According to the Delta Strategy Group summary of the nomination
both nominees agreed that the CFTC
should work closely with agricultural end users to address their
the nominees agreed that due process
and confidentiality should not be violated in circumstances where
the CFTC acquires a firm's source code without a subpoena (with
respect to Regulation Automated Trading); and
the nominees agreed that cross-border
rulemaking is important for functioning markets, and recognized
that other jurisdictions may have different rulemaking processes
Dr. Brummer testified that the U.S. role in international
coordination should be that of "lead[ing] by example,"
and a commitment to "the highest standards." He stated
that the U.S. should find those "who are like-minded in
implementing a cross-border regulatory environment." Mr.
Quintenz stated that "[r]egulatory arbitrage always hurts
someone" with regard to the U.S. moving forward on proposed
margin requirements for uncleared swaps when other countries have
delayed their margin rules.
The Committee is expected to vote to favorably discharge the
nominees, setting up the possibility of confirmation by the full
Although both nominees (along with members of the committee)
place a large value on reaching harmony with non-U.S. regulatory
regimes, there appears to be a little daylight between them. While
Dr. Brummer clearly favors the CFTC leading "by example"
(aka as leading from the front), Mr. Quintenz appears to be more
willing to lead from behind given his concern with avoiding
"timing gaps" that may encourage "regulatory
This bipartisan focus on regulatory harmony and avoiding
regulatory arbitrage, however, misses the larger issue, which is
whether the rules that we or Europe adopt make economic sense. In
other words, the focus should be on the comparative costs and
benefits of different regulatory regimes, not who goes first. If
Europe adopts a more sensible (i.e., less costly or less
burdensome) set of rules than the U.S., then we should follow their
example. Conversely, if the U.S. adopts rules that make more sense,
then our example should be followed. Neither Congress nor our
regulators, however, should seek to restrict the flow of capital
across national boundaries in the name of regulatory harmony. This
is, after all, what regulatory competition is all about.
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