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FIA Special Report: Election aftermath - what to expect from the transition

2016 Election

FIA Special Report: Election aftermath - what to expect from the transition

9 November 2016 10:30pm EST

Although the results of the Nov. 8 U.S. elections are not yet complete, all major news outlets have declared Donald Trump to be the winner of the presidential election, with Republican majorities in both the House of Representatives and the Senate.

As President-Elect, Donald Trump's next task will be to pivot from running a campaign to running the government. Under the leadership of Chris Christie, the Trump campaign has an active transition team gathering information and developing recommendations for each department and agency. This includes prioritizing an inventory of the major issues and rulemakings before each agency. The transition team is expected to work with the outgoing administration to ensure a smooth handover of the reins of power on Jan. 20 when the president-elect will be sworn into office.

The transition team also will be tasked with gathering names of potential nominees for Cabinet and agency posts, including the Secretary of the Treasury and the chairs of the Securities and Exchange Commission and the Commodity Futures Trading Commission. Before any nominees can take office, however, their nominations will have to be submitted to the Senate for confirmation. This process can take a considerable amount of time, but the fact that the Senate is under Republican control reduces the barriers to confirmation.

Trump also will need to fill key positions in the White House such as chief of staff and top economic adviser. Those positions do not require Senate confirmation.

Transition at CFTC and SEC

In line with the change in administration, the leadership of the two market regulatory agencies will change on Jan. 20. The Republican Party will hold three out of the five seats at the Commodity Futures Trading Commission, and CFTC Commissioner Tim Massad will likely step down as the chairman of the CFTC after Trump takes office. Chris Giancarlo, the only Republican Commissioner at present, is likely to serve as acting chairman from Jan. 20 until the President nominates him or a new candidate as permanent chair.

A similar process will take place at the Securities and Exchange Commission. Mary Jo White is expected to give up the chair, and Michael Piwowar is expected to step up and become the acting chairman until a permanent chair is named.

Both agencies have two seats vacant out of five. Although President Barack Obama nominated four people to fill those vacancies, the Senate has not confirmed those nominations, and the next administration may choose different nominees.

Changes in the House and Senate

Republicans retained control of the House and Senate and therefore Republicans will remain in charge of the committees that oversee derivatives markets. Senator Pat Roberts (R-Kansas) is expected to remain as chairman of the Senate Agriculture Committee, but the chairmanship of the Senate Banking Committee is expected to switch from Senator Richard Shelby (R-Ala.) to Senator Mike Crapo (R-Idaho).

In the House, Rep. Mike Conaway (R-Texas) is expected to remain as chairman of the House Agriculture Committee and Rep. Jeb Hensarling (R-Texas) as the chairman of the House Financial Services Committee. Rep. Scott Garrett (R-N.J.) was not re-elected, and it is not yet known who will take his place as chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises.

On the Democratic side, Senator Debbie Stabenow (D-Mich.) is expected to remain as the highest ranking Democrat on the Senate Agriculture Committee, and Senator Sherrod Brown (D-Ohio) is expected to be the highest-ranking Democrat on the Senate Banking Committee. Representatives Collin Peterson (D-Minn.) and Maxine Waters (D-Calif.) are expected to continue as the highest ranking Democrats on the House Agriculture Committee and the House Financial Services Committee, respectively.

FIA's policy team will monitor the transition process as it unfolds over the coming weeks and assess the potential impact on the regulation of cleared derivatives markets. Please contact info@fia.org if you have any questions.

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