ANALYSIS: CFTC’s Johnson backs bipartisan appointments in US regulation

Speaking as the CFTC on Wednesday followed the Securities and Exchange Commission (SEC) in backing a delay to private fund holding disclosure rules, CFTC commissioner Johnson said: “Notwithstanding grave concerns, I have moved the request for an extension. In part, my decision is intended to demonstrate the strength and value of bi-partisan Commissions as well as our ability to reach the best outcomes for our markets, our economy and our nation."

Johnson, the last remaining Democratic nominee on the CFTC, announced last month that she would depart “later this year”, igniting a debate about the future composition of the agency.

“I am hopeful that the Commissions leadership’s commitments to democratic processes continue to prevail and our regulation continues to protect investors, encourage market integrity and stability, and foster and promote the deepest, most liquid markets in the world.”

The comments follow statements by incoming CFTC chair Brian Quintenz, who in his confirmation hearing this week said the agency should maintain the tradition of bi-partisanship through an unprecedented period of churn in Commission members.

Once Quintenz is sworn in, he will be left with only Johnson as a fellow Commissioner after a raft of departures, and with four spaces to fill in the coming months. Quintenz was pushed by Senator Smith, a Democrat representing Minnesota, on whether he would “urge” the president to preserve the balance of the agency, which has traditionally including two commissioners from the non-ruling party.

“I would pledge to you that I would work with whoever is at the commission to keep the bi-partisanship spirit of the agency alive,” he said in the hearing on Tuesday.

The wider Form PF disclosure rules, designed to give regulators a better idea of private fund holdings for market oversight, were published in February last year. Johnson argued that firms lobbying for the extension, which has been confirmed by both agencies until October this year, had plenty of time to work with regulators to remedy problems before this week.

Fellow Democratic Caroline Crenshaw, speaking at the SEC meeting to vote on the delay, said the objections were an attempt to revisit the rules altogether.

“Today, the Commission is attempting to extend the new form’s compliance date under the wire, with just hours to spare, to accommodate a last-minute request from some of the most highly sophisticated, highly resourced entities in our financial system, who have already been given an extension several months ago,” Crenshaw said in a statement at the open meeting on Wednesday. “Now they’re back for more time with what doesn’t seem like a credible reason.

“The truth is that we are here to extend this compliance date not because firms actually need additional time to comply, but to allow for reconsideration of these amendments more broadly…, although this extension is for just a few more months, I suspect that we will continue to accommodate requests to extend this compliance date until we have significantly revised or undone this rule.”

Paul Atkins, chair of the SEC at the same meeting criticised the burden imposed on private funds and their advisers by the Form PF rules, which he said had been amended three times since first being introduced in 2011 (including the February update).