The date of the inauguration of Donald Trump is fast approaching. Consequently, the Commodity Futures Trading Commission (CFTC), the chief regulator of the trading industry in the US, is starting to shift to the right. The Chairman of the watchdog Timothy Massad has decided to resign from office effective from the 20th of January.
The change of leadership was widely expected with the shift in power across the political spectrum. Timothy Massad will go down as one of the most prominent chairmen of the regulator that has been tasked with overseeing a drastic transformation of the financial industry under the Dodd-Frank Act.
He was named Chairman of the CFTC by President Obama in 2013 and was sworn in in June 2014. Before joining the watchdog he was Assistant Secretary for Financial Stability at the United States Department of the Treasury.
Most notably, Mr Massad was overseeing the application of the Troubled Asset Relief Program (TARP) which was created by the US government in order to contain the great financial crisis of 2008.
During his tenure, the number of foreign exchange brokers in the US continued on a steadily decline, as the industry continued to be squeezed by substantial capital requirements. Retail investors looking to trade forex in the US have little choice nowadays with FXCM, GAIN Capital and OANDA being the only three companies that are still operating in the country.
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During Mr Massad’s two and a half years tenure in the position his efforts have been focused on harmonizing international regulation of derivatives.
He was presented with substantial challenges in the face of algorithmic trading regulation in an increasingly interconnected world. During his tenure about 95 percent of the 600 decisions taken by the CFTC have been unanimous, proving that a bipartisan approach has been in place.
Donald Trump’s Likely Pick
The most likely successor to Timothy Massad is Commissioner Christopher Giancarlo. He has publicly voiced his opinion that the swaps-trading regulations have broken the normal functioning of global markets.
Giancarlo is a Republican member of the CFTC and seems committed to restoring the competitiveness of the US banking system. This could be a double edged sword for the global financial system if Europe doesn’t follow suit quickly. With the tough MiFID II regulations coming into force in January 2018, European banks are likely to face even more challenges.
Commenting in an official statement, Giancarlo said: “I commend Tim on his tenure as Chairman. It has been a distinct honor to serve with him. Along with Commissioner Bowen, our time together has been one of mutual respect and genuine interest in the health of our U.S. markets.”
“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,” he elaborated.