[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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