As he begins his term today as the 14th chairman of the US Commodity Futures Trading Commission (CFTC), Heath Tarbert says that he intends to “hit the ground running”.
“America’s futures, swaps, and options markets are the global standard. Their integrity is essential to the economic security of every American, particularly our farmers and ranchers. I look forward to working with each commissioner and the talented staff at the CFTC to ensure our derivatives markets remain vibrant and wrongdoers are held accountable,” says Tarbert. “At its core, the CFTC is a guardian of the American free-enterprise system. Opportunities and threats await us, and we will be ready. Whether it be unfinished business or the unwritten future, now is the time to act, and I intend to hit the ground running.”
He also offered words of praise for his predecessor, Christopher Giancarlo, stating: “Chris deserves great credit for his hard work and service leading the CFTC. Thanks to his efforts, this commission is positioned better to tackle the challenges we face today and into the future.”
Tarbert was nominated by President Trump for a term expiring on April 13, 2024. He was approved unanimously by the Senate Agriculture Committee before being confirmed as chairman by the US Senate with broad, bipartisan support in a vote of 84-9.
Talking to Profit & Loss about how market participants should be preparing for Tarbert’s term as CFTC chair, Justin Slaughter, a partner at Mercury Strategies, advocates for increased engagement and educational outreach to the commission.
“The first job is probably an educational one over the next three to four months,” he says. “Anyone who is heavily involved in the industry should take this opportunity to plan to educate the chairman’s office about how the industry works – or doesn’t work – in their opinion and the various business models at play.”
Slaughter continues: “If you’re in crypto it’s now a more important time than ever to engage with LabCFTC and be ready for potentially a change in the winds if there comes demands for broad based regulation suddenly because of the impact of Libra. If you have a lot of dealings with cross border issues, it’s also a good time to be getting ready to engage with CFTC, and international regulators, because there will probably be one more push to find some kind of international agreement between the CFTC and the Europeans and British.”
Prior to taking on the role of CFTC chair, Tarbert was the assistant secretary for International Markets and subsequently worked as the acting under-secretary for International Affairs at the US Department of the Treasury. In these roles he served as the G7/G20 deputy finance minister, a member of the Financial Stability Board, and the co-chair of both the US-EU Financial Regulatory Forum and the US-UK Financial Regulatory Working Group.
Prior to his service at the Treasury Department, Tarbert was head of the bank regulatory practice of the law firm Allen & Overy. Earlier in his career, he served as special counsel to the US Senate Banking Committee and as associate counsel to the President of the United States for financial markets.
“If you’re in crypto it’s now a more important time than ever to engage with LabCFTC and be ready for potentially a change in the winds if there comes demands for broad based regulation suddenly because of the impact of Libra”
Apart from his public and private sector roles, Tarbert has served as legal advisor to the Systemic Risk Council, senior fellow at the Harvard Law School Program on International Financial Systems, deputy director of the Committee on Capital Markets Regulation, and as a member of the board of advisors for the Review of Securities and Commodities Regulation. In addition, he is a licensed CPA and CFA charterholder, and he is an elected member of the American Law Institute.
In addition to setting the rulemaking agenda for the commission, Tarbert also serves as the agency’s chief executive, leading its day-to-day work regulating the futures, swaps and options markets.
It is unclear at this point in time the extent to which Tarbert will continue pursuing some of the key elements of Giancarlo’s agenda or not. These included changing the rules around swap execution facilities (SEFs), fostering innovation in the crypto markets and introducing position limit rules.
Instead, one source in Washington speculates that, given Tarbert’s background in international affairs, he might want to focus on continuing issues in this area, such as harmonising cross border rules. However, they note that one potential problem he could face in this area is that the key authorities that Tarbert’s CFTC would want to do deals with – in the UK, Europe and China – are not ready to be making deals with the US right now. The source claims that it would be impractical for the US to have a cross-border deal with China before it has resolved one for Europe and the UK, but that the latter two are too consumed by Brexit right now to focus on a deal with the CFTC.