U.S. GOVERNMENT PUBLISHING OFFICE

23–593 PDF WASHINGTON : 2018

S. HRG. 114–645 

NOMINATIONS OF 

CHRISTOPHER JAMES BRUMMER AND 

BRIAN D. QUINTENZ TO BE 

COMMISSIONERS OF THE 

COMMODITY FUTURES TRADING COMMISSION 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 15, 2016 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

Available via the World Wide Web: http://www.fdsys.gov/ 

mw42035 on AGRINON012 with DISTILLER

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

PAT ROBERTS, Kansas, Chairman 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

JOHN BOOZMAN, Arkansas 

JOHN HOEVEN, North Dakota 

DAVID PERDUE, Georgia 

JONI ERNST, Iowa 

THOM TILLIS, North Carolina 

BEN SASSE, Nebraska 

CHARLES GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

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 

JOEL T. LEFTWICH, MAJORITY STAFF DIRECTOR

ANNE C. HAZLETT, MAJORITY CHIEF COUNSEL

JESSICA L. WILLIAMS, CHIEF CLERK

JOSEPH A. SHULTZ, MINORITY STAFF DIRECTOR

(II) 

mw42035 on AGRINON012 with DISTILLER

(III) 

C O N T E N T S 

Page 

HEARING(S): 

Nominations of Christopher James Brummer and Brian D. Quintenz to be 

Commissioners of the Commodity Futures Trading Commission .................... 1 

Thursday, September 15, 2016 

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 ..................... 2 

Witnesses 

Brummer, Christopher James, of Washington, DC, to be a Commissioner 

of the Commodity Futures Trading Commission ............................................... 4 

Quintenz, Brian D., of Washington, DC, to be a Commissioner of the Commodity Futures Trading Commission ................................................................. 6 

APPENDIX 

PREPARED STATEMENTS: 

Brummer, Christopher James ......................................................................... 26 

Quintenz, Brian D. ........................................................................................... 28 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

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

Executive Branch Personnel Public Financial Disclosure Report filed 

by Christopher James Brummer ................................................................. 32 

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

Executive Branch Personnel Public Financial Disclosure Report filed 

by Brian D. Quintenz ................................................................................... 54 

QUESTIONS AND ANSWERS: 

Brummer, Christopher James: 

Written response to questions from Hon. Pat Roberts .................................. 76 

Written response to questions from Hon. Debbie Stabenow ......................... 77 

Written response to questions from Hon. Sherrod Brown ............................ 88 

Written response to questions from Hon. Charles Grassley ......................... 85 

Written response to questions from Hon. Heidi Heitkamp ........................... 89 

Written response to questions from Hon. Patrick J. Leahy .......................... 87 

Written response to questions from Hon. David Perdue ............................... 81 

Written response to questions from Hon. Ben Sasse ..................................... 82 

Written response to questions from Hon. John Thune .................................. 86 

Quintenz, Brian D.: 

Written response to questions from Hon. Pat Roberts .................................. 90 

Written response to questions from Hon. Debbie Stabenow ......................... 92 

Written response to questions from Hon. Sherrod Brown ............................ 105 

Written response to questions from Hon. Charles Grassley ......................... 101 

Written response to questions from Hon. Heidi Heitkamp ........................... 106 

Written response to questions from Hon. Patrick J. Leahy .......................... 103 

Written response to questions from Hon. David Perdue ............................... 97 

Written response to questions from Hon. Ben Sasse ..................................... 98 

mw42035 on AGRINON012 with DISTILLER

Page

IV 

Quintenz, Brian D.—Continued 

Written response to questions from Hon. John Thune .................................. 102 

mw42035 on AGRINON012 with DISTILLER

(1) 

NOMINATIONS OF 

CHRISTOPHER JAMES BRUMMER AND 

BRIAN D. QUINTENZ TO BE 

COMMISSIONERS OF THE 

COMMODITY FUTURES TRADING COMMISSION 

Thursday, September 15, 2016 

UNITED STATES SENATE, COMMITTEE ON AGRICULTURAL, NUTRITION, AND FORESTRY, Washington, DC 

The Committee met, pursuant to notice, at 10:00 a.m., in room 

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

of the Committee, presiding. 

Present: Senators Roberts, Boozman, Perdue, Tillis, Stabenow, 

Brown, Klobuchar, Bennet, Gillibrand, Donnelly and Casey. 

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, and colleagues soon to come, as we consider the nominations of Dr. Christopher Brummer, and Mr. Brian Quintenz to 

serve as Commissioners of the Commodity Future Trading Commission. 

The CFTC is charged with fostering open, transparent and competitive financially sound markets and to avoid systemic risk. Further, the Commission is tasked with protecting market users and 

their funds, consumers and the public, from fraud, manipulation 

and abusive practices related to derivatives and other products that 

are subject to the Commodity Exchange Act. 

In order to fulfill its mission, the Commission is comprised of five 

Commissioners nominated by the president with the advice and 

consent of the Senate. Unfortunately, there are two commissioner 

vacancies at the CFTC, or perhaps fortunately, and that is what 

brings us here today. 

As noted by the CFTC’s own mission statement, farmers, ranchers, producers, and commercial companies are end users—that includes municipalities and pension funds and others who use markets to lock in a price or rate and focus on what they do best, that 

is, innovating and producing goods and services for the economy, 

most importantly, creating jobs. 

It is essential that the CFTC have individuals in charge that 

truly take that mission statement to heart, as the innovation and 

mw42035 on AGRINON012 with DISTILLER

2 

hard work of our farmers and ranchers seems to have been forgotten in recent years. As I have said before, it was not the farmer, 

the rancher, the producer or the commercial end user that caused 

the great financial crisis of 2008, yet they are paying the price. 

Many of us here raised concerns when Dodd-Frank was being considered and insisted that the legislation should not negatively impact those who had nothing to do with the causes of 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, it was in fact our farmers, our ranchers, and our 

country grain elevator managers who felt the heavy hand of overregulation. We hear of the concerns from constituents who describe 

in detail, the regulatory overreach stemming from the Dodd-Frank 

Act and its implementation. 

In order to address these concerns, this Committee passed a bill 

in April titled ‘‘The Commodity End User Relief Act.’’ The bill 

champions compromise and a responsible solution to providing regulatory certainty to end users while increasing customer protections. As the futures and derivative markets have grown to include 

a producer’s input costs like fuel and fertilizer, so too has the producer risk management toolbox, and more options for managing 

risks are a good thing. 

It is clear that Congress should not withhold needed regulatory 

relief from our farmers and ranchers and risk management service 

providers any longer, nor should the CFTC. The CFTC must look 

through the lens of regulatory practicality, not the lens of irrationality. I am pleased that Chairman Massad is recommending the 

automatic drop of swap dealer de minimis levels be pushed back 

one year. It is important that the Commission have more time to 

analyze the issue to better serve our farmers, ranchers and end 

users. 

It is also important the CFTC discontinue its expansion of its jurisdiction where systemic risk is not present. It is imperative that 

all Commissioners understand the historic nature of the markets 

the CFTC regulates and truly understand risk mitigation as well 

as associated costs of regulations. 

I thank both the nominees for being here today. I look forward 

to your testimonies, and I now turn to my colleague, Ranking Member Stabenow, for her opening remarks. 

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

FROM THE STATE OF MICHIGAN 

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

I too want to welcome and congratulate our two CFTC nominees, 

Chris Brummer and Brian Quintenz, and welcome their families 

and friends who are here today. 

It is remarkable to think that more than eight years have passed 

since the start of the worst financial crisis to hit our country since 

the Great Depression. That is why your positions are so important, 

this responsibility is so important. Whenever I think about the 

work of the CFTC, I never forget that eight million hardworking 

Americans lost their jobs because of financial markets that got out 

of control. Small businesses closed, people were evicted from their 

homes, retirements were wiped out. Despite many signs of strength 

mw42035 on AGRINON012 with DISTILLER

3 

and continued growth in our nation’s resilient economy, we also 

know that millions of Americans across the country are still trying 

to get fully back on their feet from what happened at that time. 

Although the Commodity Futures Trading Commission is rarely 

associated with helping to create or secure American jobs, the price 

of food in the marketplace, the supermarket, or the cost of gas at 

the pump, this Committee knows all too well the direct relationship 

between the CFTC’s responsibilities and these fundamental elements of our economy that American families worry about every 

single day. 

The CFTC is the front line regulator of derivatives, which as we 

know, includes futures, options, and since 2010, swaps. As we all 

know, derivatives, specifically the over-the-counter swaps market, 

played a significant role in the financial crisis. The swaps market 

was once in the shadows and a virtual financial playground. But 

today, this Committee and the CFTC can confidently say that as 

a result of Wall Street reform, a light is shining on the swaps market. 

From strong capital and margin requirements to mandatory 

clearing, trade reporting, swap execution facilities, the derivative 

market is much more transparent and well-regulated in the public 

interest than it has ever been. There is, however, more to do. The 

CFTC must continue to build on the momentum of the past six 

years to ensure that the derivatives market remains strong, transparent, free from manipulation and fraud, and accessible to end 

users, and certainly the Chairman and I agree and have both 

joined together in supporting the accessibility and effectiveness for 

end users in this process. 

Today the CFTC has much more responsibility than it has ever 

had. Unfortunately, though, it carries out those responsibilities 

with limited resources, which continues to be a concern of mine in 

terms of the ability to fully respond to markets and be effective 

through the CFTC. While I will continue to lead the fight for additional Commission resources, it is critical that the Commission use 

existing resources in the most effective manner possible. 

The CFTC must also keep a sharp eye on all market participants, including clearing houses, exchanges, swap dealers, which 

now have significant new roles and responsibilities under DoddFrank, and new risks associated with automated trading and 

threats from cyberattacks are threats that could domino across the 

globe and knock families and small business down along the way. 

Finally, the CFTC must continue to work to harmonize key financial reform rules across borders, carefully balancing the need 

for smart financial reform with the sensitive appreciation of how 

countries may approach regulations differently. The CFTC’s most 

important responsibility is to fight for every American who has lost 

their job, their home, their pension after the financial crisis, also 

for every farmer, every manufacturer, rancher, business person 

who uses the markets and needs it to be effective. 

I have enjoyed meeting with each of you and appreciate the responses, the conversations that we have had, and I look forward to 

your responses today. If confirmed, I fully expect both of you to 

work with this Committee in an open and responsive manner. 

Thank you, Mr. Chairman. 

mw42035 on AGRINON012 with DISTILLER

4 

Chairman ROBERTS. I thank my distinguished colleague for her 

remarks. It is now time to hear from the nominees. 

Dr. Chris Brummer is a professor of law and faculty director of 

the Institute of International Economic Law at the Georgetown 

University Law Center where he has taught since 2009. Chris received his bachelor’s from Washington University in St. Louis, a 

juris doctorate from Columbia University Law School, and a Ph.D. 

from the University of Chicago. From 2004 to 2006, he was an associate of the law firm of Cravath Swaine & Moore, LLP. From 

2006 to 2009, Chris was an assistant professor at Vanderbilt University Law School, and he served as an academic fellow in the Securities and Exchange Commission Office of International Affairs 

in 2008. In 2015, he completed a three-year term on the National 

Adjudicatory Council of Financial Industry Regulatory Authority. 

The acronym for that is FINRA. 

Welcome, Chris. 

Our next nominee, Mr. Brian Quintenz, is a founder and managing principal and chief investment officer of Saeculum Capital 

Management, LLC, in Washington, DC Prior to forming Saeculum 

Capital Management in late 2013, Brian worked within the Global 

Institutional Consulting Group at Merrill Lynch as an outside consultant. From 2009 to 2012, he was the senior associate for HillTownsend Capital, a firm established during the 2000 crisis to 

focus solely on U.S. financial company equity opportunities. 

Prior to working in the financial markets, from 2001 to 2007, 

Brian was a senior policy aide for Congresswoman Deborah Pryce, 

an outstanding member of the House from Ohio and a good friend. 

Brian graduated Magna Cum Laude from Duke University—it is 

not clear whether he is one of these Duke University’s jumping up 

and down fans on the basketball court, so that will remain classified—who has a major in public policy studies and received an 

MBA from Georgetown. 

I welcome you. I look forward to your testimonies. But before 

that, there are two questions I will ask you under oath. Please 

stand and raise your right hand. 

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. BRUMMER. I do. 

Mr. QUINTENZ. I do. 

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

you will appear before any duly constituted committee of Congress 

if asked to appear? 

Mr. QUINTENZ. I will. 

Mr. BRUMMER. Yes. 

Chairman ROBERTS. I thank you both. We recognize Dr. 

Brummer first. 

TESTIMONY OF CHRISTOPHER JAMES BRUMMER, TO BE COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION 

Mr. BRUMMER. Thank you so much, Chairman Roberts, Ranking 

Member Stabenow, and the members of the Committee. I am honored to be here before you today as a nominee to serve as a commissioner on the Commodity Futures Trading Commission. I would 

mw42035 on AGRINON012 with DISTILLER

5 

also like to thank President Obama for nominating me and my 

amazing family, especially my wife, for supporting me. 

The CFTC has an important, significant impact on the daily lives 

of Americans and it is critical that CFTC regulated markets work 

well, and I hope to contribute to this work. I come from a family 

of teachers and farmers. My grandparents had a small farm in the 

Shenandoah Valley of Western Virginia, and some of my earliest 

memories include spending summers on that farm, riding on the 

back of my grandfather’s pickup truck as we took produce to the 

local market. 

My mother, who grew up there, would become an elementary 

school teacher and move with my father to beautiful Northwest Arkansas, where I was raised. I grew up in a rural area just outside 

of Fayetteville, where my neighbors raised cattle and horses, and 

poultry producers were just a 10-minute walk down the road from 

my house. My upbringing taught me to respect different points of 

view and stressed basic values that have longed sustained the 

country: work hard, help your neighbor, think before you act, and 

do good. 

These values have paid dividends throughout my life. I worked 

hard in school, learned a couple of foreign languages, and eventually ended up a lawyer, which opened doors for me to educational 

and professional experiences around the world. I invested a significant amount of time studying markets and financial regulation as 

a professor, and I opted, where I could, to do good, from advising 

regulators in the United States, Europe and Asia on how to ensure 

safe and efficient cross-border market supervision, to working on 

critical enforcement efforts intended to keep America’s financial 

markets safe and secure. 

The 2008 financial crisis had devastating consequences for the 

economy and like many Americans, it impacted those I cared about 

in many ways. It would also underscore for me important lessons 

about interdependence and the global economy. For much of 2008, 

I was a fellow at the Securities and Exchange Commission’s Office 

of International Affairs, on loan from Vanderbilt Law School in 

Nashville where I was teaching. There I helped push forward 

America’s regulatory interests and priorities in the world and saw 

firsthand the need for skilled communication and coordination with 

global actors. 

My work since then has focused on cross-border oversight of derivatives and securities markets. I am a strong believer in promoting safe and economically vibrant financial markets through 

sensible and strong regulation at home and close coordination 

abroad. Smart international coordination helps level the playing 

field for U.S. firms competing abroad and to prevent arbitrage that 

can undermine our domestic policy priorities and market practices. 

I have seen in my experience assisting law enforcement that, unfortunately, threats to market integrity are very real and must be 

addressed swiftly. Farmers, ranchers, and commercial end users 

must be able to trust that markets both function properly and 

allow market participants to hedge their commercial risks effectively. They also have to trust that the markets in which they participate are healthy, liquid and free of fraud and manipulation. 

mw42035 on AGRINON012 with DISTILLER

6 

To accomplish this, government oversight should be prudent and 

efficient and rules should be carefully and faithfully enforced. The 

CFTC should not be afraid to embrace new technologies that promote efficient markets, but where innovations pose risks, whether 

to market integrity, cybersecurity or financial stability generally, 

end users and U.S. taxpayers must be protected. 

Finally, I believe the CFTC’s mission going forward is as much 

about faithfully concluding the agency’s Dodd-Frank rulemaking as 

it is about looking forward to new threats and opportunities facing 

the derivatives markets and those who depend on them. I recognize 

that to do this job well requires listening and keeping an open door 

to people who rely on those markets, and I promise to do just that. 

Again, I am honored to be here today, and I look forward to your 

questions. 

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

26 in the appendix.] 

Chairman ROBERTS. Thank you very much, Dr. Brummer, for an 

excellent statement, and for being on time. I make a note of that. 

Ranking Member will have to give him a star for that. Mr. 

Quintenz. 

Mr. QUINTENZ. I will make a note of that too, Mr. Chairman. 

TESTIMONY OF BRIAN D. QUINTENZ, NOMINEE TO BE COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION 

Mr. QUINTENZ. Thank you, Chairman Roberts, Ranking Member 

Stabenow, and members of the Senate Agriculture Committee. It is 

an honor to be with you this morning. I would also like to thank 

Majority Leader McConnell for recommending me for this position 

and President Obama for my nomination. If confirmed, I would fill 

the seat vacated by Scott O’Malia, who set a high standard in his 

service as commissioner. 

I am deeply grateful for the love and support of my parents, Kenneth and Susan Quintenz; my brother, Darren Quintenz; and my 

two children, Connor and Vivienne, all of whom are in attendance 

today. I am proud to have them here. 

Mr. Chairman, I am a Midwesterner, a first generation Ohioan 

whose mother and father grew up in Wisconsin, the home of my extended family. While I am a resident of Washington, DC, I still 

consider myself a Midwesterner, and I believe firmly in the Midwest values of hard work, honesty, and community. 

I come from a family of entrepreneurs and small business owners. My grandfather on my mother’s side, after serving in World 

War II, returned home to Northwestern Wisconsin and bought a 

Ford car dealership. His wife, my maternal grandmother, was 

raised on a family dairy farm in Chetak, Wisconsin. My paternal 

grandmother owned and operated a restaurant on the east side of 

Milwaukee, putting her three sons through college. My father started his own business, my brother started his own business, and I 

am the founder of my own business, Saeculum Capital Management. 

Saeculum is an investment firm currently registered with the 

CFTC as a commodity pool operator. As the sole proprietor of this 

firm, it is my responsibility to effectively and meticulously manage 

mw42035 on AGRINON012 with DISTILLER

7 

risk as well as compliance. I am, therefore, very familiar with the 

CFTC’s investor protection rules, disclosure requirements, and recordkeeping obligations. Additionally, as a registered Associated 

Person of this firm, I hold a Series 3 National Commodity Futures 

Exam license, a credential valuable in interpreting the impact of 

regulations on futures markets. 

I began my career in finance in 2008, during the financial crisis, 

working directly under the CEO at an investment firm focused on 

the banking sector. I performed detailed valuations on financial institutions of all sizes and complexities. I became an expert at reading banks’ balance sheets and income statements, understanding 

their accounting rules and financial disclosures, and forecasting 

their capital levels and quarterly earnings. 

In this position, I depended on the accuracy and accessibility of 

publicly available information and became a firm believer in data 

and transparency. Transparency increases market efficiency and 

can provide an important check on risky behavior. The Commission’s focus on data and transparency is encouraging, but more 

progress is needed. If confirmed, I will draw from my professional 

experience to advance that important work. 

But my professional career did not begin in finance; it began in 

public policy. After graduating from Duke with a degree in public 

policy studies, I joined the office of Congresswoman Deborah Pryce, 

who represented Ohio’s 15th District, an area that included my 

hometown of Columbus. Ultimately, I became her Senior Policy Advisor with an issue portfolio that included agriculture. In meeting 

agricultural constituents and personally visiting some of the over 

1,000 family farmers in our Ohio district, I developed a strong appreciation for the work ethic and sophistication of America’s farmers and ranchers, as well as for the pressures, costs, and risks that 

they face in their business. Should I be confirmed, I pledge to ensure the market concerns of the agricultural sector are recognized 

and continue developing a firsthand knowledge of the agricultural 

community. 

The financial crisis scarred every sector of our economy, hurt individuals, families and communities, and exposed deep flaws in our 

markets. It deserved a legislative and a regulatory response. As 

that response is calibrated, regulations meant to address those 

flaws should not spill over to harm the normal activity of ordinary 

businesses. When costs are added without targeting risk, poor outcomes ensue. I will work to ensure that regulations and their burdens are tied to the risks being mitigated. 

I would be honored to bring my public policy background, my expertise in finance, my knowledge of derivatives and their uses, my 

familiarity with risk management, as well as my respect for the agricultural community and end users of these markets, to the CFTC. 

This is a crucial time for our financial markets and for the people 

that depend on them. It would be a privilege to be of service in 

safeguarding and improving the country’s marketplaces. 

I will be very pleased to answer your questions. 

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

28 in the appendix.] 

mw42035 on AGRINON012 with DISTILLER

8 

Chairman ROBERTS. Thank you, sir. We now turn to questioning 

of the witnesses, and I am going to ask this question, and we will 

ask Brian to start off. 

Looking at the CFTC through the lens of an agricultural end 

user, do you think the CFTC has done an adequate job of balancing 

risk versus costs in rules they have issued as required by DoddFrank? 

Mr. QUINTENZ. Thank you for the question, Mr. Chairman. I 

think it is crucial that the agency, in all aspects of their 

rulemakings, do a thorough job in understanding, estimating, and 

disclosing the costs associated with their rule writings and to ensure that, as they seek to apply those costs through the definitions 

they create that target entities and activities, that those definitions 

correspond to the risks being mitigated. Otherwise, I fear costs are 

applied broadly, burdens are borne inappropriately, and the Commission gets into the dangerous area of potentially regulating generic activity. 

I guess I would point to, as an example, something we saw a 

number of years ago with the agency revising the Part 135 requirements that would require farmers and ranchers to keep very detailed records that were searchable and sortable, including text 

messages and instant messages, of any communication that could 

possibly lead to a transaction. I know this was a great burden on 

the farming and ranching community. I am pleased that the CFTC 

recognized the burden of that and worked to fix it, although, unfortunately, I think it took a number of years to happen. But I would 

point to that, as well as maybe some other things coming down the 

pike, where they need to focus on this. 

Chairman ROBERTS. Dr. Brummer. 

Mr. BRUMMER. It is absolutely critical that the CFTC both remember its roots and the importance of agricultural end users to 

the U.S. economy. If these derivatives markets do not function well, 

it jeopardizes the ability of end users to not only hedge their risk, 

but also to contribute productively to the U.S. economy. 

You have my commitment that I will work to ensure that the 

rules that are in place work effectively for these end users, for the 

folks back home in my community and similar communities. It is 

important work, and frankly it has to be something to keep in 

mind in the ongoing rulemaking. 

Chairman ROBERTS. So you have your cost benefit yard stick 

right in your pocket? 

Mr. BRUMMER. Well, the CFTC statutorily is required to consider 

costs. It is critical that the work being done is data driven, that the 

Commission grounds its rule writing in facts. Part of the costs to 

be considered involve avoiding dead weight costs to society, while 

at the same time making sure that we keep in mind the greater 

costs at times, and certainly in the financial crisis, that we saw 

that can peril the U.S. economy. So the data-driven analysis has 

to be one where you kick the tires and you lift the hood, and also 

you keep in mind the stakes of getting it right and the stakes involved in getting it wrong. 

Chairman ROBERTS. You both have touched on this, but I want 

to really emphasize that I have stated many times before that we 

need more options and lower costs for our on-the-ground folks who 

mw42035 on AGRINON012 with DISTILLER

9 

are trying to hedge their agriculture or their commercial risks so 

they can get down to the business of what they do the best for 

America. As the CFTC is currently considering rules and regulations that could negatively affect our farmers, ranchers, and end 

users, can you please speak to how you would address those rules 

and regs as a commissioner, specifically the de minimis level and 

position limits. 

We will start with you, Mr. Quintenz. 

Mr. QUINTENZ. Thank you, Mr. Chairman. Yes, these are very 

important rulemakings that could affect a lot of activity that falls 

outside, I think, the risks that are being targeted. I think it is important in position limits to make sure that the end users maintain 

their ability to bona fide hedge their risks. The proposal, I think, 

contains a number of limitations of very tried and true hedging 

practices that would be subject to Commission approval and create 

an approval regime. In terms of the de minimis threshold, I fear 

that if we get that wrong, we end up driving providers of these 

swaps out of the market and consolidating risk. 

Chairman ROBERTS. Dr. Brummer. 

Mr. BRUMMER. Given the data that I have seen from the CFTC, 

I would have some concerns about the risk of transactions in the 

non-financial commodity swaps markets flying under the radar. I 

hear today, like you, that the Chairman has announced a year-long 

delay in order to get more data in order to not only do that, but 

also get their capital rules right. I certainly cannot disagree with 

the proposition that you want to get these rules in particular right. 

But I think that any delay really should be a purposeful one. It 

is essential for regulators to understand cost. But if you have significant players in the market, the law mandates that there needs 

to be in place standards like business conduct, reporting, record 

keeping, and risk mitigation, in order to help assure a high quality 

transactional environment. 

So if confirmed, I would certainly work to ensure that the time 

is used wisely. 

Chairman ROBERTS. Dr. Brummer, let me ask you a question. In 

a 2000 ‘‘Georgetown Law Journal’’ article you wrote the following, 

quote, ‘‘Policymakers in agencies such as the SEC and Federal Reserve are not generally elected by the public and once appointed, 

are not often easily removed by even democratically-elected officials. Policymaking is to some degree unaccountable to the public, 

and therefore, some believe, illegitimate.’’ 

Now, considering this, why do you want to become such a policymaker, and how will you ensure the legitimacy of your work at the 

CFTC? Pardon us for going into your background. 

Mr. BRUMMER. Oh, no, no. It is an honor to have my scholarship 

certainly discussed by such an esteemed body. In that article and 

in other articles I also add that in order to get rulemaking right, 

you have to have on the one hand, technical expertise, people who 

are willing to get into the details and to make sure that very factspecific and often complex market ecosystems work well. But it is 

essential that when doing this, that there is sound, strong congressional oversight. 

I think that if I have the honor of being a commissioner, a certain modesty has to be involved in everything that you do, to know 

mw42035 on AGRINON012 with DISTILLER

10 

that I am not or would not be an elected representative, and that 

ultimately I have to understand that although I have a responsibility to safeguard the public interest, that at the same time that 

work has to be done in a collaborative spirit with elected rule makers. It is the only way to get it right, to get all the information that 

you need about your constituents and others, and I think it ultimately enhances the quality of agency rulemaking. 

Chairman ROBERTS. I appreciate that. I have two other questions, one involving the cost benefit balance and the consideration 

when voting on proposed final rules and regs, the other on CFTC 

in regards to the Dodd-Frank rule writing process. You have both 

touched on those in your answers. 

I turn now to Senator Stabenow. 

Senator STABENOW. Well, thank you, Mr. Chairman, and thank 

you again to both of you. I wanted to specifically ask you a little 

bit about cybersecurity, which obviously, when we look at every 

realm of our lives now, there is the whole question that is very serious. Last week the CFTC adopted amendments to its system safeguard rules in an effort to enhance and clarify existing cybersecurity requirements. 

I am pleased that the Commission did that in a timely way, because it goes without saying that this threat of cyberattack is one 

of the biggest challenges we face both in the public and the private 

sector. However, looking closely at last week’s amendments, I am 

curious whether each of you believes that a best practices approach 

is enough or whether we need to be looking at more specific cybersecurity regimes which closely integrate the public sector’s work 

with the private sector. What is the best that we should be doing 

here as it relates to addressing cyber threats to our financial markets? 

I will first, Mr. Quintenz, ask you and then Dr. Brummer. 

Mr. QUINTENZ. Thank you, Senator. That is a very important and 

a very difficult question. There is no more important issue, I believe, to regulators and to the marketplaces than cybersecurity. I 

view cyberspace as the battlefield of the 21st Century for those 

that wish not only to commit fraud and theft, but for those that 

wish to do our country harm and potentially create a panic that 

could lead to a breakdown in social services. This is something that 

I believe the Commission has taken very seriously. I was encouraged by the bipartisan and unanimous adoption of that rule. 

Specifically, to your question, I think we need to allow for innovation in this space. We need to allow for the flexibility of firms 

that have very large budgets that can target cybersecurity, to 

spend those funds and spend that thought in a flexible way, while 

ensuring that they are meeting best practices, a high standard of 

best practices, to save our markets. 

Senator STABENOW. Thank you. Dr. Brummer. 

Mr. BRUMMER. Cybersecurity is critically important. It is critically important to our markets. It is critically important to the 

health and security of the U.S. economy. It is not only complex, but 

it is fast moving. Cyber threats can quite literally move in milliseconds, and it is critical that the agency, that the CFTC, remains 

ahead of the technological curve. 

mw42035 on AGRINON012 with DISTILLER

11 

Certainly best practices are a start. You want to, I would imagine, make sure—and certainly I would want to make sure, if I had 

the honor of being confirmed, that best practices and benchmarks 

are indeed being met and that there is a high quality to those best 

practices. It is important, frankly, for CFTC Commissioners and 

staff to get out into the field and make sure that they have both 

the resources and the wherewithal in order to predict trends to cybersecurity. But is it of critical importance, and you would have my 

commitment that I would be paying this very, very close attention. 

Senator STABENOW. Thank you. Let us talk about cross-border 

harmonization. I know, Dr. Brummer, you have done a lot of important work in that area, but recent decisions by some international regulators to delay the September 1 implementation of 

margin requirements for un-cleared swaps has raised many important policy questions regarding global harmonization of financial 

markets and relates to the risks of rewarding bad behavior by 

broadly delaying deadlines. This is a dilemma because we have 

moved ahead, others have not. 

So given the global nature of the swaps market, what is your 

view of the U.S. role among international regulators, and how 

would each of you balance the need to move forward on financial 

reform while recognizing real challenges that individual regulators 

may face and the communities being regulated face in all of this? 

Dr. Brummer. 

Mr. BRUMMER. International coordination is deceptively hard. It 

is difficult. You have countries with different traditions, different 

economies, different political and economic cycles, and getting everybody on the same page takes commitment and it takes work. 

Overall, I think it is hard, however, to lead if you do not lead by 

example. I think if you want to have an environment, a cross-border regulatory environment that is of high quality, then the United 

States should commit to the highest standards and find those who 

are like-minded. 

There have been some delays. My sense is that by standing firm, 

the United States, and particularly the CFTC, has been able to encourage other countries to accelerate some of their own reforms in 

order to provide a more stable cross-border regulatory environment, 

but it certainly takes a lot of dedication, work and listening to 

other regulators and a firm understanding of what exactly they are 

doing in other parts of the world. 

Senator STABENOW. Thank you. Mr. Quintenz. 

Mr. QUINTENZ. Thank you, Senator. I would agree with my fellow 

nominee. I think this comes down ultimately to relationships and 

trust and keeping an open line of communication across our borders to make sure that these efforts are coordinated. I think someone does have to go first, but I do not believe that is the full analysis. I believe that the full analysis is: after you go first, how long 

will it be until all the jurisdictions move, what is the size of the 

regulatory arbitrage you are creating, and once other jurisdictions 

move, will there be regulatory arbitrage going forward? 

I believe that requires a great level of coordination on which I 

would be thrilled to work should I have the honor of being confirmed. 

mw42035 on AGRINON012 with DISTILLER

12 

Senator STABENOW. Thank you very much. One other question 

that I would like to ask each of you in that regards to the clearing 

house risk. The risk and leverage associated with unregulated 

swaps markets played, as we know, a significant role in a financial 

crisis. Recognizing this, Congress required essential clearing of certain standardized swaps. Since the transition, many concerns and 

questions have been raised regarding the new risk profile of clearing houses. 

What actions do each of you believe the CFTC should take to ensure registered clearing houses manage risk appropriately so that 

the requirement for clearing does not become a vehicle for unmanageable systemic risk? Dr. Brummer. 

Mr. BRUMMER. The reforms, the clearing reforms, are very important and constitute a core aspect of recent reforms, but there 

are risks certainly whenever you concentrate transactions within 

one entity, and as a result, the CFTC has to play a vigilant role 

in making sure that clearing houses operate well, that they function properly, and that the members are fulfilling their own obligations to the clearing house. 

This involves close supervision of clearing houses. It involves an 

analysis of what contributions the members are making to the 

clearing house in order for it to function properly, what risk protocols are not only being implemented now, but on an ongoing basis, 

and making sure that there are inspections of those clearing houses 

to make sure that they are adequately capitalized and to make 

sure again, that U.S. taxpayers are never again on the hook for 

shortcomings in our own financial market infrastructure. 

Senator STABENOW. Thank you. Mr. Quintenz. 

Mr. QUINTENZ. Yes, thank you for the question. I think it is crucial to make sure that the clearing houses are keeping their obligations. I do not believe that, before rule writing in this area, there 

was any method to potentially resolve a clearing house failure. So 

I believe that is crucially important, that it be on the record and 

in the books, and that process be known to the markets so it does 

not create a panic. 

However, I am also aware clearing houses need to protect themselves against their largest two customers and members failing, in 

which case there would probably be some significant other problems that we would be having to deal with. But I think it is crucial 

that we verify that they are keeping those obligations to prevent 

anything outside of that from happening. 

Senator STABENOW. Thank you, Mr. Chairman. 

Chairman ROBERTS. I thank my colleague. Senator Boozman. 

Senator BOOZMAN. Thank you, Mr. Chairman, and Dr. Brummer, 

we are glad that your family saw the light and moved you from 

Virginia to Northwest Arkansas. 

Mr. BRUMMER. Yes, sir. 

Senator BOOZMAN. Certainly we are very, very proud of you. I 

would like to follow up on the Chairman’s question about the relationship of the importance of the CFTC understanding the American farmer and understanding agriculture. If confirmed—and this 

is a question for both of you. If confirmed, how do you plan to engage with agricultural groups as well as with other end users? 

mw42035 on AGRINON012 with DISTILLER

13 

What would be your method of getting out and ensuring that you 

have a good understanding? 

Mr. QUINTENZ. Thank you, Senator. When I spent time on the 

Hill, one of my favorite things to do was to go back to our district 

and actually visit with people. I do not think you get a better sense 

of their businesses and their pressures and their costs than you do 

by actually going there and being on the ground with them. 

I would, should I have the honor of being confirmed, commit to, 

on a very regular basis, meeting with the agricultural community 

and farmers and ranchers around the country to make sure that 

I am hearing their concerns. I would also very much like to keep 

an open line of communication to you and your colleagues to make 

sure I am hearing the concerns of your constituents. 

Senator BOOZMAN. Dr. Brummer. 

Mr. BRUMMER. Absolutely. It is an honor, a privilege to talk to 

our great farmers. I too can commit to getting out, talking to farmers and ranchers and other end users about their needs. I enjoy 

getting back home and talking to folks in my community and other 

similarly-situated communities and will continue to do so. 

Senator BOOZMAN. Very good. In your testimonies, I think both 

of you noted the importance of ensuring that U.S. firms are operating on a level playing field as compared to our international competitors, and certainly, I completely agree with that point. But one 

area that has been a challenge is in harmonizing the rules, and 

again, our Ranking Member brought this up with the regulations 

with the rest of the world. 

How would you approach the decisions like the CFTC’s recent 

comparability determination regarding Japan? How would you ensure that U.S. firms are able to compete with their international 

counterparts without competitive advantage? 

Mr. QUINTENZ. Thank you for the question, Senator. I think that 

this does come down to relationships. It does come down to keeping 

open lines of communication. I believe that in the example of 

Japan, ‘‘comparability’’ is an important word. The word is not 

‘‘equality’’; it is ‘‘comparability’’. I think that we need to be open to 

understanding other jurisdictions have their own authority and, if 

their goals are similar to ours and we feel that we are comfortable 

with the ring fencing they can do around that risk, I think that 

those determinations should be pretty easy. 

But I think that it is crucial that we understand how our rules 

are either advantaging our markets or potentially disadvantaging 

our markets in a situation where there is disharmony in the regulatory process. 

Mr. BRUMMER. I think that harmonization is important. Rules 

will never be 100 percent the same across jurisdictions, and it is 

important to make sure that regulators are on the same page, both 

from the standpoint of financial risk, but also to make sure that 

there is a level playing field for our companies operating abroad, 

and I think you have to leverage existing international organizations and forums, having sound relationships, and leading by example. 

As I said, I think it is hard to lead if you do not lead by example, 

but also understand that there are different regulatory ecosystems 

and countries have different ways of getting things done. 

mw42035 on AGRINON012 with DISTILLER

14 

Senator BOOZMAN. I really do not have a question about cybersecurity except just to comment in the sense I am on a Subcommittee 

that has jurisdiction over OPM and the IRS and Appropriations, 

and this is just a huge problem for our country, and we are seeing 

this with all the stuff that is coming out. But that is certainly 

something that I would really encourage both of you to really just 

make that a priority. It is just something that we have to attack 

as a nation. The Federal Government just does not do a very good 

job. So if you want to comment on that. 

Mr. QUINTENZ. I just agree with you. It requires an immense 

amount of coordination and effort. 

Senator BOOZMAN. Yeah. 

Mr. BRUMMER. Absolutely, sir. 

Senator BOOZMAN. Thank you. Thank you, Mr. Chairman. As 

noted, I have also stayed within my time line. 

Chairman ROBERTS. Much appreciated. Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. Mr. Quintenz, welcome fellow Ohioan. I see your family is there with you. I know it 

is a big day for you and for them, and congratulations. I had the 

honor of serving with your very distinguished former employer in 

the House, with Congresswoman Pryce. So thanks for joining us. 

Let me start with you, and then I want to follow up with Dr. 

Brummer from what Mr. Boozman asked about and what Ranking 

Member Stabenow talked about too. The Advisory Committee, the 

CFTC Advisory Committee, as you know, these committees serve 

an important function, but earlier this year, the Energy and Environmental Markets Advisory Committee presented a one-sided report that was withdrawn. 

How do you support balancing the membership of the Committee 

to make sure a variety of viewpoints are considered and represented? Because in that report we had some conversations and 

the Commission did not really seem all that interested in more balance. How do we get there on those kinds of advisory committee 

reports? 

Mr. QUINTENZ. I think it is crucial that advisory committees are 

open and transparent. I think transparency is the bedrock of trust 

in governments and in markets. I believe in hearing all sides of an 

issue. As a former staffer and as an analyst in the markets, I know 

there are always two sides of a story. So I would encourage a robust conversation on any advisory committee would I have the 

honor of leading. I believe that the two advisory committees open 

are Global Markets and Technology. I am not sure exactly how robust those viewpoints would be, but I would agree with you that 

an open process is a good process. 

Senator BROWN. Thank you. That is important. You want to comment on that, Dr. Brummer? 

Mr. BRUMMER. I certainly know that—frankly, I do not have a 

monopoly on all good ideas in the world, and it is so important that 

you have folks from different vantage points who are directly informing our regulatory decision-making. It is the only way in which 

you can get the information. People talk about data-driven analysis. It is the only way in which you can get the information to 

make sure that you get decisions right. 

mw42035 on AGRINON012 with DISTILLER

15 

So you would have my commitment, to the extent that I am both 

confirmed and have the power over any particular advisory committee to do so, to make sure that there is a broad set of personalities and interests that are involved in forming the decision-making. 

Senator BROWN. Thank you. Let me follow up on the conversation again that Senator Boozman and Senator Stabenow had with 

you on the whole issue of international regulators. I stepped out of 

the Committee because I was speaking with Governor Dan Tarullo 

of the Federal Reserve, who does not have the title, but really is 

the supervisory—does the supervisory work for the Fed. What we 

were—the subject of the conversation in large part was what is 

happening with international regulators on capital standards, and 

partly the different speed at which—whether it is Basel III, whether it is the EU, whether it is individual countries—is they move on 

capital standards and on regulation, both the speed and the pressure they are under from their banking communities and their legislators. 

There are always efforts of one country playing off against another, one set of companies playing off one country against another 

to try to weaken rules. That being said, understanding you need to 

coordinate with international regulators, we have seen, like I said, 

rulemaking not always moving at the same speed. Are there risks 

or unintended consequences of CFTC repeatedly delaying its implementation based in part either at the weaker rules or the delaying—the slower moving rules of another country? 

Mr. BRUMMER. Again, where I am from, leadership is often— 

leadership by example—and it is important if you want to push 

certain high quality standards—that an agency shows that it is 

willing to abide by those standards. You have to, obviously, try to 

understand that other countries work differently. Literally how 

they make rules can be different. 

But at the same time, the strategy should be to find other likeminded countries who have the same commitment, not only in the 

rules but in the supervision with same commitment to our rules 

that we have, and then to work collaboratively to create a large 

enough of a market and regulatory ecosystem that other countries 

are either inspired or required to opt into our standards and market and regulatory preferences. It is a critical aspect of our diplomacy, and getting it right means strong rules at home and leadership abroad. 

Senator BROWN. One more point. I apologize for going over a bit, 

and thank you for that. For both of you, if you would, I know earlier you both discussed the importance of protecting markets from 

the threats of cyberattacks. In your opinion, is CFTC’s funding 

keeping pace with this threat? Is it adequate? Do you want to start, 

and then Mr. Quintenz? 

Mr. BRUMMER. You know, I come from a part of the country 

where people want to know that their tax dollars are being invested wisely, and I think that the CFTC—— 

Senator BROWN. That may, actually, be all parts of the country, 

but fair enough. 

Mr. BRUMMER. I know. well, certainly—— 

Senator BROWN. Even in Bexley we think that. 

mw42035 on AGRINON012 with DISTILLER

16 

Mr. BRUMMER. I think the CFTC’s case is an exceptionally strong 

one, and cybersecurity is one aspect of that case. The responsibilities of the agency have expanded dramatically and the threats 

from cyber have expanded dramatically as well. So you need to 

have both the human capital, the technological capability, the surveillance mechanisms, and other tools in place to help, again, promote sound decision-making, regulatory certainty from market participants and end users, also protecting the U.S. economy from 

folks who may want to undermine that stability. 

Senator BROWN. So is the funding adequate? Do you know this? 

Can you figure this out yet? 

Mr. BRUMMER. Certainly I will have a better—the funding has 

certainly not kept up with the dramatic increase in the agency’s responsibilities, and I have concerns, serious concerns about whether 

or not they are sufficient. 

Senator BROWN. Mr. Quintenz. 

Mr. QUINTENZ. Thank you, Senator. I think I would have to get 

there to be able to answer that question concretely. From the rule 

writings that have been issued, they have been focused on enforcing very high standards of best practices for the industry. There 

are companies that spend hundreds of millions of dollars on this for 

themselves. It would be hard to answer that question in terms of 

the resources until I get there, should I have the honor of being 

confirmed. 

Senator BROWN. As long as you are obviously aware of the acute 

need and that we do not always keep up with things like that as 

well as we should. Also, thank you for the meetings you have each 

had with my staff so far and I look forward to sitting with each 

of you. Thank you. 

Mr. QUINTENZ. Thank you. 

Chairman ROBERTS. Senator Tillis. 

Senator TILLIS. Thank you, Mr. Chairman. I thank you both for 

being here today, and thank you for being generous with your time 

meeting with me in the office. I enjoyed that discussion. I just have 

a couple of questions. 

In the office, I appreciate some of the forward-looking discussions 

we had. I have a couple of questions here. One I may just submit 

for the record because it has to do with modernizing and becoming 

more focused on digital alternatives to the analog world that we 

live in today. 

But I want to get to two specific policy questions. One of them 

is about the regulation of automated trading. Are you familiar with 

the rule the Commission is trying to implement to remove the subpoena requirement? In my opinion, I cannot find any evidence of 

where the subpoena requirement is broken, so I do not know why 

they are trying to fix it. But I would be kind of curious about your 

position on this issue and the position you would take if confirmed. 

Mr. Quintenz, we will start with you. 

Mr. QUINTENZ. Sure Senator, thank you. I believe that the source 

code, trading mechanisms and algorithms that firms develop do not 

just represent historical trading files. I believe that they are a result of an immense amount of time and energy and thought and 

research, and represent future as well as current business strategy. 

Senator TILLIS. It is critical intellectual property. 

mw42035 on AGRINON012 with DISTILLER

17 

Mr. QUINTENZ. I would agree with that, and I believe it deserves 

those protections. I do not see anything that is wrong or risky or 

inconvenient about maintaining the subpoena process as the appropriate legal and judicial standard to compel a firm to disclose its 

intellectual property. There are plenty of steps that the agency can 

take before it gets to that level to work with the firm. 

Senator TILLIS. Thank you. Mr. Brummer. 

Mr. BRUMMER. As a law professor—— 

Senator TILLIS. Dr. Brummer. 

Mr. BRUMMER. No, no. I certainly understand the importance of 

due process. It is an essential part of the rule of law since, frankly, 

Roman times. The CFTC has rules, or must have rules in place to 

make sure that information is protected and that market participants can trust regulators. 

Now, I am not entirely sure about how enforcement is practiced 

in the building, and I have heard that there are some surveillance 

concerns and as a result, you would want to talk to the folks 

charged with financial stability and the enforcement folks to make 

sure that they have the tools that they need in order to do their 

job well. But I give you my word that I will do my very best to 

make sure that whatever the CFTC comes out with, due process 

and the confidentiality of information will be assured. I think this 

does require close attention. 

Senator TILLIS. In my opinion, again, if we could point to a litany 

of examples where something bad could have been averted as a result of bypassing the subpoena process, I would see the argument. 

In my personal opinion, it looks like a power grab that I am not 

particularly supportive of. 

The other one that I had has to do with the implementation for 

the margin for un-cleared swaps. You know, we had several nations 

and economies that were going to be involved in that. Most, except 

for the United States and Japan, have delayed their implementation. The result is putting the U.S.—I will not speak for Japan— 

at a disadvantage in the period of time where some financial markets are not subject to the new rules that we are subject to. 

So I am kind of curious about why you would think it is either 

wise or unwise for the United States to move forward when some 

of our top global competitors have decided to delay it. Quite honestly, if they start measuring the benefit of having this market advantage for some period of time, I cannot imagine why they would 

not think, well, maybe we need a little bit more time than the initial delay to get a market advantage. 

So I would be curious, and this time, we will start with you, Dr. 

Brummer. 

Mr. BRUMMER. I too believe that it is important that countries 

work in concert with one another to the extent possible on regulatory positions and you do not want to do anything to burden our 

market participants in a global environment—— 

Senator TILLIS. So would you—— 

Mr. BRUMMER. —needlessly. 

Senator TILLIS. —in the interest of time then—— 

Mr. BRUMMER. Sure. 

mw42035 on AGRINON012 with DISTILLER

18 

Senator TILLIS. —would you suggest that it would make sense 

then for us to key our implementation dates with our major global 

competitors? 

Mr. BRUMMER. Here it is tough, because I would not want to, 

frankly, reward bad behavior. I think that if the United States 

wants to promote its rules, it has to do so by leading by example, 

and I think that it appears that the CFTC’s—— 

Senator TILLIS. Yeah. 

Mr. BRUMMER. —pace has accelerated parts—— 

Senator TILLIS. Although I would say—and I am only interrupting you because of the time. 

Mr. BRUMMER. Sure. I am sorry. 

Senator TILLIS. I would like to have your opinion. But it is almost like we are being penalized for good behavior. We are on time; 

some of the other key players are not. Our banking industry is suffering as we move forward with regulations that make us globally 

uncompetitive. 

So to me it is something that we should take a look at. We 

should never move forward with regulations that knowingly will 

put us at a disadvantage, and we have to make these things get 

in synch, otherwise, it provides our competitors with a disincentive 

to move quickly even after the delay. 

Mr. Quintenz, I will have you summarize. 

Mr. QUINTENZ. Yes. Thank you, Senator. I could not agree with 

you more. I think regulatory arbitrage always hurts someone. To 

the extent that it is created by us moving first or someone else delaying their rules, we need to be aware of how that affects our markets, how that imposes costs, how that disadvantages our economy. 

So I would urge a teamwork approach to this, being on time but 

moving forward with it together. 

Senator TILLIS. Thank you both. I look forward to supporting 

your confirmation. 

Chairman ROBERTS. Senator Donnelly. 

Senator DONNELLY. Thank you, Mr. Chairman, and thank you, 

Dr. Brummer, Mr. Quintenz. I come from a farm state, Indiana, 

and I think it is really important for the CFTC commissioner, as 

my colleague Senator Boozman was saying, to make your decisions 

based on more than just being in Washington, and to not just occasionally fly out, have an airport meeting and fly back, but to actually be out and see what happens in our chairman’s farms in Kansas and mine in Indiana. 

I think it is really important for you to spend the day there, to 

see what is going on, to see the effect of your decisions on how the 

balance sheet turns out for them, how that determines whether or 

not they are going to be able to cover their bills that year. I just 

want to follow up with Senator Boozman’s comments that we would 

like a commitment that you will hit the road, that you will spend 

time out there, that you will talk to our farmers, not just at the 

airport lounge, but actually at their actual farms with a lot of the 

ag leaders in the community. Dr. Brummer. 

Mr. BRUMMER. I could not agree with you more. You have my 

commitment. Some of the smartest things I ever heard came from 

my own grandfolks who were farmers. You learn not only about 

markets, you learn not only about what they do, but you learn a 

mw42035 on AGRINON012 with DISTILLER

19 

little bit of common sense too, and it is important for folks to get 

out of Washington generally. 

But you have my commitment that I will do my very best to keep 

in touch and to make sure that the rules work as well as possible 

for our farmers, ranchers. 

Senator DONNELLY. Mr. Quintenz, the Indiana line is only about 

90 miles away from Columbus. 

Mr. QUINTENZ. I cannot wait. I cannot wait to come and visit 

my—my grandmother grew up on a dairy farm in Northern Wisconsin. She still lives very close to it. I remember her ridiculing me 

one time for bringing margarine home from the grocery story instead of butter, and that will never happen again. 

Senator DONNELLY. She is a wise woman. 

Mr. QUINTENZ. I would very much like to take you up on your 

invitation. 

Senator DONNELLY. Following up on that, one of the things that 

affects our farmers and their livelihood are how the commodities 

are obviously treated once they are on the market, and I have consistently argued that position limits should be a tool in the CFTC’s 

toolbox. That helps the Commission fulfill its mission to promote 

transparent, open markets and to protect the public from fraud and 

manipulation. If confirmed, I want to know if you are going to work 

to help finalize the strong positions limit rule in a timely manner. 

Dr. Brummer. 

Mr. BRUMMER. Absolutely. You put it best. It is one of a number 

of tools that the Commission has historically relied on and will rely 

on to police market abuse and large systemic concerns of large positions, any one position. To get it right, you have to make sure 

that you do not end up excluding the folks who depend on them, 

a smart bona fide hedging rule. 

At the same time, you cannot create loopholes for the sake of creating loopholes. You have to focus on making sure it is as cost efficient and value enhancing for the market and for the global and 

U.S. economics as possible. 

Senator DONNELLY. Mr. Quintenz. 

Mr. QUINTENZ. Yes, thank you, Senator. This issue has been out 

there for a long time. We have had four proposed rules. The one 

final rule was vacated by a federal court. We have had thousands 

of comment letters. It seems to me that the problems in finalizing 

something may not be a result of effort as opposed to perspective. 

I believe that the perspective needs to require the concerns of end 

users being met here, making sure that they can hedge in a bona 

fide way. Yes, I give a commitment to working on that. 

Senator DONNELLY. Because it is important, obviously, that they 

be able to lay off risk and know that they are secure, but at the 

same time, we do not want to see these markets abused as well. 

Mr. BRUMMER. Absolutely. 

Senator DONNELLY. I would also like to talk to you a little bit 

about the funding for the CFTC. You know, we have great hopes. 

We have great challenges. It is critically important to our rural 

communities and actually to the entire economy of the United 

States. But it is like a car, if there is no gas, you cannot start the 

car and it will not go down the highway. 

mw42035 on AGRINON012 with DISTILLER

20 

So one of the things we want to do is make sure that there is 

enough funding. I am interested in learning more about the possibility of creating some self-funding mechanisms for the Commission 

that provides you with the sufficient resources you need without restricting access for market participants. 

I am not asking you for an answer today, but would each of you 

commit to getting back to me about that concept of some methods 

of self-funding so you are not reliant on us having our budget act 

together and other things that make it very difficult. Mr. Quintenz, 

I will have you answer first. 

Mr. QUINTENZ. Yes, I would be thrilled to engage with you on 

that issue and respond to that issue. 

Senator DONNELLY. Dr. Brummer. 

Mr. BRUMMER. Absolutely. I would be delighted to. 

Senator DONNELLY. Great. Well, look, I will tell you that we had 

some folks from the EPA out to Indiana in February in an 

unheated barn. It was about 10 degrees. Everybody had a good 

time, I think, except maybe some of the folks who were not from 

Indiana. So we will try to make it either a heated barn or during 

the summer, if that works better for you. Thank you very much. 

Mr. QUINTENZ. Thank you. 

Chairman ROBERTS. Thank you, Senator Donnelly. We have 

never had any EPA folks out to Dodge City. I am not sure they’d 

get back. That memo that you are going to get from the two nominees with regards to the possibility of user fees, my word, not 

yours. Send me the same information. 

We have now Senator Gillibrand. 

Senator GILLIBRAND. Thank you, Mr. Chairman. I would like the 

memo too. I wanted to know specifically what budgetary challenges 

you think you are going to encounter. Because you have such a limited appropriations considering that the derivatives market is 

worth $300 trillion and $34 trillion worth of futures and options 

and $270 trillion worth of swaps. I mean, that is a huge responsibility. You have 750 people, but your budget is $250 million. So 

that is really much farther below other prudential regulators with 

the same regulatory responsibilities. 

So I would really like you to be as far reaching in your analysis 

of budgetary concerns and funding streams and what you think 

your ideal budget would be, and specifically, if you think capital infusions are needed for live time reporting or retaining qualified 

staff, also whether any mandatory funding stream should or would 

be necessary, whether you suggest fees or other mechanisms. Because I do think you need a more reliable and standard funding 

source for the CFTC. 

So I am very interested in your thoughts. If there is any you 

want to share now, you can, but otherwise, we can wait for your 

memo. Dr. Brummer. 

Mr. BRUMMER. Certainly fulfilling this mandate is not easy. The 

responsibilities have expanded dramatically and I look forward to 

providing it. 

Senator GILLIBRAND. Mr. Quintenz. 

Mr. QUINTENZ. Thank you. That was a very detailed question, 

and I think it would be very difficult to answer that question without being at the agency and understanding exactly how they are 

mw42035 on AGRINON012 with DISTILLER

21 

spending their money and their resources. I do know that the Technology Advisory Committee is currently un-sponsored, and should 

I have the honor of being confirmed and have the honor of sponsoring that advisory committee, it would give me a deep dive look 

into the technology needs of the agency to be able to assess resources. 

Senator GILLIBRAND. I think it is really important, and it obviously is relevant to the questions that we have already had on cybersecurity. I just think there is enormous vulnerability there, and 

while our markets are resilient, the systemic risks and bad actors 

throughout the world create more risks for us. I think part of those 

concerns directly relate to your budgeting and your vast area of responsibility. 

Recently the CFTC agreed that Japan’s uncleaned swaps collateral would—excuse me—un-cleared swaps collateral was strong 

enough to suffice the CFTC margin requirements. A member of the 

Commission voiced concern that Japan’s rule would quote, ‘‘introduce greater risk into the derivatives markets,’’ specifically highlighting their concern that what would happen in the event of 

bankruptcy. 

As the Commission continues to move toward regulatory consistency in the market, what do you see as additional risks with the 

non-U.S. counterparties, and specifically with risks arriving from 

un-cleared swaps? 

Mr. BRUMMER. So clearing is an essential aspect of the CFTC’s 

rulemaking because it allows a better opportunity to both standardize risk and to assess those risks. It is important when one 

looks and thinks about cross-border risk and the mandate of the 

agency and the agency resources and where risk may be coming in 

the future. 

There are parts of the world that are not only behind, but may 

not necessarily have any incentives to opt into the global reforms 

that were articulated by large international bodies like the G–20, 

and I think this is a key question. It is an important question. The 

margin rules are, as well, critical components of financial security 

and safety, and it is important that we get the rest of the world— 

and they are coming along. I think that there has been an enormous amount of progress made, but there is still some way to go 

to make sure that this is done right. 

Senator GILLIBRAND. Mr. Quintenz. 

Mr. QUINTENZ. Thank you, Senator. I think this is a very important area. Un-cleared swaps can provide very essential risk-mitigating features for companies in terms of hedge accounting and 

their exposures. But I think it is crucial that we also make sure 

that large exposures do not come back to our markets and harm 

us from a jurisdiction that may not have as similar rules to ours 

as we would like. 

So I think that is an important thing to consider, and I believe 

Chairman Massad had some responses to the concerns raised by 

the other commissioner. 

Senator GILLIBRAND. Do you see any other regulatory inconsistencies in non-U.S. jurisdictions that CFTC should seek to address 

through partial or full substitute compliance? 

mw42035 on AGRINON012 with DISTILLER

22 

Mr. QUINTENZ. I think that the swap execution facility rules, we 

need to keep working on those. There is potential evidence that it 

is fracturing a very important market and that it is shrinking liquidity to our participants, and if that is the case, I think we need 

to be open to revisiting that. 

Senator GILLIBRAND. Okay. Since I have no more time, I am 

going to submit my specific cyber question for the record, so you 

guys can just answer it once you get in place. You will have more 

information to be able to answer it more fully given the answers 

already. Thank you. 

Mr. BRUMMER. Thank you. 

Senator GILLIBRAND. Thank you. 

Chairman ROBERTS. I thank the distinguished Senator from New 

York for setting a wonderful example with regards to her time. 

Senator KLOBUCHAR. Did you do that because I am up next? 

Chairman ROBERTS. Precisely. Senator Klobuchar. 

Senator KLOBUCHAR. All right. Thank you very much, Mr. Chairman. I would like to start by thanking you for holding this hearing 

on the important nominations of Dr. Brummer and Mr. Quintenz, 

to be Commissioners. Thank you so much for that. 

I would like to focus some of my questions, given how people in 

my state have been harmed by speculation and by issues that have 

come before the Commodity Futures Trading Commission, and we 

also have a lot of businesses who hedge their risk legitimately. I 

always see a difference between some of the people that do it as 

part of their businesses and the effect that other types of speculation has had on our farming community. 

Each of you has a strong background with the financial markets. 

Dr. Brummer, you have a strong academic background. Mr. 

Quintenz, you are a participant in the financial markets as a part 

of your business. Could you talk to me about how you would evaluate the differences and the similarities between regulations for the 

financial markets and then for agricultural end users. 

Mr. BRUMMER. Frankly, one of the first observations is that 

farmers and ranchers did not cause the crisis, and I think that has 

to be acknowledged. At the same time, derivatives markets exist 

for a reason. It is for people to be able to hedge the risk in a way 

that is responsible and allows them to ultimately contribute to the 

U.S. economy. Certainly the origins and the roots are in the agricultural sector, but there are hardworking Americans, and commercial end users, who need the derivatives markets for similar things. 

It is key at the same time just to make sure that when examining the different risks, the different kinds of positions, the size 

of the positions, the liquidity of the different kinds of markets in 

which they are operating, to take into account the public interest 

across the board and to make sure that U.S. taxpayers are safe. 

But this has to be done in a responsible, efficient way. 

But again, understanding that is not just a question of the differences of the market participants, but also of the different contracts. 

Senator KLOBUCHAR. So are you willing then to work with those 

who trade physical commodities to ensure that the exemptions to 

the position limit rule allow for normal practices of the businesses? 

Mr. BRUMMER. Absolutely. 

mw42035 on AGRINON012 with DISTILLER

23 

Senator KLOBUCHAR. Thank you. Mr. Quintenz. 

Mr. QUINTENZ. Yes. Thank you, Senator. I think commodity markets need to work for the people that are exposed to commodity 

risk. Ultimately, markets need to work for the people that use 

them, and these markets are different than other markets in that 

regard. But with regard to your second question, yes, I am very 

concerned about making sure that any position limits rule allows 

for long-standing and tried and true hedging practices in the energy markets to make sure that people can, and firms can, hedge 

that risk the same way that they have been. 

Senator KLOBUCHAR. Well, I know the CFTC has studied speculation extensively. Can you talk a little bit about how the trades 

that commercial end users enter into are different than the types 

that financial institutions have entered into and just your views on 

speculation? Mr. Brummer. 

Mr. BRUMMER. Well, certainly speculators have a role in derivatives markets and they are supposed to be there to make sure that 

trades are completed where perhaps end users are not there and 

to be ready. They help to make the markets work. The CFTC’s regulation, and particularly its statutory authority, involves excessive 

speculation, and to make sure that excessive speculation does not 

distort the price discovery operations of these markets. 

Senator KLOBUCHAR. Do you think the rules that we have in 

place now are adequate to do that, to go after abusive or excessive 

speculation? 

Mr. BRUMMER. I think we have made a strong start. I think it 

is important for the agency to continually reevaluate where it 

stands as it gets more information and data, particularly pertaining to your question on market abuse and market manipulation, because the markets themselves are always changing. You 

would have my commitment to do just that and to keep an eye 

open and talk to you and others about where the market stands on 

this. 

Senator KLOBUCHAR. Mr. Quintenz, what steps do you believe 

the CFTC should take to reduce the risk of market manipulation 

from large market participants using one market to influence a 

price for similar contracts in another market? 

Mr. QUINTENZ. Thank you, Senator. That is a very good and interesting question. I think they need to be focused on all aspects 

that could affect artificially the price in any market. I think that 

position size has long been recognized, in the investment community, as something that can impact prices and create large price 

moves. As such, there has been a very robust regulatory architecture that has developed over the last 70 years to identify, closely 

monitor, and in some cases, disallow large positions. 

Position limits have been a part of the CFTC’s enforcement for 

80 years now, I believe, and large trader reporting requirements for 

almost 90 years. So that is well established. 

Senator KLOBUCHAR. Thank you very much. I appreciate it. 

Forty-four seconds over, Mr. Chairman. 

Chairman ROBERTS. That goes into your bank. That is certainly 

within the boundaries of the distinguished Senator. This is going 

to conclude our hearing this morning. I want to thank each of our 

witnesses very much for sharing your background and testimony. 

mw42035 on AGRINON012 with DISTILLER

24 

As the Committee considers your nomination, it has been most valuable to hear your perspectives first hand. 

I have a little admonition here to both of you, and for that matter, anybody else who is listening. There has been a lot of discussion about funding here today. I remember well when former 

Chairman Gensler came into my office to talk about funding. He 

was a little disturbed, alarmed, upset with regards to what the 

House of Representatives had done to his budget. We will not get 

into numbers, but it was significantly lower than what he requested. I informed him that some might be a little bit more understanding of his request, but what would he need all of that money 

for. He indicated it would be for several hundred more lawyers to 

implement Dodd-Frank. 

I asked if there would be parking places available for the attorneys and informed him we lived in a brave new world, where I 

think at that particular time the debt was about what, $17 trillion, 

$16 trillion. It is now 20. 

I would say that the best perspective is that of our farmers who 

are going through a very difficult time. They are facing terribly 

tough times right now and, quite frankly, they just have to do more 

with less. There is a lot of talk about that, a lot of press about that. 

It is hard. It really is hard, and it requires that you really 

prioritize. But they know they have to do it. 

I remember sitting at the Pentagon with the commandant of the 

Marine Corps going over their mission in the Pacific, which is considerable, if anybody would ever use them. But having said that, 

I asked the commandant, how is he going to do this? He said, we 

are going to do what we always do, we are going to have to do more 

with less. 

I think that is the situation that we face, unfortunately. We 

should all do the same, and so we are going to talk about things 

like user fees and additional funding. It is good that we do that, 

but now is not the time. It is not going to happen. 

So with that wonderful news, to my fellow members, I would ask 

that any additional questions that they may have for the record, 

they be submitted to the Committee clerk by 5 p.m. Friday. I thank 

you both. 

Mr. Quintenz, that young man that looks remarkably like you 

can now go to whatever experience he wants to go that will be a 

lot more interesting than it has been so far for him today. 

The Committee stands adjourned. 

[Whereupon, at 11:18 a.m., the Committee was adjourned.] 

mw42035 on AGRINON012 with DISTILLER

(25) 

A P P E N D I X 

SEPTEMBER 15, 2016 

mw42035 on AGRINON012 with DISTILLER

26 

mw42035 on AGRINON012 with DISTILLER


23593.001
27 

mw42035 on AGRINON012 with DISTILLER


23593.002
28 

mw42035 on AGRINON012 with DISTILLER


23593.003
29 

mw42035 on AGRINON012 with DISTILLER


23593.004
mw42035 on AGRINON012 with DISTILLER

(31) 

DOCUMENTS SUBMITTED FOR THE RECORD 

SEPTEMBER 15, 2016 

mw42035 on AGRINON012 with DISTILLER

32 

mw42035 on AGRINON012 with DISTILLER


23593.005
33 

mw42035 on AGRINON012 with DISTILLER


23593.006
34 

mw42035 on AGRINON012 with DISTILLER


23593.007
35 

mw42035 on AGRINON012 with DISTILLER


23593.008
36 

mw42035 on AGRINON012 with DISTILLER


23593.009
37 

mw42035 on AGRINON012 with DISTILLER


23593.010
38 

mw42035 on AGRINON012 with DISTILLER


23593.011
39 

mw42035 on AGRINON012 with DISTILLER


23593.012
40 

mw42035 on AGRINON012 with DISTILLER


23593.013
41 

mw42035 on AGRINON012 with DISTILLER


23593.014
42 

mw42035 on AGRINON012 with DISTILLER


23593.015
43 

mw42035 on AGRINON012 with DISTILLER


23593.016
44 

mw42035 on AGRINON012 with DISTILLER


23593.017
45 

mw42035 on AGRINON012 with DISTILLER


23593.018
46 

mw42035 on AGRINON012 with DISTILLER


23593.019
47 

mw42035 on AGRINON012 with DISTILLER


23593.020
48 

mw42035 on AGRINON012 with DISTILLER


23593.021
49 

mw42035 on AGRINON012 with DISTILLER


23593.022
50 

mw42035 on AGRINON012 with DISTILLER


23593.023
51 

mw42035 on AGRINON012 with DISTILLER


23593.024
52 

mw42035 on AGRINON012 with DISTILLER


23593.025
53 

mw42035 on AGRINON012 with DISTILLER


23593.026
54 

mw42035 on AGRINON012 with DISTILLER


23593.027
55 

mw42035 on AGRINON012 with DISTILLER


23593.028
56 

mw42035 on AGRINON012 with DISTILLER


23593.029
57 

mw42035 on AGRINON012 with DISTILLER


23593.030
58 

mw42035 on AGRINON012 with DISTILLER


23593.031
59 

mw42035 on AGRINON012 with DISTILLER


23593.032
60 

mw42035 on AGRINON012 with DISTILLER


23593.033
61 

mw42035 on AGRINON012 with DISTILLER


23593.034
62 

mw42035 on AGRINON012 with DISTILLER


23593.035
63 

mw42035 on AGRINON012 with DISTILLER


23593.036
64 

mw42035 on AGRINON012 with DISTILLER


23593.037
65 

mw42035 on AGRINON012 with DISTILLER


23593.038
66 

mw42035 on AGRINON012 with DISTILLER


23593.039
67 

mw42035 on AGRINON012 with DISTILLER


23593.040
68 

mw42035 on AGRINON012 with DISTILLER


23593.041
69 

mw42035 on AGRINON012 with DISTILLER


23593.042
70 

mw42035 on AGRINON012 with DISTILLER


23593.043
71 

mw42035 on AGRINON012 with DISTILLER


23593.044
72 

mw42035 on AGRINON012 with DISTILLER


23593.045
73 

mw42035 on AGRINON012 with DISTILLER


23593.046
74 

mw42035 on AGRINON012 with DISTILLER


23593.047
(75) 

QUESTIONS AND ANSWERS 

SEPTEMBER 15, 2016 

mw42035 on AGRINON012 with DISTILLER

76 

mw42035 on AGRINON012 with DISTILLER


23593.048
77 

mw42035 on AGRINON012 with DISTILLER


23593.049
78 

mw42035 on AGRINON012 with DISTILLER


23593.050
79 

mw42035 on AGRINON012 with DISTILLER


23593.051
80 

mw42035 on AGRINON012 with DISTILLER


23593.052
81 

mw42035 on AGRINON012 with DISTILLER


23593.053
82 

mw42035 on AGRINON012 with DISTILLER


23593.054
83 

mw42035 on AGRINON012 with DISTILLER


23593.055
84 

mw42035 on AGRINON012 with DISTILLER


23593.056
85 

mw42035 on AGRINON012 with DISTILLER


23593.057
86 

mw42035 on AGRINON012 with DISTILLER


23593.058
87 

mw42035 on AGRINON012 with DISTILLER


23593.059
88 

mw42035 on AGRINON012 with DISTILLER


23593.060
89 

mw42035 on AGRINON012 with DISTILLER


23593.061
90 

mw42035 on AGRINON012 with DISTILLER


23593.062
91 

mw42035 on AGRINON012 with DISTILLER


23593.063
92 

mw42035 on AGRINON012 with DISTILLER


23593.064
93 

mw42035 on AGRINON012 with DISTILLER


23593.065
94 

mw42035 on AGRINON012 with DISTILLER


23593.066
95 

mw42035 on AGRINON012 with DISTILLER


23593.067
96 

mw42035 on AGRINON012 with DISTILLER


23593.068
97 

mw42035 on AGRINON012 with DISTILLER


23593.069
98 

mw42035 on AGRINON012 with DISTILLER


23593.070
99 

mw42035 on AGRINON012 with DISTILLER


23593.071
100 

mw42035 on AGRINON012 with DISTILLER


23593.072
101 

mw42035 on AGRINON012 with DISTILLER


23593.073
102 

mw42035 on AGRINON012 with DISTILLER


23593.074
103 

mw42035 on AGRINON012 with DISTILLER


23593.075
104 

mw42035 on AGRINON012 with DISTILLER


23593.076
105 

mw42035 on AGRINON012 with DISTILLER


23593.077
106 

mw42035 on AGRINON012 with DISTILLER


23593.078
107 

mw42035 on AGRINON012 with DISTILLER


23593.079