The federal government’s top regulators for securities and derivatives trading are getting an overhaul in the run-up to the new administration.
Jay Clayton, chairman nominee, SEC
The SEC has an official nominee for its next chairman and the head of the CFTC has just announced his resignation as President-elect Donald J. Trump fills out his administration and signals a new approach to regulation.
During the U.S. presidential campaign, Trump sounded clarion a call for less regulation via the federal government. His statements so far indicate a new emphasis on growth rather than renewed regulation for financial services, which was the hallmark of the Obama administration.
The Trump team on Wednesday, Jan. 4, announced the nomination of lawyer Jay Clayton to be the next SEC chairman. Clayton is a partner with a major law firm, Sullivan & Cromwell LLP, and he has been tapped because of his “decades of experience helping companies navigate complex federal regulations,” according to the Trump transition team.
“Jay Clayton is a highly talented expert on many aspects of financial and regulatory law, and he will ensure our financial institutions can thrive and create jobs while playing by the rules at the same time,” Trump says in a statement. “We need to undo many regulations which have stifled investment in American businesses, and restore oversight of the financial industry in a way that does not harm American workers.”
After the U.S. presidential election, SEC Chair Mary Jo White announced in November that she would be stepping down as the Obama administration draws to a close.
“I want to thank President-elect Trump for the opportunity to serve as SEC Chairman,” Clayton says in a statement. “If confirmed, we are going to work together with key stakeholders in the financial system to make sure we provide investors and our companies with the confidence to invest together in America. We will carefully monitor our financial sector, as we set policy that encourages American companies to do what they do best: create jobs.”
Clayton’s career includes public and private mergers and acquisitions transactions, capital markets offerings, regulatory and enforcement proceedings, and other matters, officials say.
“In addition to numerous awards recognizing him as one of the top corporate lawyers in America, Clayton has also authored multiple publications on regulatory law, and has been an adjunct professor at the University of Pennsylvania School of Law,” according to Trump transition officials.
If Clayton is approved as the next chairman of the SEC, he will have to quickly fill commissioners’ posts as there will be only two on January 21: Kara M. Stein, who has been serving since Aug. 9, 2013 and will be stepping down in 2017. The other commissioner is Michael S. Piwowar, who has been serving since Aug. 15, 2013 and will be stepping down in 2018.
Massad to Step Down
Timothy Massad, outgoing chairman, CFTC
Although rumored beforehand, Chairman Timothy G. Massad made his resignation official on Tuesday, Jan. 3, in a letter to President Obama. His resignation takes effect on inauguration day, Jan. 20, 2017.
“For the past two and a half years, I’ve had the privilege of working alongside the very talented CFTC staff, and I thank them for their dedication on behalf of the American people,” Massad said in a prepared statement. “I came to the CFTC with a number of priorities, and I am proud we have made significant progress in every area.”
Massad says that the CFTC has “largely finished implementing the regulatory framework for swaps, and have concentrated on the areas posing the greatest risk to the financial system.” These actions have enabled market participants to “continue using the derivatives markets efficiently and effectively to hedge routine commercial risk and engage in price discovery.”
Under his tenure, Massad says that the regulator:
- improved international coordination via harmonized rules, strengthened relationships, and cooperation with other regulators on oversight of markets;
- engaged in “robust enforcement efforts” to hold “bad actors accountable and protect users of these markets;”
- And acted to address “challenges and opportunities in the derivatives markets, particularly cyber threats, clearinghouse resilience, and the increased use of automated trading.”
Mr. Massad will remain a Commissioner for a few weeks in order to close out his office and handle administrative matters.
CFTC officials also note that among Massad’s major accomplishments were proposing and adopting margin requirements for uncleared swap transactions, “which are perhaps the single most important element in swaps market regulation called for by the Dodd-Frank Act.” There was also a new focus on rules “where the greatest risk exists, in transactions between large financial institutions,” with a further effort to harmonize “with other domestic and international requirements.”
Massad’s CFTC also worked to make clearinghouses “stronger and more resilient through enhanced risk surveillance, new supervisory stress testing, and the development and completion of recovery and wind down plans and rules,” officials say. The CFTC also helped to lead “a major effort involving regulators from around the world to look at clearinghouse resilience, recovery and resolution planning.”
CFTC officials say that Massad also pushed bipartisan consensus within the commission. “Over 95 percent of the more than 600 votes taken during his tenure were unanimous,” officials say.
Massad has been chairman since June 5, 2014. Before his time at the CFTC, he served as assistant secretary for Financial Stability at the U.S. Department of the Treasury, overseeing the Troubled Asset Relief Program (TARP).
With Massad’s departure, the CFTC will have only two commissioners — Sharon Y. Bowen, who has been serving since June 9, 2014, and was appointed for a five year term; and J. Christopher “Chris” Giancarlo, who has been serving since June 16, 2014 in a term that expires April 2019.
Giancarlo will serve as interim CFTC chairman once Massad officially steps down.
“The chairman and I have discussed the importance of a smooth transition and I expect to be working closely with commission’s senior staff in the coming days to ensure this outcome,” Giancarlo says in a prepared statement.
Need a Reprint?
