Republican CFTC member announces plans to step down by late October

Washington — Republican Commodity Futures Trading Commission member Brian Quintenz announced Tuesday that he will not seek re-nomination when his term ends this month, increasing pressure for the five-member derivatives regulator to complete work this fall on a long-awaited regulation setting position limits.

Quintenz plans to stay until the earlier of the Senate confirmation of his successor at the CFTC or until October 31, he said in a statement released by the commission.

"With five years having passed since I was first selected for this role, it is time for me to pursue new challenges and opportunities," he said.

Explaining his plans to remain at the CFTC during a grace period following his official term, he acknowledged that departure of a commissioner can create uncertainty for market participants if it shifts the balance on the panel.

"In particular, there are several critical rulemakings before the commission about which I care deeply, have had a strong hand in developing, and wish to see finalized," he said.

POSITION LIMITS COMMENTS

His departure comes as the CFTC is accepting comments ahead of a May 15 deadline on a draft rule setting federal position limits in 25 physical commodity derivatives, an action nearly a decade in the making with major implications for energy markets.

The CFTC in January voted 3-2 to issue that proposal, even as it remained split along party lines over a key legal finding and its decision to hand private commodity exchanges a leading role in granting exemptions for hedging of commercial risk.

Were the CFTC membership to drop down to two Republicans and two Democrats, it is unclear that it would be able to advance the same proposal to a final regulation. The latest iteration, with increased emphasis on exemptions for traditional hedging practices and its focus on the spot month for energy derivatives, is seen as less onerous for the industry than some prior versions.

While the prior two CFTC chairman had promised Congress to compete work on the contentious regulation during their terms, neither moved it across the finish line. Former Commissioner Timothy Massad faced opposition from congressional Republicans against taking action during the final weeks of the Obama administration and instead put forward a re-proposal.

UNFINISHED BUSINESS

The current chairman, Heath Tarbert, has identified among his top priorities completing work on unfinished rules stemming from the Dodd-Frank Act, such as position limits, and is seen as likely to push for action this fall. Another key pending rule stemming from the act is one setting capital requirements for swap dealers.

The CFTC also is weighing proposed rules meant to simplify swap data reporting, and regulations to update bankruptcy requirements for commodity pools and commodity pool brokers.

In announcing his plans to leave the commission, Quintenz highlighted his efforts to ensure CFTC regulation is appropriately tailored to risks, embraces rapid development of technology and innovation in finance, and strives to harmonize regulation with other domestic and international regulators.

"From calling for an overhaul of the swap dealer de minimis threshold, to tailoring the re-proposal of the swap dealer capital rule, to changing the CFTC's proposed approach to cross-border swap dealer regulation, to opposing the ill-conceived Regulation Automated Trading, I am proud to have played a positive role in promoting sound regulation," he said.

Prior to joining the CFTC in August 2017, Quintenz was managing principal and chief investment officer of Saeculum Capital Management, a commodity pool operator.