivery" under the Commodities Exchange Act ("CEA "). In that 

guidance, which was applicable to all categories of commodities, the CFTC indicated 

that "actual delivery" would be deemed to have occurred if (a) the commodities at issue 

were purchased on a leveraged, margined, or financed basis and stored in a depository 
92 

in the purchaser's name or (b) if the commodities purchased are paid in full and the 

purchaser takes actual possession of the commodities. Do you agree with the 2013 

guidance that both of the above scenarios satisfy the criteria for "actual delivery" under 

theCEA? 

Response: The CEA generally treats retail commodity transactions entered into, or 

offered, on a leveraged, margined, or financed basis as if they are futures contracts 

unless, among other exceptions not relevant here, the contract results in actual delivery 

within 28 days or such longer period of time as the Commission may determine based 

upon the typical commercial practice in cash or spot markets for the commodity involved. 

In its 2013 interpretive guidance, the Commission provided two examples of when 

delivery will be deemed to have occurred as follows: 

Example 1 - Actual delivery will have occurred if, within 28 days, the seller has 

physically delivered the entire quantity of the commodity purchased, including any 

portion of the purchase made using leverage, margin or financing, into the possession of 

the buyer and has transferred title to that quantity of the commodity to the buyer. 

Example 2- Actual delivery will have occurred if, within 28 days, the seller has: 

(1) physically delivered the entire quantity of the commodity purchased by the 

buyer, including any portion of the purchase made using leverage, margin, 

or financing, whether in specifically segregated or fungible bulk form, into 

the possession of a depository other than the seller and its parent company, 

partners, agents, and other affiliates, that is: 

(a) a financial institution as defined by the CEA; 

(b) a depository, the warrants or warehouse receipts of which are 

recognized for delivery purposes for any commodity on a contract market 

designated by the Commission; or 

(c) a storage facility licensed or regulated by the United States or any 

United States agency; and 

(2) has transferred title to that quantity of the commodity to the buyer. 

(17) In the absence of a rulemaking that clearly delineates what constitutes "actual 

delivery," market participants have found it increasingly difficult to navigate a 

landscape that is defined by settlements of enforcement actions focused on individual 

institutions rather than the industry as a whole. As you know, settlements of 

enforcement actions are neither precedential nor binding on other parties, and the 
93 

CFTC has been criticized on more than one occasion for seeking to impose its own view 

of the law through enforcement actions rather than through the rulemaking process -

notably, with respect to the "actual delivery" issue, in the Worth decision (CFTC v. 

Worth Group, Inc. 9:13-cv-80796 S;D. Fla. Aug. 18, 2014). Given that there could be 

far-reaching implications on how the CFTC defines "actual delivery," do you believe 

that it is appropriate for the CFTC to be construing the definition of"actual delivery" 

through piecemeal enforcement actions as opposed to engaging in a thorough and 

thoughtful rulemaking? 

Response: I believe that fmther clarification of what constitutes "actual delivery," either 

through a rulemaking or fmther guidance subject to notice and public comment, may be 

appropriate. I will carefully consider any recommendations made by staff in response to 

the requests for rulemaking and no-action relief mentioned above. It is my general 

philosophy that the Commission should not make important regulatory policy decisions 

through piecemeal enforcement actions. 
94 

Senator Sherrod Brown 

(41) Margin rules 

You have pushed to delay the CFTC's margin rules when foreign regulators have delayed 

their rules, and then you have criticized the U.S. banking regulators when their margin 

rules have been stronger than the CFTC's. 

I understand your argument that markets need to work "efficiently," but arguments about 

efficiency -both now and when people were making them in the early 2000s - always seem 

to conveniently lead to weaker rules and slower reforms. 

Do you agree capital and margin are critical to protect against the concentration of risky 

trades we saw leading up to the crisis- at places like AIG and Wall Street banks? 

YES. 

How will you prevent- rather than promote- another race to the bottom? 

Response: I support regulation requiring margin on swaps transactions. On December 

16, 2015, I voted in favor of the CFTC's Final Rule on Margin Requirements for 

Uncleared Swaps for Swap Dealers and Major Swaps Participants. I continue to support 

this important rulemaking. 

(42) Leverage Ratio 

You have criticized the leverage ratios that the banking agencies have finalized, in 

particular the one aimed at reducing the likelihood and the costs of the failure of the very 

largest U.S. banks, who also happen to be outsized players in the derivatives market. I 

support these rules, and have communicated my concerns with the CFTC's position on the 

leverage ratio .to Chairman Massad on at least two occasions. 

You have said that, because ofthe leverage ratio: "The FCM marketplace has declined 

from 100 CFTC-registered entities in 2002 to 55 at the beginning of 2017. Of these 55, just 

19 were holding customer funds for swaps clearing. Many large banks have exited the 

business, including State Street, Bank of New York-Mellon, Nomura, RBS and Deutsche 

Bank." 
95 

A number of FCMs have left the market over the period that you cite for a variety of 

reasons. For example, Lehman Brothers, Bear Stearns, Wachovia, and Merrill Lynch all 

had registered FCMs that were in some way consolidated with other institutions when their 

parent companies failed or were merged to avoid failure. In part, those failures were 

brought on by a lack of adequate capital, liquidity, and margin. Also, to my knowledge, 

three of the five institutions that you list are subject to the eSLR, the regulation that 

industry has advocated be weakened. 

a. Are you arguing that the leverage ratio caused the decline in registered FCMs from 

2002 to the present? In particular, are you arguing that the five institutions that you 

list about- including the nonbank broker-dealer Nomura have exited client 

clearing because of the leverage ratio? If so, please present any evidence that you 

have linking these events to either the SLR or the eSLR. 

Response: The registered FCM marketplace began consolidating long before the 

supplementary leverage ratio was adopted by the U.S. through the Basel accords of2014. 

Its long-run consolidation dating back to 2002 has been driven primarily by extreme low 

interest rates. Since July 2002, the effective monthly fed funds rate has averaged 51 basis 

points. Since the Fed instituted a near zero interest rate policy in December 2008, the 

monthly rate has averaged just 15 basis points. This compares to a monthly average of 

5.15 percent between 1954 when the Fed began keeping records and 2002. Near zero 

interest rates eliminate the revenue stream of FCM's to reinvest excess client collateral 

(limited in the CEA to U.S. government-backed short-term investments). Without that 

revenue source, they are reliant on client clearing fees an already low margin business. 

The CFTC's own regulations have contributed toward the more recent FCM 

consolidation. Its rules dating to 2013 on ownership and control reporting imposed new 

compliance and paperwork burdens. The CFTC also further expanded recordkeeping 

obligations to include the recording of oral and written communications leading up to the 

execution of a transaction in a commodity interest. These rules hurt small and mediumsized FCMs and their similar-sized clients disproportionately- causing the fragmentation 

of this important "Main Street" section of the marketplace. 

The banks that face a three to five percent leverage ratio charge on client cash margin 

held at a CCP have an incentive to exit the FCM business. Deutsche Bank, Bank of New 

York Mellon, RBS, and State Street are G-SIBs that faced this capital charge and 

subsequently chose to stop providing client clearing. 

Some of the consolidation is also due to changes in market structure, especially, the 

transition from floor based to electronic trading. Large numbers ofFCMs who serviced 

the floor trading cormnunity were likely not willing to make the investments necessary to 
96 

operate in the increasingly automated environment. Electronic trading also allows willing 

FCMs to invest in technology and scale up their business. 

While the application of the leverage ratio to client cash collateral and gross notional 

derivative exposure is one of several public policies outlined above that have contributed 

to the consolidation ofFCMs, it became the inflection point for those four G-SIBs to shed 

their FCMs. It remains a risk for other large banks to follow suit. Given that just 19 

FCMs at the beginning of 2017 were active in swaps clearing, this is detrimental to 

Congress's directive in Title VII of the Dodd-Frank Act for mandatory clearing of most 

over-the-connter derivatives. 

I do not advocate eliminating the leverage ratio, only amending it to exempt from the 

bank's leverage calculation: 

1. Customer cash collateral held with central clearers (CCPs); 

2. Other collateral held in segregated CCP accounts. 

I believe these two changes will enhance the ability ofFCMs to offer their services to 

clients. This will further the objectives of Title VII of Dodd Frank to increase central 

clearing of formerly bilateral swaps- an objective I fully support. 

You have also said: "The suggested SLR rule changes will significantly reduce capital costs 

for clearing members. By CFTC estimates, this potential reduction in capital costs for these 

clearing members could be as high as 70 percent; but these will translate into a small one 

percent capital reduction at the bank holding company level." 

Please provide the following: 

b. The amount of segregated customer margin currently held by FCMs affiliated with 

BHCs or IDis subject to i) the SLR; and ii) the eSLR; 

c. The amount of such segregated margin that is being held in transactions on behalf 

of non-financial end users subject to the exemption for posting initial margin; 

d. An explanation of your calculation on the effects of banks' capital levels, including: 

i. Whether the term "capital reduction" refers to the leverage ratio or 

some other measure; 

ii. Whether the "one percent" that you reference means a one percent 

reduction in the denominator of the leverage ratio, or a one 

percentage point increase in the BHCs' leverage ratios; 

iii. The applicable leverage ratio denominator including segregated 

margin vs. the leverage ratio denominator excluding segregated 
97 

margin, on an both an aggregate and institution-by-institution basis; 

and 

iv. The institution-by-institution leverage ratios including segregated 

margin vs. the leverage ratios excluding segregated margin on both an 

aggregate and institution-by-institution basis. 

Response: Staff estimates were based on data regularly submitted by FCMs, with 

emphasis on the top nine bank-affiliated FCMs in aggregate. The 70 percent reduction in 

exposure was calculated assuming relief was provided for client margin offset in the 

capital rules. This reduction in exposure translates into a 70 percent reduction in capital 

for these FCMs in aggregate. Assuming Tier I capital of US banks is $1.5 trillion 

approx., the reduction in capital at the FCM level is equivalent to less than 1 percent 

reduction in total bank capital. 

(43) Advisory Committees 

I was troubled by both the composition of the EEMAC, as well as the flawed report on 

position limits that it first released and then withdrew- both of which happened under 

your leadership of that committee. 

As Chair, will you ensure that more balanced views are represented on the CFTC's 

advisory committees? 

Response: Section 5(b)(2) of the Federal Advisory Committee Act (FACA) 

requires that the membership of advisory committees be balanced in terms of the 

points of view represented and the functions to be performed. FACA regulations 

provide that agencies must provide a description of their plan to attain fairly 

balanced membership through the creation of a Membership Balance Plan. While 

the EEMAC is not subject to the FACA or its implementing regulations, if 

confirmed, I will ensure that all of the Commission's advisory committees comply 

with the FACA Membership Balance Plan requirements. 

Will you support efforts to amend the statutory provision- section 751 of the DodFrank 

Act- to ensure that EEMAC explicitly represents a more balanced range of interests, 

similar to the other advisory committee structures, and is more transparent and 

accountable? 

Response: Should Congressional efforts to amend Section 751 of the Dodd-Frank 

Act result in changes to the structme and proceedings of the CFTC's Energy and 
98 

Environmental Markets Advisory Committee, I will, if confirmed, direct the CFTC 

to fully abide all such provisions. 

(44) CFTC Budget 

The CFTC is responsible for a growing and more complex market, but year after year 

has been denied adequate funding. You have asked for a modest increase in funding, 

but the current budget proposal proposes a fourth year of flat funding. Earlier this 

year you announced the plan to move the CFTC's market surveillance function into its 

Enforcement Division in an effort to strengthen and improve the agency's enforcement 

work. You are literally trying to do more with less. 

How can you fulfill the CFTC's mandate without proper funding and are you willing to 

press Congress and the Administration for more funding? 

Response: To effectively oversee the evolving derivatives markets, the Commission is 

requesting $281.5 million and 739 full-time equivalents (FTE) for fiscal year 2018 

operations. This is an increase of $31.5 million and 36 FTE over the FY 2017 level. The 

$31.5 million in additional funds is not a formulaic or superficial number, but a thorough 

and informed assessment of what the CFTC needs to execute its mission in FY 2018. 

Under my direction the Commission has utilized its ability to provide a budget directly to 

the Congress. I did not take this rarely used step lightly. This is the first budget 

submission under my leadership, and I thought it important to articulate the needs of the 

Commission based on my perspective and vision for a renewed and refocused CFTC. I 

bring to this process my experience, not in politics, but as a former senior executive of a 

publicly-traded company. In business, everything we did every expenditure and every 

investment -- had to contribute to shareholder value. The P&L was our scorecard and it 

didn't lie. You were either adding value to the enterprise or you were looking for another 

line of work. 

On January 20th, I began a process oflooking at every function undertaken by the 

Commission. In the private sector, you would never simply take last year's budget 

number and add a percentage increase. Rather, each dollar requested must serve a 

purpose. Likewise, when I sat down with our leadership team, my budget baseline was 

zero. We built this budget from the ground up. Drawing on my many years of business 

experience, I have already identified several areas in which the agency can mn more 

efficiently and save taxpayer dollars. For example, I reviewed the needs of the offices 

that provide various support services to our divisions, and intend to gain efficiencies by 
99 

instituting a central-services organizational model that is a best practice in the private 

sector. We also discovered areas within our current mission where we need additional 

investment. The $281.5 million FY 2018 budget request reflects the current needs of the 

CFTC based on this analysis. 
100 

Senator Amv Klobuchar 

( 45) Cybersecurity 

It bas unfortunately become near routine that we learn of another cyber-attack and 

data breach resulting in compromised financial information. We've seen cyber-attacks 

at retailers like Home Depot, financial institutions like J.P. Morgan and major 

corporations like Sony. 

As you noted in your testimony, exchanges and clearinghouses are also vulnerable to 

attack. I know that you are working with the exchanges and clearinghouses to make 

sure that they are taking the necessary steps to prevent a cyber-attack. I believe that it 

is vital that the federal government, private business, and law enforcement coordinate 

their efforts to prevent and respond to these attacks. 

• Do you think that the exchanges and clearinghouses are putting increased emphasis on 

data security as a part of their business plans and not waiting for the next crash? 

Response: YES. The exchanges and clearinghouses deploy extensive fmancial resources 

to ensure that data security is as foolproof as technology allows. U.S. exchanges and 

clearinghouses are industry leaders in data security. Data security is an executive 

leadership function. Executives are part of integrated cyber response teams at the 

exchanges and clearinghouses and are responsible for recovery and decision making 

protocols. 

Additionally the exchanges and clearinghouses conduct regular, periodic tests of its 

business continuity and disaster recovery plans and resources and its capacity to achieve 

the required recovery time objective in the event of a wide-scale disruption. 

Each systemically important derivatives clearing organization (and subpart C derivatives 

clearing organization) must have the objective of enabling, and the physical, 

technological, and personnel resources to enable it to recover its operations and resume 

daily processing, clearing, and settlement no later than two hours following the 

disruption, for any disruption including a wide-scale disruption. 

• What are the disclosure requirements for the exchanges and clearinghouses in the event of 

a cyber-attack? 
101 

Response: A derivatives clearing organization must notify staff of the Division of 

Clearing and Risk promptly of any hardware or software malfunction, security incident, 

or targeted threat that materially impairs, or creates a significant likelihood of material 

impairment, of automated system operation, reliability, security, or capacity; or any 

activation of the derivatives clearing organization's business continuity and disaster 

recovery plan. 

SEFs and DCMs must notify Commission staff promptly of all cyber security incidents or 

targeted threats that actually or potentially jeopardize automated systems operation, 

reliability, security, or capacity. See 17 CFR 37.1401(d)(2); 17 CFR 38.l05l(e)(2). 

• What are the possible implications for capital formation and risk management if we fail to 

adequately address the risks as a part of the digital transformation? 

Response: Capital can only be deployed efficiently for broad-based prosperity when the 

risks associated with it are well understood. Given that so much investment is now 

devoted toward cyber infrastructure as part of the digital transformation, it is vital for 

financial regulators to make clear through their rules and applicable supervision the 

extent that cybersecurity must factor into risk management standards. Simply put, a 

successful digital transformation for our markets hinges on a sufficient vigilance and 

defense against cyber threats. The CFTC as lead regulator of the derivatives markets must 

play a leading role in this. 

(46) Renewable Identification Number (RIN) 

I believe the Renewable Fuel Standard (RFS) is important. The renewable fuel 

industry which generates an estimated $5 billion in economic output and sustains 

nearly 12,600 jobs in Minnesota. It's an issue that is important to a number of members 

of this Committee, and a number of members who I have been working with on the 

importance of a strong RFS rule. 

In your May 19, 2017 letter (attached), you stated that, "the CFTC stands ready to 

assist the EPA in its analysis of the RINs market." 

• What role do you believe the CFTC can play to reduce volatility and enhance transparency 

in the physical and cash RIN market? 

• What role does the CFTC have in the RIN and renewable fuels market? 

• How can the CFTC help the EPA successfully meet its statutory functions under the Clean 

Air Act? 
102 

Response: The CFTC's regulatory authority extends to futures and swaps contracts in 

any commodity. The CEA broadly defmes the term commodity to include services, rights 

and interests. As Renewable Identification Numbers ("RIN") meet the definition of 

commodity, the CFTC has regulatory jurisdiction over futures and swaps markets on 

them. The CEA grants the Commission broad authority to take enforcement action for 

fraud, manipulation, and attempted manipulation in connection with futures contracts, 

swaps, and commodities in interstate commerce. 

Activity in RIN futures is non-existent. Currently, CME Group lists two vintage 2016 

RIN futures with contract months through February 2018; however since being listed at 

the end of December 2015, there was only one trading day with limited volume across 

three months in the biodiesel RIN future. Its maximum total open interest was 30 

contracts and there has been no open interest in these futm·es since the September 2016 

contract expired with an open interest of ten. Also, based on data submitted to the 

Commission, there were fewer than 300 open swaps based on the RIN market as of April 

l, 2017. 

On March 15, 2016, the CFTC and EPA signed an MOU to address the sharing of 

information in the possession of the EPA with the CFTC. I believe this MOU is an 

important contribution to inter-agency cooperation. Under the MOU, the CFTC uses 

information shared by the EPA to advise the EPA on techniques that could be employed 

to minimize fraud, market abuses or other violations, and to conduct appropriate 

oversight in RIN and renewable fuel markets to aid the EPA in successfully fulfilling the 

EPA's statutory functions under the Clean Air Act. 

Thus far, this MOU has been utilized to assist the EPA in responding to a request from 

the Renewable Fuels Association ("RFA"). In this letter, the RFA expressed concerns 

about "potential manipulation of the Renewable Identification Numbers ("RIN") market. 

The EPA provided the CFTC with a dataset of matched transactions from its EMTS 

system. The CFTC's Division of Market Oversight Surveillance reviewed the matched 

transactions for indications of possible manipulative behavior and provided a 

memorandum to the EPA. 
103 

Senator Joe Donnelly 

(47) You submitted a separate budget request from the president, requesting $31.5 

million more for the commission than the administration. Ensuring the agency has 

sufficient resources to properly do its job is a significant concern. You said in a letter to 

several members of this committee that CFTC's ability to coordinate with the EPA in 

monitoring RIN markets for manipulation and excessive speculation is "subject to the 

availability of appropriated funds and the agency's budget priorities" and that the 

CFTC "stands ready to assist the EPA ..• to the extent consistent with its limited 

resources." 

• Does the CFTC currently have the resources to adequately assist the EPA 

oversee RIN markets, and will it have the necessary resources at the budget 

levels you requested? If not, what level of resources is needed? 

• Will assistance to EPA be a budget priority for you if you're confirmed as 

Chairman? 

• Have budget levels during your time as a commissioner placed any 

constraints on tbe commission's ability to work with EPA? If so, can you 

detail what kind of activities CFTC has been unable to conduct because of 

those constraints? 

Response: The CFTC's regulatory authority extends to futures and swaps contracts 

in any commodity. The CEA broadly defines the term commodity to include services, 

rights and interests. As Renewable Identification Numbers ("RIN") meet the 

definition of commodity, the CFTC has regulatory jurisdiction over futures and swaps 

markets on them. The CEA grants the Commission broad authority to take 

enforcement action for fraud, manipulation, and attempted manipulation in 

connection with futures contracts, swaps, and commodities in interstate commerce. 

Activity in RIN futures is non-existent. Currently, CME Group lists two vintage 2016 

RIN futures with contract months through February 2018; however since being listed 

at the end of December 2015, there was only one trading day with limited volume 

across three months in the biodiesel RIN future. Its maximum total open interest was 

30 contracts and there has been no open interest in these futures since the September 

2016 contract expired with an open interest of ten. Also, based on data submitted to 

the Commission, there were fewer than 300 open swaps based on the RIN market as 

of April!, 2017. 
104 

On March 15,2016, the CFTC and EPA signed an MOU to address the sharing of 

information in the possession of the EPA with the CFTC. I believe this MOU is an 

important contribution to inter-agency cooperation. Under the MOU, the CFTC uses 

information shared by the EPA to advise the EPA on techniques that could be 

employed to minimize fraud, market abuses or other violations, and to conduct 

appropriate oversight in RIN and renewable fuel markets to aid the EPA in 

successfully fulfilling the EPA's statutory functions under the Clean Air Act. 

Thus far, this MOU has been utilized to assist the EPA responding to a request from 

the Renewable Fuels Association ("RFA"). In this letter, the RFA expressed concerns 

about "potential manipulation of the Renewable Identification Numbers ("RIN") 

market. The EPA provided the CFTC with a dataset of matched transactions from its 

EMTS system. The CFTC's Division of Market Oversight Surveillance reviewed the 

matched transactions for indications of possible manipulative behavior and provided a 

memorandum to the EPA. 

It is difficult to know with certainty whether the Commission's budget will be 

sufficient to assist the EPA. Thus far, the Commission has been able to assist the EPA 

in analyzing its EMTS data as described above and Jack of resources has not 

constrained our ability to work with the EPA while I have served as commissioner. 

Should the EPA request further assistance in analyzing data from the cash markets 

under their direct supervision, if confirmed, I will endeavor to extend our assistance 

under the MOU. 

(48) In your 2014 testimony for your current position on the CFTC, you said that the 

position limits rule was "vitally important" and that "we have got to get [the rule) 

right" so that "loopholes are not created through it." It's now over three years after you 

gave that testimony and almost seven years after legislation was enacted directing the 

commission to finalize a position limits rule. The position limits rule, however, is still 

not finalized and the latest proposal has many concerned that there are significant 

loopholes in the rule. 

When you first came before this committee in 2014, I talked about how these seemingly 

obscure CFTC rules can potentially have significant impacts on Hoosier lives. We 

discussed Hoosiers who were dealing with spiking gas prices, and as a result, many 

hard-working families were having to put off doing things like buying their kids a new 

pair of shoes for basketball season or getting some new clothes for the school year in 

order to fill up the tank of gas to get to work every day. At the time, you said it was an 
105 

"important objective for [the] Commission" to gather the data and come to the 

conclusions about "what we need to do about [excessive speculation]." 

• Would you say that you've come to the conclusion that we need a position 

limits rule that allows exchanges to determine for themselves what gets an 

exemption from the rule; allows financial firms to qualify for exemptions 

even though they're not actually engaged in the physical market; and further 

delays the rule for the swaps market because the exchanges won't have the 

necessary information to be the primary regulators? NO. 

• Or have you come to the conclusion that we don't need a position limits rule 

at all, like the Energy and Environmental Markets Advisory Committee 

(EEMAC) recommended in a report that you requested? NO. 

Response: In December 20 16, I voted alongside fellow Commissioners, Tim Massad 

and Sharon Bowen, in favor of the CFTC's current position limits proposal. I said 

that the proposal "provides the basis for the implementation of a final position limits 

rule that I could support." My view has not changed. 

I have always been open to supporting a well-conceived and practical position limits 

rule that restricts excessive speculation. That is so long as it protects the ability of 

America's farmers, ranchers and producers to hedge risks of agricultural commodities 

and the ability of America's energy producers and distributors to control risks of 

energy production, storage and distribution. 

Early in my term at the CFTC, I traveled to Jeffersonville, Indiana to tour an elevator 

and distribution facility operated by Consolidated Grain and Barge. The plant 

manager explained to me that the elevator served the critical function of providing 

liquidity for Indiana grain and soybean farmers when end-users are not interested in 

buying, and providing a market for end-users when farmers are not interested in 

selling. The elevator thus allows for the management of price risk at both ends of the 

supply chain. 

During that visit to Jeffersonville I learned how the CFTC's then-current (2014) 

proposal would have hmmcd the participants it claimed to protect because it would 

prevent grain merchandisers like Consolidated Grain and Barge from hedging 

"anticipated" transactions, such as hedges of unfilled storage and futures positions 

ahead of anticipated processing requirements. I learned that in late winter, prior to 

spring wheat planning, an Indiana grain elevator with storage capacity that is sitting 

completely empty locks in a spread on a portion of its expected throughput for the 

crop year by buying July wheat futures for the current year and selling July wheat 
106 

futures for the following year. Regardless of whether the elevator actually buys 

wheat during the current year, this transaction represents a hedge by the elevator of its 

capacity (i.e. the value of its grain storage assets). Ifthere is a crop failure during the 

current year resulting in little to no wheat deliveries at the elevator, the spread 

position hedge will perform by providing the elevator the economic value of the 

position hedging against such event. Alternatively, if the elevator does buy wheat, it 

will hedge these specific price risks by taking appropriate futures positions and 

reducing the July/July wheat spread. Unfortunately, the CFTC's proposed position 

limits rule did not provide for such hedging. 

From this Indiana meeting and other meetings with farmers, elevators and other ag 

service providers in almost two dozen states, I was convinced that we must carefully 

consider the impact of this very complex rule on America's almost nine thousand 

grain elevators, two million family farms and 147 million electric utility customers. 

We must get it right. 

If confirmed, I intend to direct the CFTC's Division of Market Oversight to complete 

as soon as possible its review of the many comments received on the current position 

limits proposal. I will also direct the staff to present recommendations for 

appropriate amendments, if any, to the earlier proposal. I will then instruct the staff 

to incorporate any such amendments into draft rules to be presented to the full 

Commission for their review and consideration for final adoption. Any final rule will 

require the affirmative vote of the Commission. 

If confirmed, I am committed to putting forth a workable position limits rulemaking 

that balances the public interest in restricting excessive speculation while allowing 

America's farmers, ranchers, energy producers and manufacturers to hedge bona fide 

risks of production costs and volatile commodity prices. 

0