    [Senate Hearing 115-595]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 115-595

                              NOMINATION HEARING:
                         ROSTIN BENHAM, OF NEW JERSEY,
                        BRIAN D. QUINTENZ, OF OHIO, AND
                         DAWN DEBERRY STUMP, OF TEXAS,
                          TO BE A COMMISSIONER OF THE
                      COMMODITY FUTURES TRADING COMMISSION

    =======================================================================

                                    HEARING

                                   BEFORE THE

                           COMMITTEE ON AGRICULTURE,
                            NUTRITION, AND FORESTRY

                              UNITED STATES SENATE

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JULY 27, 2017

                                   __________

                           Printed for the use of the
               Committee on Agriculture, Nutrition, and Forestry

                   [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

           Available via the World Wide Web: http://www.govinfo.gov/

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE

    29-641 PDF                 WASHINGTON : 2019

               COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

                         PAT ROBERTS, Kansas, Chairman

    THAD COCHRAN, Mississippi            DEBBIE STABENOW, Michigan
    MITCH McCONNELL, Kentucky            PATRICK J. LEAHY, Vermont
    JOHN BOOZMAN, Arkansas               SHERROD BROWN, Ohio
    JOHN HOEVEN, North Dakota            AMY KLOBUCHAR, Minnesota
    JONI ERNST, Iowa                     MICHAEL BENNET, Colorado
    CHARLES GRASSLEY, Iowa               KIRSTEN GILLIBRAND, New York
    JOHN THUNE, South Dakota             JOE DONNELLY, Indiana
    STEVE DAINES, Montana                HEIDI HEITKAMP, North Dakota
    DAVID PERDUE, Georgia                ROBERT P. CASEY, Jr., Pennsylvania
    LUTHER STRANGE, Alabama              CHRIS VAN HOLLEN, Maryland

                 James A. Glueck, Jr., Majority Staff Director

                    DaNita M. Murray, Majority Chief Counsel

                        Jessica L. Williams, Chief Clerk

                   Joseph A. Shultz, Minority Staff Director

                   Mary Beth Schultz, Minority Chief Counsel

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page

    Hearing(s):

    Nomination Hearing: Rostin Behnam, of New Jersey, Brian D.
      Quintenz, of Ohio, and Dawn DeBerry Stump, of Texas, to be a
      Commissioner of the Commodity Futures Trading Commission.......     1

                                  ----------

                            Thursday, July 27, 2017
                        STATEMENTS PRESENTED BY SENATORS

    Roberts, Hon. Pat, U.S. Senator from the State of Kansas,
      Chairman, Committee on Agriculture, Nutrition, and Forestry....     1
    Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan...     3

                                   Witnesses

    Behnam, Rostin, of New Jersey, to be a Commissioner of the
      Commodity Futures Trading Commission...........................     5
    Quintenz, Brian D., of Ohio, to be a Commissioner of the
      Commodity Futures Trading Commission...........................     7
    Stump, Dawn DeBerry, of Texas, to be a Commissioner of the
      Commodity Futures Trading Commission...........................     9
                                  ----------

                                    APPENDIX

    Prepared Statements:
        Behnam, Rostin...............................................    30
        Quintenz, Brian D............................................    33
        Stump, Dawn DeBerry..........................................    35
    Document(s) Submitted for the Record:
    Roberts, Hon. Pat:
        Ag Coalition, letter of support for nominees.................    38
        U.S. Cattlemen's Association, letter of support for nominees.    40
        5-day letter, Committee questionnaire and Office of
          Government Ethics Executive Branch Personnel Public
          Financial Disclosure Report filed by Rostin Behnam.........    41
        5-day letter, Committee questionnaire and Office of
          Government Ethics Executive Branch Personnel Public
          Financial Disclosure Report filed by Brian D. Quintenz.....    68
        5-day letter, Committee questionnaire and Office of
          Government Ethics Executive Branch Personnel Public
          Financial Disclosure Report filed by Dawn DeBerry Stump....    90
    Question and Answer:
    Behnam, Rostin:
        Written response to questions from Hon. Pat Roberts..........   120
        Written response to questions from Hon. Steve Daines.........   122
        Written response to questions from Hon. Debbie Stabenow......   123
        Written response to questions from Hon. Sherrod Brown........   130
        Written response to questions from Hon. Kirsten Gillibrand...   131
    Quintenz, Brian D.:
        Written response to questions from Hon. Pat Roberts..........   134
        Written response to questions from Hon. Steve Daines.........   139
        Written response to questions from Hon. Debbie Stabenow......   141
        Written response to questions from Hon. Sherrod Brown........   150
        Written response to questions from Hon. Kirsten Gillibrand...   151
    Stump, Dawn DeBerry:
        Written response to questions from Hon. Pat Roberts..........   154
        Written response to questions from Hon. Debbie Stabenow......   157
        Written response to questions from Hon. Sherrod Brown........   165
        Written response to questions from Hon. Kirsten Gillibrand...   166

                              NOMINATION HEARING:
                         ROSTIN BENHAM, OF NEW JERSEY,
                        BRIAN D. QUINTENZ, OF OHIO, AND
                         DAWN DEBERRY STUMP, OF TEXAS,
                          TO BE A COMMISSIONER OF THE
                      COMMODITY FUTURES TRADING COMMISSION

                            Thursday, July 27, 2017

                                  United States Senate,
             Committee on Agriculture, Nutrition, and Forestry,
                                                         Washington, DC
        The Committee met, pursuant to notice, at 9:30 a.m., in
    Room 328A, Russell Senate Office Building, Hon. Pat Roberts,
    Chairman of the Committee, presiding.
        Present or submitting a statement: Roberts, Boozman, Ernst,
    Thune, Daines, Perdue, Stabenow, Brown, Klobuchar, Bennet,
    Gillibrand, Donnelly, Heitkamp, and Casey.

     STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF
    KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND
                                FORESTRY

        Chairman Roberts. I call this hearing of the Senate
    Agriculture, Nutrition, and Forestry Committee to order.
        I thank the distinguished Ranking Member for being here.
        We have two. Senator Ernst, Senator Heitkamp, thank you for
    coming.
        I have six grandkids. If Nina--if you want to bring her up
    here, we will be----
        [Laughter.]
        Chairman Roberts. --happy to try to do that.
        Senator Stabenow. I think we can handle that.
        Chairman Roberts. I welcome my colleagues as we consider
    the nominations of Mr. Russ Behnam, no stranger to this
    Committee; Mr. Brian Quintenz; and Ms. Dawn DeBerry Stump to
    serve as Commissioners of the U.S. Commodity Futures Trading
    Commission.
        Senator Stabenow, this is a little unique that we are
    trying to move three----
        Senator Stabenow. Yes, yes.
        Chairman Roberts. --of our Commissioners, and hopefully
    down the road, we can get a full Commission for the first time
    in--I do not know how many years.
        It was a pleasure to meet all of--with you all earlier this
    week, and I thank you for appearing before the Committee today.
    I recognize you all have close family and friends in the
    audience today. Let me welcome all of those guests and everyone
    here to the Committee.
        As I have noted in previous hearings regarding the CFTC,
    this agency is charged with fostering open, transparent,
    competitive, and financially sound markets, while working to
    prevent systemic risk. Further, the Commission is tasked with
    protecting market users and their funds, consumers, and the
    public from fraud and manipulation and abusive practices
    related to derivatives and other products that are subject to
    the Commodity Exchange Act.
        The regulation and oversight provided by the CFTC allows
    end users, such as farmers, ranchers, commercial companies,
    municipalities, energy companies, pension funds, and others to
    hedge commercial risk by and through the derivatives market.
    These markets allow companies to generate jobs and produce
    goods and services for our economy.
        I have said it before and I will say--and I will continue
    to say it again and again. It was not the farmer, not the
    rancher or the rural cooperatives or the electric utilities or
    other end users who contributed to the financial crisis of
    2008, yet oftentimes these folks are the ones shouldering the
    heaviest burden when regulators decide what rules to impose.
        A few weeks ago, we heard from Acting Chairman Giancarlo
    about his vision for the CFTC, and I was encouraged by his
    passion for the work of the agency and his plans going forward.
        Today we will hear from three other nominees who I believe
    also have a proper appreciation of the turmoil of the 2008
    financial crisis and what that crisis imposed and the
    comprehensive congressional response which followed.
        Mr. Quintenz was working in the financial industry at the
    time. Ms. Stump helped craft Title VII of Dodd-Frank, and Mr.
    Behnam has been assisting this Committee in overseeing its
    implementation for the past 6 years.
        Discussions with the nominees have shed light not only on
    their policy positions regarding immediate, specific high-
    profile issues, such as the de minimis limit, but generally on
    their collective future visions for CFTC work. Nominees also
    provided insight on their views of the agency's continued role
    regarding its exclusive jurisdiction over futures and swaps and
    an outlook on the changes that have occurred since the
    inception of Dodd-Frank, and that will most certainly continue.
        Whether it is market participants who rely on the CFTC to
    provide regulatory certainty or consumer financial advocates
    who highlight the need for robust oversight of the market, I
    think everyone can agree that we need a functioning commission.
    I am confident the nominees we have today are well qualified
    and can further this mutual objective.
        Again, I thank all of the nominees for being here today. I
    look forward to your testimony.
        I now turn to my distinguished colleague and our Ranking
    Member, Senator Stabenow, for her opening remarks.

    STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE
                              OF MICHIGAN

        Senator Stabenow. Well, thank you, Mr. Chairman. This is a
    very important hearing.
        Congratulations to all three of our distinguished nominees,
    and welcome to their families.
        Ms. Stump, welcome back to the Committee. I know you have
    previously served honorably on the Ag Committee staff,
    including your diligent work to draft Title VII of Dodd-Frank,
    which made, as we know, critical reforms to the CFTC.
        Mr. Quintenz, welcome back to you as well. President Obama
    nominated you to be a CFTC Commissioner last Congress, and it
    was not long ago that you were sitting in that very seat, so
    welcome back.
        Finally, Mr. Behnam, I have to say it is a little odd
    seeing you at that end of the table. I am normally turning to
    you and asking for your advice and input, but welcome.
    Obviously I am very proud to have you sitting there, and
    welcome also to Dinah and Nina, who I heard about before she
    was even born. We are glad that they are here with you today.
        So welcome to all of your families.
        As a member of my staff, Rostin, you have done excellent
    work for this Committee and provided valuable insight on a
    variety of issues, including the CFTC, over the past 6 years. I
    thank you very much on behalf of the Committee for your work. I
    am very happy that you have been nominated for this important
    position.
        As all of you know, Acting Chairman Chris Giancarlo sat in
    this room just a month ago and pledged to continue the progress
    of Wall Street reform and uphold the CFTC's mission to foster
    open, transparent, and competitive financial markets.
        If confirmed as CFTC Commissioners, it is essential that
    you work together on a bipartisan basis to make the best
    decisions possible for our farmers, our businesses, and our
    consumers.
        You should also keep in mind the impact your decisions will
    have on the economic health of our whole nation.
        It has been nearly a decade since our country experienced
    the worst financial crisis since the Great Depression. We all
    remember the devastating impacts of that disaster: 8 million
    American jobs were lost, many farmers and homeowners faced
    foreclosure, and countless businesses went bankrupt.
        Last week marked seven years since the passage of the
    historic Dodd-Frank Wall Street Reform and Consumer Protection
    Act. While this important legislation has brought greater
    transparency, there is still much work to be done to implement
    further improvements.
        The CFTC has unfinished business on key rules that must be
    completed to ensure our markets are not at risk. For example,
    we need a meaningful position limits rule, as called for in
    Dodd-Frank. The Commission must also move forward to establish
    important capital requirements for swap dealers. It is critical
    that the Commission take swift action on these issues.
        The CFTC must also have the resources to effectively
    monitor and oversee our markets, especially as we face new
    challenges with cybersecurity.
        The current CFTC budget is clearly insufficient. Less than
    2 months ago, the White House issued a budget proposal that
    severely underfunds the Commission.
        I applaud Acting Chairman Giancarlo for offering his own
    proposal to show what the Commission needs to keep our
    derivatives markets strong and competitive.
        I have said that I will fight for the funding the CFTC
    needs to meet its responsibilities, and I hope all of you share
    that commitment.
        As you know, CFTC has had vacant Commissioner positions for
    too long, and I am pleased that we are considering the three of
    you today. Now that the last remaining Commissioner, Sharon
    Bowen, has announced plans to leave the CFTC, there is one
    additional Commissioner slot that needs a nominee.
        It is essential that the administration moves quickly to
    nominate a qualified candidate for this seat, so that we can
    have a full commission. Our farmers, ranchers, and consumers
    deserve to have a full slate of leaders at the CFTC to continue
    making improvements to our financial markets.
        Mr. Chairman, I appreciate you holding this hearing, and I
    know that once we have a nominee for the final slot that we
    will move forward quickly as well to seat the full commission.
        Thank you.
        Chairman Roberts. I now welcome our panel of nominees this
    morning. For our first nominee, we have already turned to the
    Ranking Member for the honor of introducing him, but let me
    just say that he has worked for the Ranking Member since
    joining the Committee in May of 2011, and he has been
        an advisor to Senator Stabenow and the Committee on all
    policy and legislative issues regarding ag, biotech, crop
    protection, CFTC, and executive nominations.
        So, Russ, you are fully qualified, and I look forward to
    your testimony.
        Next, we have Brian Quintenz, who was nominated for the
    term vacated by Commissioner Scott O'Malia. Prior to his
    nomination, Mr. Quintenz was the founder and managing principal
    and chief investment officer of Saeculum Capital Management
    LLC, a commodity pool operator here in
        Washington, DC Prior to forming Saeculum in late 2013, Mr.
    Quintenz worked as an outside consultant to Merrill Lynch, and
    from 2009 through 2012, he was a senior investment associate
    for Hill-Townsend Capital during the 2008 crises. There he
    focused solely on U.S. financial company investment
    opportunities. Prior to working in the financial markets, he
    was a senior policy aide for Congresswoman Deborah Pryce, a
    dear friend of mine. Mr. Quintenz graduated Magna Cum Laude
    from Duke University.
        Were you part of those crazy Dukies in the----
        [Laughter.]
        Mr. Quintenz. I was.
        Chairman Roberts. With a major in public policy studies and
    received an MBA from Georgetown. Welcome, and thank you for
    participating in today's hearing.
        Nina has just heard that you were part of the crazy Dukies.
        [Laughter.]
        Chairman Roberts. Our next witness, Ms. Dawn DeBerry Stump,
    was nominated for the term left by former Chairman Timothy
    Massad. Most recently, Ms. Stump served as president of Stump
    Strategic, a consulting firm she founded in 2016. Prior to
    that, she served as an executive director of America's Advisory
    Board for the Futures Industry Association, and a vice
    president at the New York Stock Exchange. She has served in
    senior staff positions of both the House and Senate Agriculture
    Committees, where she was involved in matters pertaining to the
    oversight of the CFTC, reauthorization of the Commodity
    Exchange Act, and negotiation of the derivative components of
    Dodd-Frank. While a staffer on the Senate Ag Committee for
    Senators Cochran and Chambliss, she focused on various farm
    policy matters and the CFTC. She represented the Committee
    during the negotiation of complex financial derivative policies
    in the aftermath of the 2008 financial crisis, and assisted the
    crafting of Title VII of Dodd-Frank. Ms. Stump is from Olton,
    Texas, and grew up working in the ag sector. She holds a degree
    in agriculture economics from the Texas Tech University, Red
    Raiders.
        Welcome, and thank you for your willingness to serve as a
    Commissioner.
        Now, as is the tradition and custom of the Committee,
    before Committee witnesses are to provide testimony, I need to
    administer the oath. If all of you could please stand and raise
    your right hands.
        First, do you swear that the testimony you are about to
    present is the truth, the whole truth, and nothing but the
    truth, so help you God?
        Mr. Behnam. I do.
        Mr. Quintenz. I do.
        Ms. Stump. I do.
        Chairman Roberts. Second, do you agree that if confirmed,
    you will appear before any duly constituted committee of
    Congress if asked to appear?
        Mr. Behnam. I do.
        Mr. Quintenz. I will.
        Ms. Stump. I will.
        Chairman Roberts. Thank you.
        We look forward to your testimony.
        Russ, why don't you kick it off.

    TESTIMONY OF ROSTIN BEHNAM, NOMINEE, TO BE COMMISSIONER OF THE
                  COMMODITY FUTURES TRADING COMMISSION

        Mr. Behnam. Absolutely.
        Chairman Roberts, Ranking Member Stabenow, members of the
    Committee, it is an honor to sit before you this morning as a
    nominee to serve as a Commissioner of the Commodity Futures
    Trading Commission.
        I would like to take a brief moment to express my
    appreciation and thanks to Minority Leader Schumer for
    recommending me to this position, President Trump for the
    nomination, and Chairman Roberts for holding this hearing.
        I would like to recognize and thank my wife, Dinah Bengur,
    and our daughter, Nina, for being here today. Also, I would
    like to thank my parents. Their patience, guidance, and support
    have been a bedrock and a platform for me to think big and
    pursue my dreams.
        I would like to recognize my colleagues on the Agriculture
    Committee staff. This Committee is known for its bipartisanship
    and its ability to get things done. I have had the privilege to
    work with Republican, Democratic, and non-designated staff,
    both past and present. There are too many to name, but many
    have been a significant part of my career and personal life in
    the Senate. I call many close friends, and I hope I will be
    able to do so for many years to come.
        Finally, I would like to thank Senator Stabenow. For more
    than 6 years, I have had the great privilege of serving the
    people of Michigan and advising Senator Stabenow in her roles
    as Chairwoman and Ranking Member of this Committee. Senator
    Stabenow has a boundless energy driven towards a simple goal:
    helping others. This energy and discipline are contagious and
    serve as a challenge to fulfill the great responsibility of
    public service.
        These are virtues that most people can only aspire to, but,
    if confirmed, it is these virtues, manifested through your
    dynamic character, your balanced judgment, and your integrity
    that I will endeavor to use as a compass to guide my own
    decisions, both professionally and personally.
        I joined the Agriculture Committee staff more than 6 years
    ago, only a few years removed from the financial crisis, the
    U.S. economy struggling to find footing, and Wall Street reform
    just beginning to take shape. Coming from New York City, my
    professional experience as an attorney was narrow relative to
    the true breadth of the CFTC's jurisdiction. But, after a few
    short months, this would all change.
        During what became this Committee's first attempts at
    piecing together the 2014 Farm Bill, I had the opportunity to
    add two issues to my portfolio: biotechnology and crop
    protection. Since that time, I have committed to learning these
    two issues wholeheartedly--the complex regulatory field, the
    diverse viewpoints, and most importantly, meeting agricultural
    producers from across the country, many from States represented
    on this Committee.
        It is within the context of my exposure to agricultural
    policy that the CFTC's history and core mission have become
    clearer to me. I believe the strength and vibrancy of the
    futures market, which serves as a critical price discovery and
    risk management tool for end users, is a testament to the
    creative and entrepreneurial spirit of the American farmer.
        In 1974, this Committee authorized the establishment of the
    Commodity Futures Trading Commission as an independent agency,
    understanding that the quick pace of innovation in the
    derivatives space demanded a dedicated regulator with exclusive
    jurisdiction and separate from the Department of Agriculture.
        With each new year, market participants developed new
    products to help producers, manufacturers, and financial
    institutions lay off risk. Today the derivatives market is
    largely comprised of products derived from financial
    instruments, like foreign currency, interest rates, and market
    indices; a much more complex, global, and diversified market
    than what existed even 10 years ago.
        Reforms established in 2009 by the G20 leaders and later
    included in Title VII of Dodd-Frank have made significant
    changes to the CFTC's regulatory canvas, shedding much needed
    light on the previously unregulated swaps market, which played
    a significant role in the financial crisis.
        Title VII has improved transparency through mandatory
    clearing and exchange trading of standardized swaps and
    comprehensive recordkeeping and reporting requirements. These
    core reforms will protect against many risks that undermine the
    ability of global--the stability of global financial markets
    prior to 2008.
        But there is more work to be done. If confirmed, I commit
    to working with the CFTC Chairman and my fellow Commissioners
    to ensure that the balance of Title VII is completed in its
    entirety.
        Sitting here, nearly 7 years to the day since the enactment
    of Dodd-Frank, I believe the Commission must aim to finalize
    outstanding Title VII work in a thoughtful and expeditious
    manner. Completion will allow the Commission to shift its
    limited resources towards new challenges financial markets face
    today.
        In addition to the constant need for strong enforcement of
    Commission rules and regulations, advancements in technology,
    cybersecurity threats, and regulatory coordination, both
    domestically and internationally, present real challenges for
    the CFTC and market participants.
        Finally, as this Committee shifts focus to the 2018 Farm
    Bill, I commit, if confirmed, to working with each
        member of this Committee, both here in Washington, DC, and
    back home, to ensure the CFTC, particularly at this time of
    persistently low commodity prices and economic headwinds in the
    farm economy, remains both a desirable and cost-effective risk
    management and price discovery tool for agricultural producers
    and the entire value chain.
        Thank you for your time, and I look forward to your
    questions.
        [The prepared statement of Mr. Behnam can be found on page
    30 in the appendix.]
        Chairman Roberts. Mr. Quintenz.

     TESTIMONY OF BRIAN D. QUINTENZ, NOMINEE, TO BE A COMMISSIONER
              OF THE COMMODITY FUTURES TRADING COMMISSION

        Mr. Quintenz. Thank you, Chairman Roberts, Ranking Member
    Stabenow, and members of the Committee. It is an honor to be
    with you this morning.
        I would like to thank President Trump for nominating me to
    serve on this important Commission, and I am very appreciative
    of the support I received from many different parties during my
    prior nomination, including the unanimous support of this
    Committee.
        I am deeply grateful for the love and encouragement of my
    parents, Kenneth and Susan; my brother, Darren; and my two
    children, Connor and Vivienne. None of them happen to be here
    today, as they are all enjoying much cooler weather up in
    northern Wisconsin for a family reunion, but my children
    assured me that had this hearing occurred on a school day, they
    would have insisted on attending.
        [Laughter.]
        Mr. Quintenz. Mr. Chairman, I am a Midwesterner. I am a
    first-generation Ohioan whose mother and father grew up in
    Wisconsin, which is also the home of my extended family, and I
    am a firm believer in the Midwest values of hard work, honesty,
    and community.
        I come from a family of entrepreneurs and small business
    owners. My grandfather on my mother's side, after serving in
    World War II, returned home to northwestern Wisconsin and
    purchased a Ford car dealership. His wife, my maternal
    grandmother, was raised on a family dairy farm in Chetek,
    Wisconsin. My paternal grandmother owned and operated a
    restaurant on the east side of Milwaukee, putting her three
    sons through college. My father started his own business, my
    brother started his own business, and I founded my own
    business, Saeculum Capital Management.
        Until I closed it at the end of last year, Saeculum was an
    investment firm registered with the CFTC as a commodity pool
    operator. As the sole proprietor of the firm, it was my
    responsibility to effectively and meticulously manage risk as
    well as compliance. I am, therefore, very familiar with the
    CFTC's investor protection rules, disclosure requirements, and
    recordkeeping obligations.
        I began my career in finance in 2008 during the financial
    crisis. Working directly under the CEO at an investment firm
    focused on the banking sector, I performed detailed valuations
    on financial institutions of all sizes and complexities. I
    became an expert at reading banks' balance sheets and income
    statements, understanding their accounting rules and financial
    disclosures, and forecasting their capital levels and quarterly
    earnings.
        In this position, I depended on the accuracy and
    accessibility of publicly available information and became a
    firm believer in data and transparency. Transparency increases
    market efficiency and can provide important checks on risky
    behavior.
        However, my professional career did not begin in finance.
    It began in public policy. After graduating from Duke with a
    degree in public policy studies, I joined the Office of
    Congresswoman Deborah Pryce, who represented Ohio's 15th
    District, an area that included my hometown of Columbus.
    Ultimately, I became her senior policy advisor with an issue
    portfolio that included agriculture.
        In meeting agricultural constituents and personally
    visiting some of the over-1,000 family farmers in our Ohio
    district, I developed a strong appreciation for the work ethic
    and sophistication of America's farmers and ranchers, as well
    as for the pressures and the costs and the risks that they
    face.
        Should I be confirmed, I pledge to ensure the market
    concerns of the agricultural sector are recognized and to
    continue developing a firsthand knowledge of the agricultural
    community.
        The financial crisis scarred every sector of our economy.
    It hurt individuals, families, and communities, and it exposed
    the deep flaws in our markets. It deserved a legislative and a
    regulatory response. As that response is calibrated,
    regulations meant to address those flaws should not spill over
    to harm the normal activity of ordinary businesses and end
    users. When costs are added without targeting risk, poor
    outcomes ensue. I will work to ensure that regulations and
    their burdens are tied to the risks being mitigated.
        It would be an honor to bring my public policy background,
    my expertise in finance and risk management, my knowledge of
    derivatives and my respect for the agricultural community to
    the CFTC. This is a crucial time for our financial markets and
    for the people that depend upon them. It would be a privilege
    to serve at this agency.
        Thank you very much, and I would be pleased to answer your
    questions.
        [The prepared statement of Mr. Quintenz can be found on
    page 33 in the appendix.]
        Chairman Roberts. Thank you for your statement, Mr.
    Quintenz.
        Ms. Stump.

    TESTIMONY OF DAWN DeBERRY STUMP, NOMINEE, TO BE A COMMISSIONER
              OF THE COMMODITY FUTURES TRADING COMMISSION

        Ms. Stump. Chairman Roberts, Ranking Member Stabenow, and
    members of the Committee, thank you very much for the
    opportunity to return here to the Senate Agriculture Committee.
    It was a privilege to work here for 6 years as a legislative
    staffer, and today I am pleased to appear before you as a
    nominee to serve as Commissioner on the Commodity Futures
    Trading Commission.
        Should I be confirmed to the position, I know the standard
    of collaboration to which this Committee and its staff
    subscribe will assist me in contributing to the effectiveness
    of the bipartisan Commission.
        I would also like to take the opportunity to thank my
    family in Texas as well as my husband, Jeremy, and my children,
    Ethan and Abigail, who are here with me today.
        I have spent my entire professional career working in and
    around agriculture. This background is what motivates my
    conviction for well-functioning commodity markets. I grew up in
    the agricultural sector during the farm crisis of the 1980s. My
    hometown of Olton, Texas, is almost exclusively dependent upon
    production agriculture. I have seen firsthand the need for
    access to a variety of effective risk-management and price-
    discovery tools, including the futures market where the
    industry can hedge against the inherent risk of the business
    that they run.
        Earlier in my career, I worked as a market analyst for a
    group of U.S. wheat farmers seeking to market their crops
    around the globe. In our effort to promote U.S. ag products
    abroad, I provided our marketing teams around the world with
    information on the market fundamentals, the futures prices, and
    the cash markets at various export points.
        A more somber experience was my work at the Texas
    Department of Agriculture during a period of extreme drought.
    Seeing firsthand this sort of devastation and helping to
    coordinate a response further solidified my view that access to
    functional risk management tools in various forms is crucial to
    the agricultural industry.
        Notably, though, the application of the markets regulated
    by the CFTC extends beyond agriculture to manufacturers,
    utilities, and even retirement pension plans. Futures, options,
    and swaps are important tools for managing risk associated with
    price fluctuation, energy production disruptions, retirement
    savings loss, and interest rate variability.
        My background is in agriculture, but my experience is
    further informed by the various energy and financial market
    initiatives I worked on during the time here as a staffer on
    the Agriculture Committee.
        In 2008, I helped negotiate a bipartisan effort to ensure
    that the CFTC had proper oversight authority over principal-to-
    principal transactions executed on electronic trading
    facilities. Our efforts ensured that when these contracts were
    performing a significant price discovery function, they would
    be subject to transparency and position management comparable
    to those of similarly designed futures contracts. At the time,
    this was particularly applicable in the energy markets.
        Later in 2009 and 2010, the Committee was involved in
    responding to the financial crisis and specifically tasked with
    examining how to regulate over-the-counter swaps. I spent
    countless hours hearing from end users who utilize these
    markets to hedge their risk and discussing with colleagues from
    the Agriculture and the Banking Committee how to appropriately
    oversee the products, the market participants, and the
    infrastructure that would support such a newly regulated
    market.
        The circumstances of the recent financial crisis taught us
    that the markets are constantly changing, and regulators must
    be nimble enough to respond accordingly. During the 10 years
    that have passed since the onset of the crisis, the OTC swaps
    market has undergone a tremendous transformation, with 80
    percent of such transactions being cleared today, as compared
    to only about 15 percent in 2007.
        The pace of change in the markets regulated by the CFTC
    will continue. To avoid complacency, we must be vigilant about
    ensuring that regulations are properly calibrated for the
    inevitable market evolution ahead.
        In closing, I would like to note that the recently expanded
    portfolio of products and market participants under the CFTC's
    oversight requires the agency to expand its expertise, without
    losing sight of its legacy mission of ensuring that the futures
    markets are performing price discovery functions void of
    manipulation.
        My background is in agriculture, and my professional
    experience extends to the energy and financial futures markets.
    I am honored to be nominated alongside individuals with
    complementary credentials, and I genuinely believe that our
    collective knowledge will yield optimal coordination for better
    regulatory developments and oversight.
        Thank you, and I would be happy to answer any questions.
        [The prepared statement of Ms. Stump can be found on page
    35 in the appendix.]
        Chairman Roberts. Thank you very much, Ms. Stump. I thank
    you all for being on time. We have a rather hard-to-understand
    de minimis rule of 2 hours with regards to this hearing, so
    thank you for being on time. Just a bit of information for all
    Senators, including myself.
        [Laughter.]
        Chairman Roberts. Last Congress, we moved the CFTC
    reauthorization package out of this Committee in an effort to
    address some of the most pressing issues for market
    participants, such as setting an appropriate de minimis level
    and defining what constitutes a bona fide hedge.
        Can each of you briefly discuss your views on these two
    issues?
        Russ.
        Mr. Behnam. Mr. Chairman, with respect to bona fide hedge,
    I would take a step back. I do support position limits, and I
    support a quick and thoughtful completion of the position
    limits rule. That said, I fully appreciate that.
        I think the relevant question is not whether or not
    position limits should be completed, but how they should be
    completed. I think this goes to your point, thinking about a
    proper bona fide hedge definition, proper deliverable supply
    numbers, and proper aggregation definition also are very key to
    that rule to get it done right. I do believe it is the law, and
    I think it needs to be implemented and finalized as soon as
    possible.
        With respect to de minimis, I support the current rule at
    the Commission, which would require the Commission to drop the
    $8 billion level to $3 billion in December 2018. That said, if
    confirmed I commit to working with you, this Committee, and my
    fellow Commissioners and the Chairman at the CFTC to make sure
    the current rule reflects the most recent and relevant data to
    ensure that the policy objectives of the registration regime
    are met, specifically reducing systemic risk and promoting
    market participation.
        Chairman Roberts. Mr. Quintenz.
        Mr. Quintenz. Thank you, Mr. Chairman.
        With regard to the de minimis threshold level, I think when
    this threshold was set originally, it was really done without
    the benefit of a lot of data. I think if there is a scenario
    where this threshold reduces from $8 billion to $3 billion and
    instead of increasing registration, it would drive participants
    out of the market or force them to reduce their activity
    because of the costs that would be imposed upon them, that
    scenario would not serve the three stated policy goals in Dodd-
    Frank of swap dealer registration, which are systemic risk
    reduction, counter-party production, and market integrity.
        As such, I think it is very important that the Commission
    analyze a robust set of data around this issue. I know Acting
    Chairman Giancarlo has called for a fresh look at data on this
    issue, and I would like that data to inform my opinion as to
    what the appropriate level of a de minimis threshold should be.
        Regarding position limits, I think it is absolutely
    imperative that end users and farmers and ranchers that have
    been able to hedge in these markets continue to be able to
    hedge in the bona fide way that they historically have.
        Chairman Roberts. Ms. Stump.
        Ms. Stump. I will start with position limits. Can you hear
    me? I will start with position limits.
        First of all, I would like to commend the Acting Chairman
    for his commitment to putting forward a final position limit
    rule. I think that the discussion on the proposals and the
    supplements to this rule have been going on for quite some
    time, and I look forward to helping him to finalize this rule.
    With regard to bona fide hedging, the agricultural industry and
    the markets that they utilize have had position limits for
    quite some time, and my priority will be to ensure that the
    strategies they use to hedge are not prevented in the future
    due to unworkable bona fide hedging restrictions.
        With regard to the de minimis levels, having been here
    during the development of Dodd-Frank, I can absolutely attest
    to the fact that registration of swap dealers was a very
    important component of the reforms that were included in Dodd-
    Frank, and certainly, those reforms should be implemented
    aggressively. The de minimis threshold for the de minimis
    exemption was also a part of Congress' direction to the CFTC.
        Given that the agency has struggled to obtain good
    information relative to swap transactions, I believe the
    Commission made a determination that they needed to delay the
    implementation of the threshold until such time as they could
    have better data, and I look forward to looking at that data
    and reviewing it as the schedule comes due again.
        Thank you.
        Chairman Roberts. Thank you for that.
        In the 26 seconds that I have left, I am going to submit
    two questions for the record, but one is in regard to our folks
    on the ground who are trying to hedge their agriculture or
    commercial risk, and they need to be able to focus on the
    business of what they do best for America. The question
    concerns what is your position on rules and regulations and the
    negative impact on our farmers and ranchers and other end users
    and how you would address those concerns, and I am sure you all
    can respond to that.
        The other one is the--we hear rumblings about whether it
    makes sense from a budgeting perspective to combine the SEC and
    CFTC. Any comments you may have on that? You obviously are
    opposed to that and----
        [Laughter.]
        Chairman Roberts. --you can express that in one simple
    paragraph.
        Senator Stabenow.
        Senator Stabenow. Thank you, Mr. Chairman, and I too share
    your interest, obviously, in the position limits rule.
        I think it is clear. I think I heard all of you say that
    you want to get that rule done. Is that right? Rostin, is that
    right?
        Mr. Behnam. Correct.
        Senator Stabenow. Yes. Brian?
        Mr. Quintenz. Yes. I would commit to finalizing the
    position limits rule.
        Senator Stabenow. Dawn?
        Ms. Stump. Yes.
        Senator Stabenow. Okay. We also have work to do on the
    swaps de minimis threshold. I am not going to talk about this
    issue now, but I do want to be clear on the budget. You all are
    walking into a situation where there has been dramatic
    increases in responsibilities without adequate resources now
    for years. We are all concerned about important new issues that
    pose as threats to the markets, like cybersecurity and so on.
        I am wondering if each of you would indicate whether or not
    you would support increased resources for the CFTC, and at a
    minimum, would you support the Acting Chairman's efforts to
    increase the budget?
        Rostin?
        Mr. Behnam. Senator, I do not think the budget increases
    that the CFTC has received since the financial crisis, to use
    your word, are commensurate with its new oversight
    responsibilities, thinking about the swaps market, which is
    estimated at about $500 trillion notional value.
        Then, again, to your point, cyber threats and the advent of
    automated trading, these are all very resource-intensive
    challenges that the CFTC faces. So, yes, I do support an
    increased budget. I do support Acting Chair Giancarlo's
    proposal.
        I would also add that I think it is important that this
    Committee consider the Division of Enforcement and the actions
    it has taken at the Commission. Over the past 5 years, it has
    returned billions of dollars to the Treasury, and I think it is
    important to view funding the CFTC in an appropriate way as an
    investment in safe and stable markets.
        Senator Stabenow. Thank you.
        Yes, Brian.
        Mr. Quintenz. Thank you, Senator.
        I think there are a number of different ways to ball-park
    or handicap the new responsibilities that the agency has
    received. From the outside and as a nominee, I am not
    necessarily privy to the same type of information that I could
    be as a Commissioner on resource utilization and allocation or
    need, but I have a tremendous amount of respect for and
    confidence in Acting Chairman Giancarlo and would compliment
    him on the diligence, the honesty and the forethought that he
    put into building his budgetary submission. It is my
    understanding that the increase that he is seeking would go
    towards increasing the number of economists in the chief
    economist office and providing more oversight over central
    counterparties. Both of those are priorities I would support.
        Senator Stabenow. Great. Thank you. Dawn?
        Ms. Stump. Like Mr. Quintenz, I would like to commend the
    Acting Chairman for doing a top-to-bottom review of the
    Agency's resource needs. I think that was overdue, and he was
    very thoughtful, I think, in putting forward an alternative
    budget relative to the gaps that he found and the need for
    increased efficiencies.
        I look forward to having the opportunity, if confirmed, to
    review that information and contribute to future budget
    discussions.
        I would like to also, in the context of this conversation,
    commend the staff that were tasked with implementing Dodd-Frank
    at the CFTC. They did a remarkable job and, frankly, were one
    of the first agencies to implement most of the responsibilities
    under the Dodd-Frank Act, with the limited resources they had.
        Senator Stabenow. I agree with you. I think there has been
    tremendous work done, given the importance but also the limited
    resources.
        Let me ask about cybersecurity because we know it is an
    enormous risk, not only to national security, but also to our
    markets and our economy. This is something we must take
    seriously as we move forward.
        Financial markets are as vulnerable as any institution, and
    an attack on markets would have catastrophic repercussions for
    our nation's economy.
        If confirmed as a CFTC Commissioner, what are your
    intentions to address this growing challenge? Do you believe
    the Committee needs to provide additional authority to the CFTC
    to better protect the financial markets it oversees?
        Mr. Behnam. Senator, I think the thing that pops into my
    mind when I think about cyber is coordination and collaboration
    among financial regulators. There are obviously a lot of
    financial regulators that oversee very discrete parts of the
    financial system.
        That said, the one priority that I hope I would contribute
    to my fellow Commissioners and the Chairman is working with
    other financial regulators, specifically thinking about the
    Financial Stability Oversight Council, which was authorized in
    Title I of Dodd-Frank, excellent opportunity for Acting Chair
    Giancarlo to be sort of the face of the CFTC and work with
    other financial regulators to have an across-the-board
    coordination with all regulators so that everyone is working on
    the same page and sort of living up to the same standard,
    because you could have nine out of ten financial regulators
    doing and having the best cyber defense, but if one, to your
    point, is not strong, that one leak can have a systemic issue
    across the board.
        Senator Stabenow. Thank you.
        Yes, Brian.
        Mr. Quintenz. Yes. I would like to echo those comments.
        I think about cybersecurity from an internal perspective
    and an external perspective, the internal perspective meaning
    protecting the CFTC's own data and its digital infrastructure
    from attack. I know that it is implementing the NIST
    Cybersecurity Framework, and it is also subject to the Federal
    Information Security Modernization Act and the annual audits
    that it requires. Then there is the external component of
    ensuring that the financial institutions that it regulates are
    held to the highest standards, and I know that there has been a
    unanimous rule to address those issues.
        Senator Stabenow. Yes, Dawn?
        Ms. Stump. I agree with everyone. Cyber is a serious threat
    to the market and the infrastructure that supports it, and you
    all putting forward core principles under the Commodity
    Exchange Act expect that the system safeguard core principle be
    adhered to.
        The Commission recently improved upon the systems safeguard
    core principle regulations to ensure that the clearinghouses
    and the exchanges that support these markets are, in fact,
    conducting the necessary internal and external test to ensure
    that cyber threats can be managed and detected.
        So I certainly will be vigilant in ensuring that those
    regulations are complied with, if confirmed.
        Senator Stabenow. Thank you.
        Mr. Chairman, I know I have gone over, but I want to stress
    that there are folks working at this moment to undermine U.S.
    financial systems as well as the rest of our economy. So I hope
    that each of you will take this threat seriously moving
    forward.
        Thank you.
        Chairman Roberts. They were good overtime questions.
        Senator Ernst.
        Senator Ernst. Yes. Thank you, Mr. Chair, and welcome to
    each of you, your families, and your colleagues. It is nice to
    have you here, and congratulations on your nominations.
        We all know that folks within the ag industry face
    tremendous risk and operate in a uniquely volatile marketplace.
    Risk management is essential to their business operations,
    especially as we continue to experience a downturn in our ag
    economy.
        From the entire panel, if you would, as you all know, there
    is a big difference between an Iowa farmer hedging against
    commodity market risk and a Wall Street investment banker
    writing credit default swaps. How would you ensure that we
    avoid unintended consequences of a one-size-fits-all regulation
    on families and businesses who are involved in agriculture?
        We will reverse the order this time. Ms. Stump, if you
    would start, please.
        Ms. Stump. Certainly.
        I absolutely understand what you are saying. The CFTC is
    tasked with regulating a number of different asset classes and
    market participants, and certainly, given my background, I am
    familiar with the different risks that agricultural producers
    face and energy producers also face. All of the commodity
    market participants need to have access to markets where they
    can hedge against the volatility that is always going to be
    present in their business.
        Relative to the financial products that the CFTC oversees,
    some of those are also necessary hedging tools. For example,
    CoBank probably uses the interest rate swap market to hedge
    against their risk, and we have to make sure that those tools
    are available to them as well.
        On the other side, there are participants in the market
    that are not hedgers. They are liquidity providers. They are
    often speculating in the market, and we do need to address the
    concerns relative to the different market participants in
    different manners. I look forward to doing that, if confirmed.
        Senator Ernst. Very good. Thank you.
        Mr. Quintenz. Thank you, Senator.
        I think that these markets need to work for the people and
    the farmers and the ranchers and the businesses that have a
    natural exposure to commodity risk because they depend upon
    them, and when the Commission loses sight of the risk that its
    rules are trying to mitigate or the market flaw that its
    regulations are trying to address, that is when costs get added
    and regulations end up burdening ordinary businesses and the
    end-user community.
        So I would pledge to make it a focus of mine to ensure that
    the regulations and the rules that the CFTC considers,
    proposes, and finalizes target risks specifically.
        Senator Ernst. Thank you.
        Mr. Behnam. Senator, echoing everything my fellow nominees
    said, I will add, though, I think constant communication with
    stakeholders. Obviously, the stakeholders of this Committee is
    important to ensure that they are able to use the derivatives
    market in a cost-effective way as a risk-management tool.
        So, if confirmed, I pledge to continue working with the
    Aggies to make sure that they are able to use the markets in
    the way they were intended to be used.
        Senator Ernst. Thank you very much. I appreciate it.
        In his testimony, Mr. Quintenz discussed the danger of
    rules that treat low-risk behavior the same as high-risk
    behavior, and for all of you as well, to what extent do you
    think CFTC regulations currently do this? Are there any steps
    that Congress should be taking in this process?
        Yes, Mr. Quintenz.
        Mr. Quintenz. I guess I will start since it was in my
    testimony.
        Senator Ernst. Yes.
        Mr. Quintenz. I think that----
        Senator Ernst. Thank you.
        Mr. Quintenz. --there are areas where the Commission has
    issued rules on thresholds or definitions that do not
    necessarily fit the risks that are being mitigated.
        I think one example could be in the de minimis threshold
    and using notional value as a way to measure activity. Notional
    value, I believe, is a poor measure of activity and is a
    meaningless measure of risk, but yet that is what the
    Commission has chosen to impose all of these costs upon smaller
    firms that would have to register as swap dealers; also, in
    regulations defining who is a bone fide end user in position
    limits; Also, in defining who is an algorithmic or a high-
    frequency trader, where in past iterations it could have
    applied very broadly to even the farmers and the ranchers of
    this country; I think they need to make sure they are focused
    on targeting the rule specifically.
        Senator Ernst. Very good.
        I only have 30 seconds, if there is a differing opinion,
    either one.
        Ms. Stump. I have no differing opinion.
        I would just like to point out that you all have given the
    Commission a principle-based roadmap for these regulations,
    such that I think that indicates that one-size-fits-all was not
    your intention, so----
        Senator Ernst. Right. Correct. Thank you.
        Mr. Behnam.
        Mr. Behnam. I would just add that it is important as an
    independent agency that the Commission have the flexibility to
    constantly adapt to the current marketplace, given its quick
    pace of evolution.
        Senator Ernst. Absolutely. Thank you very much.
        Thank you, Mr. Chair.
        Chairman Roberts. Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        Thank you all for being here.
        I have consistently argued that position limits should be a
    tool in the CFTC's tool box that helps the Commission fulfill
    its mission to promote transparent open markets and to protect
    the public from fraud and manipulation.
        I would like to go down the line. If confirmed, will you
    work to finalize the position limits rule in a timely manner?
        Mr. Behnam.
        Mr. Behnam. Senator, absolutely. I support position limits,
    and I will work with my fellow Commissioners and the Acting
    Chair to ensure that the rule is done as quickly as possible.
        Mr. Quintenz. Thank you, Senator. Yes, I would commit to
    finalizing a position on this rule.
        Senator Donnelly. Okay.
        Ms. Stump. Yes, I would.
        Senator Donnelly. Great. One of CFTC's continual challenges
    is securing appropriate funding to make sure that operations
    are full capacity. That has continued to be a challenge on a
    regular basis.
        I am also interested in learning more about the possibility
    of creating a self-funding mechanism for the Commission that
    provides you with the resources needed without restricting
    access for market participants.
        Mr. Quintenz, starting with you, would you commit to
    getting back to this Committee in the coming months with your
    thoughts and ideas for appropriately funding the Commission for
    the work that you have to do?
        Mr. Quintenz. Absolutely.
        Senator Donnelly. Ms. Stump?
        Ms. Stump. Yes. I would be happy to.
        Senator Donnelly. Mr. Behnam?
        Mr. Behnam. Yes, Senator Donnelly.
        Senator Donnelly. Great.
        Thank you, Mr. Chairman.
        Chairman Roberts. Senator Boozman.
        Senator Boozman. Thank you, Mr. Chairman, and thank you and
    the Ranking Member for getting this together in a timely
    fashion.
        I guess I would like to talk a little bit about harmonizing
    the swaps rules to ensure that U.S. firms are operating on a
    level playing field with their international competitors.
        In your opinion, how important is this work--international
    regulators harmonizing their swaps rules? What are the biggest
    harmonization challenges that we are facing in the coming
    years, and how do you think we should tackle these challenges
    again? Talk a little bit about how that affects the ability of
    United States entities to complete overseas.
        Mr. Quintenz. Thank you, Senator.
        The swaps market is a global market, and I think that
    presents two somewhat opposing challenges in harmonization
    efforts.
        The first is that, as the financial crisis showed, a
    buildup of excessive risk anywhere through derivative exposure
    can be a buildup of excessive risk everywhere, and we have to
    be vigilant that we are not importing risk into the United
    States through lax comparability determinations.
        But the second aspect of a global swaps market is that if
    costs or regulations are added in one jurisdiction that do not
    compare to other jurisdictions, that activity can move
    overseas, and it could be detrimental to the liquidity and to
    the ability of end users.
        Senator Boozman. You actually lose control somewhat?
        Mr. Quintenz. To some degree, you could, yes, Senator. So I
    think that those are things that the Commission needs to keep
    in mind in making comparability determinations.
        Mr. Behnam. Senator, I think one of the most important
    lessons from the crisis was how global and interconnected the
    financial markets are. You could have a transaction, to Mr.
    Quintenz's point, take place far beyond our borders and it have
    a profound effect on our domestic institutions, our domestic
    markets, and most importantly, the American taxpayer.
        With that, I think it is critical that when the CFTC
    enforce its cross-border guidance and related rules and
    regulations, it have appropriate oversight over transactions
    that have significant nexus to the U.S.
        With that, to the extent that it is my responsibility, if
    confirmed, I will work with the Chairman to continue working
    with foreign counterparts to make sure that there is a level
    playing field and that there is not a regulatory race to the
    bottom.
        Senator Boozman. Very good.
        Ms. Stump. I would just--I agree with everything that has
    been said, but I would like to point out that never was it any
    more apparent than during the financial crisis that these are
    global markets. What started in one jurisdiction quickly bled
    into another, and I think that is why the global regulators
    came to terms with a three-part approach relative to
    derivatives regulations--transparency, reducing systemic risk,
    increase clearing. All of those things were supported in a
    bipartisan manner.
        But what is unique about the United States is that the CFTC
    has for over 30 years been a leader among their global
    regulators, and I believe that has continued. They were one of
    the first movers implementing many of these reforms, and so we
    saw that at the time, when various jurisdictions were
    implementing the regulations at different times, that there
    were gaps. But now most jurisdictions have taken steps to put
    in place regulations, and it is incumbent upon all regulators
    to coordinate and ensure that they are not stepping on each
    other but at the same time ensuring that the prevalence of
    these problems does not bleed from one jurisdiction to another.
        Senator Boozman. Well, we have the harmonizing the rules.
    We have the cross-border situation, but domestically, what will
    you do to reduce the unnecessary redundant burdens, such as
    inspections, filings, and information requests on regulated
    entities?
        In other words, right now the feedback that we are getting
    is that we need good information, but we do not need regulation
    for regulation's sake.
        The other problem with that is that as you acquire this
    information--and it is not just the CFTC--it is all of our
    financial regulators. It seems like there is a move for more
    and more information, but as we talked about the cyber security
    component, you have the responsibility then of securing this
    information, which is very, very difficult to do.
        So can you comment on what do we do about getting rid of
    some of the redundant stuff that is going on?
        Mr. Quintenz. Thank you, Senator.
        I think this is an opportunity to applaud Acting Chairman
    Giancarlo's efforts. He has announced something called Project
    KISS, which stands for ``Keep it Simple, Stupid,'' to review
    all of the regulations that are currently on the books and try
    to find areas where there may be duplicative regulations or
    unneeded regulations. I would support his efforts in that
    regard.
        Senator Boozman. Very good.
        You all certainly support that, I assume?
        Mr. Behnam. Absolutely.
        Ms. Stump. Yes.
        Senator Boozman. Very good. That is a great slogan for all
    of us.
        Thank you, Mr. Chairman.
        Chairman Roberts. Senator Klobuchar.
        Senator Klobuchar. Thank you very much, Mr. Chairman.
        Welcome, all of you. This hearing is a little more less
    intense than the Judiciary hearing I just came from on Russia,
    so I will try to adjust my tone.
        [Laughter.]
        Senator Klobuchar. Mr. Quintenz, you have a strong
    background----
        Chairman Roberts. Welcome back home.
        [Laughter.]
        Senator Klobuchar. Thank you. Thank you. It is great to be
    here.
        Mr. Quintenz, You have a strong background with the
    financial markets. You have been a participant in financial
    markets as part of your business.
        You and I met, and we talked about the differences between
    speculation in areas like gas, oil, wheat, where there are
    physical commodities, and pure financial speculation. Could you
    talk about how you consider this and what you see as the
    similarities and differences?
        Mr. Quintenz. Yes. Thanks, Senator.
        It was a pleasure to meet you, and it was very kind of you
    to spend some time talking business during that--during that
    event.
        Commodity markets evolved completely separately from the
    equity markets for completely different purposes. Whereas the
    equity markets were designed for companies to raise capital
    from the public and to provide an avenue of wealth creation
    through the ownership of future cash flows, commodity markets
    evolved so that individuals, farmers and ranchers, and
    businesses that have a natural exposure to commodity risk could
    hedge that risk and transfer that risk.
        Currently in the commodity markets, there are two
    classifications of participants. Those that have that natural
    exposure and hedge that exposure are considered hedgers, and
    that impacts things like reduced margin requirements, because
    of their ability to perform on these contracts; Everyone else
    is lumped into the role of a speculator. That could be an
    individual, it could be a small financial firm, it could be a
    large financial institution, regardless of whether or not they
    are speculating for their own account or providing
    intermediation for their client. But it is the functionality of
    these markets to the end user for the purposes of price
    discovery and risk mitigation that is at the core of the CFTC's
    function, which is what I would vow to protect.
        Senator Klobuchar. Okay. Thank you.
        As you know, we are facing a big time of declining
    commodity prices and in all the areas that I mentioned,
    including in agriculture, and big moves in market prices, as
    you know, can create an incentive for speculation and abuse,
    people placing bets on the way the market moves and who do not
    have a stake actually in the commodities being produced. The
    CFTC enforces the rules that prevent abuses that led to the
    2008 market crisis, and since then, cases of note that we have
    discussed in this Committee--MF Global and Peregrine--I
    actually have someone, a constituent in my State, an
    agriculture person who is a victim of both of those rip-offs.
        So I guess I will ask the other two nominees here, Ms.
    Stump and Mr. Behnam. In your work on the Agriculture
    Committee, you saw how the ag sector was also impacted by the
    collapse of MF Global and other abuses. Could you talk about
    how you would work with the CFTC to protect consumers and
    investors, and are there other steps that we can take to
    protect consumers and investors from these types of abuses?
        I guess, Mr. Behnam and then Ms. Stump.
        Mr. Behnam. Senator, like you pointed out, my work on the
    Committee has been super helpful in sort of informing me about
    the risks that growers take on a daily basis, and having worked
    on the MF Global and Peregrine hearings when we had them back
    in '11 and '12, having an opportunity to meet these growers
    firsthand and the risks they take, and really the unacceptable
    abuse of their sort of--their assets and their personal
    belongings that these companies did was egregious. To that end,
    I think the Commission and this Committee has reacted well, but
    the core priorities of the Commission have to be customer
    protections.
        To Mr. Quintenz's point, these markets were created for end
    users to manage risk and for price discovery, but we have
    small, large farmers and ranchers and manufacturers and other
    end users using these markets. The priority for the Commission
    must be customer protections.
        To that end, if confirmed, I will continue working with
    stakeholders, both ag and otherwise, to ensure that they feel
    comfortable using the markets for risk management and price
    discovery.
        Senator Klobuchar. Thank you.
        Ms. Stump?
        Ms. Stump. Absolutely, I think that the customer protection
    measures that the CFTC is responsible for are the bedrock of
    what makes these markets appealing to people and encourages
    them to hedge against their risk. If their collateral cannot be
    protected, they will have no incentive to be operating or
    hedging against the risk.
        Certainly, the failures of MF Global and Peregrine resulted
    in a review of what could be done and what could be made better
    and what could be improved upon relative to protecting those
    assets, and I am very pleased to have worked with a coalition
    of agricultural producers and the clearing members that support
    them at that time to review those improvements and to have
    provided input into how they would be workable or not. Going
    forward, if confirmed, this will be especially important to me,
    because I am from the agricultural industry, and we want to
    encourage those folks to be in the markets hedging.
        Senator Klobuchar. Okay. Thank you.
        Chairman Roberts. Senator Thune.
        Senator Thune. Thank you, Mr. Chairman, Senator Stabenow,
    for having the hearing. It is nice to welcome Ms. Stump and Mr.
    Behnam back to the Committee, and I know that with your
    experience here, you understand the complexities of the ag
    commodity markets and how important they are when it comes to
    keeping functioning smoothly and without risk. So we look
    forward as well, Mr. Quintenz, to having you all there and
    bringing your backgrounds to bear and to serve at the CFTC.
        Just a question having to do--we have heard complaints,
    especially from our livestock producers, that the Chicago
    Mercantile Exchange, or CME, is not performing as it should,
    which they say is negatively impacting cattle prices. Can you
    kind of tell me just maybe what your thoughts are on that, and
    perhaps even more specifically, with your future potential
    oversight of CME at CFTC and based on what you know now, are
    there any CME activities that concern you regarding
    transparency or price manipulation?
        Mr. Behnam. Senator, I am not aware of any actions that the
    CME has taken that would disrupt the cattle markets.
        That said, I am very well aware of this issue. I have met
    with stakeholders, some from South Dakota in the past year or
    two, and appreciate their concerns about the volatility in that
    market.
        That said, if confirmed, I fully commit to working with
    you, your staff, and this Committee to ensure that measures
    that both the CFTC have taken and the CME has taken as well
    continue to address the problem and resolve the issues, so that
    the livestock industry can use the markets for risk management.
        Mr. Quintenz. Thank you, Senator.
        I think, ultimately, these markets need to work for the
    farmers and ranchers that depend upon them, and when a contract
    is trading at lock limit for a significant number of days, like
    the cattle futures contract has in 2015, to a lesser extent
    2016, but still somewhat in 2017, I think it is indicative of
    some type of problem with the market, whether it be contract
    design, whether it be market participants, or whether it be
    supply and demand and balances. It is important for the
    Commission to answer those questions.
        I know that the Commission has been looking into this and
    has been working with all the stakeholders, including the CME
    and ranchers that have exposure to this, and I would pledge to
    look into this issue and give you any of my thoughts and
    findings.
        Senator Thune. Thank you.
        Ms. Stump?
        Ms. Stump. I agree with everything that has been said. The
    only thing I would add is that anytime one of the commodity
    markets is not performing a price discovery function or
    convergence is not occurring or volatility that is
    unprecedented is present, it is incumbent upon all of the
    stakeholders to come together and address or at least explore
    that there might need to be changes, including the exchanges,
    the end users, the liquidity providers, and certainly the
    regulators. I am committed to doing that if confirmed.
        Senator Thune. Well, we look forward to working with you on
    that. As you noted, we hear a lot of that--and I am sure you do
    as well--from people who are out there raising cattle and
    trying to use the markets in an effective way.
        Past several years, we have been informed that resources,
    including personnel at the CFTC, are insufficient to meet
    required operations and oversight. Based on what you know now,
    what are your thoughts on staffing and resources, and do you
    expect to be requesting additional staffing and resources in
    the future?
        Ms. Stump. I will start. I think that the Acting Chairman
    has done a remarkable job of evaluating the resource needs of
    the CFTC, and that was probably overdue. I think he has
    identified some increased efficiencies as well as some gaps
    that need to be filled, and in doing so, he has put together
    some analysis that I have not yet seen, but, if confirmed, I am
    committed to reviewing, especially in the context of the new
    responsibilities that the Commission has under the Dodd-Frank
    Act.
        Mr. Quintenz. Thank you, Senator. I would completely agree
    with Ms. Stump.
        While it is hard as a nominee to have the same type of
    information as we would have as Commissioners to answer the
    resource question, I am well aware of the review that Acting
    Chairman Giancarlo has put together in his request for
    additional resources and would look forward to working with him
    to ensure that the Commission has what it needs to operate and
    fulfill its obligations.
        Mr. Behnam. Senator, I agree with my fellow nominees in the
    sense that we cannot properly evaluate the needs of the
    Commission in these seats, and we would need to be down there
    examining the books to see what the true needs are.
        That said, as I pointed out earlier, I would say given the
    increase in oversight responsibility that the Commission
    received through Title VII, relative to the funding increases
    it has received since the financial crisis, I would think that
    the funding increase is important to ensure and preserve market
    integrity.
        Senator Thune. My time has expired. Thank you, Mr.
    Chairman.
        Chairman Roberts. Senator Perdue.
        Senator Perdue. Thank you, Mr. Chairman, and thank you for
    holding this critical meeting. In my opinion, it is very
    important we get these Commissioners confirmed so they can go
    to work.
        I just have a couple of quick questions for all three. The
    first is on the derivatives markets globally. Since the crash
    in '08 and '09, as jurisdictions around the world move to catch
    up and progress towards implementing their own reforms in the
    derivatives markets, coordinations with those regulators around
    the world to me seems like it has never been more important for
    our CFTC to be engaged with that.
        Would you just briefly--because I want to get on to another
    issue here as well, quickly--would you talk about your views
    regarding how the CFTC can better coordinate with these other
    regulators around the world to ensure that we do have a robust
    global swaps market? I mean, this is not just an isolated
    regional market, as I am sure you are aware, so that U.S.
    companies can, in fact, hedge their risk. As many of you know,
    most of our U.S. players are in that global market every day,
    anyway. So would each of you--Ms. Stump, would you start. Thank
    you.
        Ms. Stump. Certainly.
        I agree with everything you have said. These are global
    markets, and the coordination is essential.
        Post Dodd-Frank, I think all of the regulators around the
    world moved at different paces, and so there were times at
    which there might have been gaps, but I think that has been
    less so in recent years, such that the regulators have come to
    terms with the fact that they are all pulling the wagon in the
    same direction.
        So going forward, though, I think regulators need to be
    focused globally on new threats. How are we going to coordinate
    relative to a cyber incident? How will we coordinate relative
    to new technologies being present in the marketplace?
        I said in my testimony that I think it is really important
    that we consider that--that we will need to calibrate the
    regulations going forward. That is not just in the United
    States but around the world.
        Senator Perdue. Thank you.
        Mr. Quintenz. Thank you, Senator. You are exactly right.
    The global nature of the swaps market means that if costs are
    imposed in one jurisdiction that do not match up to costs in
    other jurisdictions, that activity will move, and it will
    disadvantage that home country in terms of a liquidity and its
    smaller market participants.
        Senator Perdue. Do you think that we are in that situation
    today?
        Mr. Quintenz. I think it is possible.
        I think the Commission needs to do a very thorough job of
    understanding how the costs that it is imposing are affecting
    the global marketplace. Ultimately, that comes down to a
    process perspective and ensuring that the Commission looks at
    this on an outcomes-based process. Everyone is going to have
    different opinions as to specific requirements, how much to
    hair-cut collateral, et cetera, but if the Commission focuses
    on the outcomes, I think it will make for a much smoother
    process. It also comes down to relationships, having good,
    positive, trusting relationships with international regulators,
    and from what I am aware, those have been improving in recent
    years.
        Senator Perdue. Thank you.
        Mr. Behnam. Senator, I would echo some of the statements
    that my fellow nominees have said.
        I would add that I think it is important, given that we are
    now 10 years past the financial crisis, that we not forget what
    happened and what the results were. With that said, it is
    important that regulators continue to work together
    individually on a one-on-one basis but also use entities like
    Basel and IOSCO as sort of measures to convene global
    regulators.
        Additionally, it is critical that we do not have a race to
    the bottom. Given the sort of transportability of these
    products and financial markets generally, it is not difficult
    for even some of our domestic financial institutions to just
    pick up and move to different jurisdictions. So it is important
    that everyone work together and work on a level playing field.
        Senator Perdue. Very quickly, I will just throw this out,
    and you can voluntarily answer this quickly. But Dodd-Frank
    imposed so many regulations, it required mountains of
    additional information being collected. I hear this more than
    any other complaint about the regulatory environment today, is
    that how much unnecessary information--unnecessary, in their
    definition, information, additional information is being
    collected today.
        In your opinions today, do you believe the CFTC collects
    too much information for firms under its jurisdiction?
        Mr. Quintenz. I believe that the agency needs to make sure
    that the information it is collecting and the burden that it is
    placing on end users and farmers and ranchers corresponds to a
    risk or a market flaw that it is trying to address.
        Ms. Stump. I do believe that the information that the CFTC
    requires needs to be more targeted. In fact, I think it could
    be improved. The information that is being currently collected
    relative to swap data is not necessarily in a format that is
    effectively digested, and so if we could find a way--and I
    believe the Acting Chairman has committed to doing so, and I
    certainly have confirmed, would love to help in this effort, to
    make the information more usable, such that we can properly
    target those who need to be supplying it.
        Senator Perdue. I am out of time, but quickly, the source
    codes that are used in the algorithmic trades, is that
    something that CFTC is capable of collecting, protecting, and
    then using properly?
        Mr. Quintenz. It is my understanding that the CFTC has in
    the past issued subpoenas for source code, and I believe that
    the subpoena process provides an important protection for that
    intellectual property.
        Senator Perdue. Thank you. I am out of time. Thank you.
        Thank you, Mr. Chairman.
        Chairman Roberts. Senator Daines.
        Senator Daines. Thank you, Mr. Chairman, and thank you to
    the witnesses, nominations for coming before this Committee and
    for your willingness to serve.
        I want to thank Chairman Roberts for holding this hearing.
    I also want to continue to work with you, Mr. Chairman, Ranking
    Member Stabenow, in moving forward these nominees through this
    Ag Committee and on the Senate floor as quickly as possible.
        When I am asked what is the largest industry in Montana, it
    is an easy answer. It is agriculture, and the CFTC's role in
    ensuring that agricultural derivative markets are priced
    fairly, I have heard a lot of concerns from these producers out
    in Montana that sometimes wonder if it is a casino anymore
    versus just working back on the fundamentals of supply and
    demand.
        We want to make sure that agriculture derivatives, the
    markets are priced fairly, they are priced efficiently, and
    ensure they are free of collusion.
        Should you be confirmed as Commissioners, you will be
    charged with policing these markets while protecting against
    price spikes caused by lack of liquidity as well as by
    manipulation.
        Acting Chairman Giancarlo joined the Chairman and myself in
    Montana just last month for our Ag Summit, and he was able to
    visit a grain elevator, met with farmers that rely on the
    futures market. I certainly want to extend a warm invitation to
    each of you to come out to Montana and see it for yourself.
        Let me start with market volatility. One of the recent
    initiatives we have been focused on was to remove the ban on
    U.S. beef imports into China. That stood for 14 years. Many of
    us had concerns it really was not warranted, but nonetheless,
    it was the reality. We have been working hard to get that ban
    lifted. It is the second largest beef import market in the
    world.
        As the ban has been lifted just in the last month, prices
    are finally starting to increase. That is a good sign, and
    there are a multitude of factors that go into cattle prices.
    So, again, we are glad that prices are going up.
        But I am concerned about these price shocks and market
    volatility, and the question is, to Mr. Behnam, do you believe
    the current regulatory framework is capable of soundly
    accommodating the market volatility that we see as well as the
    price shocks?
        Mr. Behnam. Senator, first off, I look forward to visiting
    Montana when----
        Senator Daines. So I will take that as a commitment.
        Mr. Behnam. Commitment, absolutely.
        [Laughter.]
        Senator Daines. All right. Thank you.
        Mr. Behnam. Second, CFTC has a fairly robust regulatory
    regime in terms of collecting data. I think to the question
    earlier, we need to make sure that the data and the information
    collected is pointed and has purpose, so that we are not
    putting an undue burden on stakeholders and market
    participants.
        That said, the types of data continue to evolve and change
    with technology advancements and just market changes. So if I
    am confirmed, I commit to working with CFTC staff and Acting
    Chair Giancarlo to review the data requirements, the data rules
    and regulations, to ensure that whatever is being collected is
    relevant and is also appropriately measuring what the markets
    reflect in terms of prices.
        Senator Daines. So along that line--and, again, one of the
    great mysteries at times for our producers in Montana is these
    dislocations that occur as relates to market volatility between
    supply and demand. So my question is, What would be your
    expectations for managing these market dislocations between
    supply and demand?
        Mr. Behnam. I think some of the concerns in the livestock
    futures contract, I think, are sort of parallel to some of the
    concerns you raise. I know that the CME took actions to resolve
    some of the issues, which include changing delivery locations
    and delivery times of the cash market and also changing trading
    hours. I think those are the types of sort of remedies and
    solutions that both exchanges and the CFTC have to look into in
    order to resolve distortions in prices between the futures
    market and the cash market.
        Senator Daines. Let me shift gears here. Ms. Stump, you
    mentioned in your written testimony, and I quote, ``The
    derivatives markets are dynamic, ever changing, and constantly
    evolving.'' I understand that the LabCFTC has been established
    to provide regulations alongside the emerging fintech firms to
    help them navigate this legal gray. The question is, Do you
    support the LabCFTC initiative to enhance the efforts of a
    growing industry?
        Ms. Stump. Yes, I absolutely do. I think the market has
    actually benefitted over many years from the various
    innovations that have come forward, but at the same time, it is
    incumbent upon the regulators to be taking a forward look at
    the things that are coming and to ensure that we properly
    understand them and, if need be, can regulate them.
        Senator Daines. So along that line, if confirmed, will you
    recommend any changes to the LabCFTC as we think about going
    forward?
        Ms. Stump. If confirmed, I would commit to helping the
    LabCFTC evolve.
        For now, I think it operates as a forum for fintech
    providers and regulators to come together and think through and
    learn about what may be coming. Beyond that, I think that there
    are steps that could be taken to build that out, such that it
    becomes a forum for regulatory building around some of those
    things.
        I am not sure we are there yet, but I do think that it will
    evolve into something much bigger than it is today.
        Senator Daines. Thank you.
        Mr. Chairman, I am out of time. Time flies when you are
    talking about agriculture, doesn't it, Mr. Chairman?
        [Laughter.]
        Chairman Roberts. Yes, that is correct. I just hope the
    other side listens.
        Senator Stabenow. That is right.
        Chairman Roberts. Unless there are further questions--and
    we have all had the opportunity to submit questions for the
    record, as I will indicate here in just a moment, the Ranking
    Member and I were discussing this while contentedly listening
    to the testimony as well. This is a unique opportunity. We have
    three, if I can say, very bright, experienced nominees here,
    and whether we can dub you the Three Musketeers--where is
    d'Artagnan? I guess that is the next person coming up. But this
    is a unique opportunity. We have three very good nominees,
    outstanding nominees for the Commission. We also have an
    opportunity to have a full Commission working for the first
    time in quite a few years. It is a wonderful opportunity and a
    message to rural America and to our farmers and ranchers and
    growers and to everybody that I mentioned in my statement that
    we can have a full Commission working on their behalf and
    protecting them as well.
        I am going to yield to you for any further comment.
        Senator Stabenow. Well, Mr. Chairman, I completely agree,
    and I think it is, frankly, a breath of fresh air to have
    nominees that want to serve, that are knowledgeable about the
    subject matter that they will be serving in and committed to
    focus on making sure that this part of the economy works.
        By the way Rostin, Nina is responding to that.
        [Laughter.]
        Senator Stabenow. She concurs in that as well.
        Chairman Roberts. She agrees.
        Senator Stabenow. Yes.
        Again, I want to thank all of you for being willing to
    serve. This is not easy work, I am very pleased to be able to
    support all of you.
        Chairman Roberts. I may add that Nina's comments will be
    submitted for the record.
        [Laughter.]
        Chairman Roberts. That will conclude our hearing today. I
    thank the nominees for taking time to address this Committee
    and to answer the Committee's questions. It is very clear that
    you have all exhibited that you are qualified to join the CFTC
    as Commissioners and work on the complicated market issues that
    impact all of us.
        In closing, I would like to mention that I have received
    multiple expressions of support for all of our nominees from
    both the ag and financial market sectors. Some have sent
    letters, including some of the largest organizations in our ag
    sector. I am grateful to all of the groups for voicing their
    support for these nominees.
        Without objection, the letters will be entered into the
    record. It is so ordered.
        [The letters follow:]
        Chairman Roberts. We learned a great deal today from the
    nominees. Their testimony provides us significant information,
    a solid basis upon which to report them favorably out of
    Committee per our rules. We cannot do so today, unfortunately,
    but we will endeavor to do so in the very, very near future.
        To that end, I would request my fellow members that if they
    have any additional questions for the record, that they be
    submitted to the Committee Clerk by 5:00 p.m. tomorrow, July
    28th. We look forward to receiving your responses and to
    further considering your nominations.
        The Committee stands adjourned, Nina.
        [Whereupon, at 10:49 a.m., the Committee was adjourned.]

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