Last week, FIA board members and staff conducted a variety of meetings with policymakers in Washington, D.C. This effort is part of a larger strategic plan to engage in proactive advocacy in the post-election political climate. We began by requesting a comprehensive review of all financial reform regulation in January. In May, we submitted a whitepaper to the Treasury Department on the pathway to smarter regulation. During our meetings, we made solid strides in educating policymakers on these issues and advancing our priorities.
In general, last week we witnessed a notable change of regulatory tone in Washington. While partisanship is at a high-water mark right now, our markets—particularly the end-users they serve—enjoy support from both sides of the aisle. Democrats and Republicans encouraged us to work in a bipartisan fashion if we wanted to get real change accomplished in Washington.
Regulators
FIA met with CFTC Acting Chairman Chris Giancarlo, SEC Chairman Jay Clayton, and a variety of regulatory and Treasury staff. The tone of these meetings was positive and forward-looking, with Giancarlo emphasizing his commitment to innovation, global market access and economic growth and Clayton prioritizing capital formation, market data and cybersecurity. In general, I noticed a shift away from regulating by “gotcha” enforcement. The focus now is on compliance by ensuring market integrity and access through the simplification of regulations and providing businesses the tools and information they need to be in compliance. Given the global nature of our board and industry, we also spent considerable time on the topic of Brexit and potential changes to how we recognize foreign markets and clearinghouses.
Congress
In addition to our regulatory meetings, FIA met with seven key members of Congress and their staff. On the Senate side of the Hill, we met with Senator Mike Crapo, Chairman of the Senate Banking Committee, Senator Pat Roberts, Chairman of the Senate Agriculture Committee, Senator David Perdue, Member of the Banking and Agriculture Committees, and Senator Heidi Heitkamp, Member of the Banking and Agriculture Committees.
On the House side, we spoke with Rep. Mike Conaway, Chairman of the House Agriculture Committee, Rep. Tom O’Halleran, Member of the House Agriculture Committee, and Rep. Blaine Luetkemeyer, Member of the House Financial Services Committee.
Each of these lawmakers plays a key role on issues that are critical to our industry and our markets.
In each meeting, we discussed our concerns with the leverage ratio and the importance of offsetting initial margin. I was pleased by how receptive the Senators and Representatives were on this issue, and how encouraging they were on next steps.
We also touched on the value of having accounts for clearing members at the Federal Reserve. Chairman Conaway, in particular, was helpful on this issue, and promised to stay engaged.
The Senate is responsible for confirming Presidential appointees, and I was pleased to hear that Senator Roberts is taking action to move forward on Chairman Giancarlo’s confirmation and the nominations of other CFTC Commissioners next week.
Takeaways
While it may seem like progress is stalled in Washington, in reality there is a lot of behind-the-scenes work taking place. I appreciate the focus at both the CFTC and SEC on market access, innovation, and growth. I’m encouraged by the momentum behind CFTC nominations and the willingness to address Fed accounts. I was also glad to hear a commitment to bipartisan progress on key issues from both Democrats and Republicans. Perhaps most rewarding was that our advocacy on the leverage ratio issue saw immediate results last week: after our meetings, three Members of Congress made statements or asked Fed Chair Janet Yellen her views on the topic during her testimony the following day.
The next step for FIA’s U.S. advocacy work will be to submit a response to CFTC’s Project KISS. Our comments will build on the work done in our policy papers released earlier this year, and will follow a principles-based framework of smart regulation, globally accessible markets, and prioritizing innovation and competition.
I look forward to sharing that with you soon.
Kind regards,
Walt Lukken
President & CEO
