[Senate Hearing 117-509]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 117-509

                   NOMINATION OF THE HONORABLE ROSTIN
                  BEHNAM, OF MARYLAND, TO BE CHAIRMAN
                  AND A COMMISSIONER OF THE COMMODITY
                       FUTURES TRADING COMISSION

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

                                HEARING

                              BEFORE THE

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            October 27, 2021

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry
           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]           


                  Available on http://www.govinfo.gov/
                  
                              __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
47-197 PDF                 WASHINGTON : 2023                    
          
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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY


                 DEBBIE STABENOW, Michigan, Chairwoman
PATRICK J. LEAHY, Vermont            JOHN BOOZMAN, Arkansas
SHERROD BROWN, Ohio                  MITCH McCONNELL, Kentucky
AMY KLOBUCHAR, Minnesota             JOHN HOEVEN, North Dakota
MICHAEL F. BENNET, Colorado          JONI ERNST, Iowa
KIRSTEN E. GILLIBRAND, New York      CINDY HYDE-SMITH, Mississippi
TINA SMITH, Minnesota                ROGER MARSHALL, Kansas
RICHARD J. DURBIN, Illinois          TOMMY TUBERVILLE, Alabama
CORY BOOKER, New Jersey              CHARLES GRASSLEY, Iowa
BEN RAY LUJAN, New Mexico            JOHN THUNE, South Dakota
RAPHAEL WARNOCK, Georgia             DEB FISCHER, Nebraska
                                     MIKE BRAUN, Indiana

               Joseph A. Shultz, Majority Staff Director
               Mary Beth Schultz, Majority Chief Counsel
                    Jessica L. Williams, Chief Clerk
               Fitzhugh Elder IV, Minority Staff Director
                 Fred J. Clark, Minority Chief Counsel
                           
                           
                           C O N T E N T S

                              ----------                              

                      Wednesday, October 27, 2021

                                                                   Page

Hearing:

Nomination of the Honorable Rostin Behnam, of Maryland, to be 
  Chairman and a Commissioner of the Commodity Futures Trading 
  Comission......................................................     1

                              ----------                              

                    STATEMENTS PRESENTED BY SENATORS

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan...     1
Boozman, Hon. John, U.S. Senator from the State of Arkansas......     2

                               WITNESSES

Behnam, Hon. Rostin, of Maryland, to be Chairman and a 
  Commissioner of the Commodity Futures Trading Commission.......     5
  
  
                              ----------                              

                                APPENDIX

Prepared Statements:
    Behnam, Hon. Rostin..........................................    30

Document(s) Submitted for the Record:
Stabenow, Hon. Debbie:
    Undersigned organizations, letters of support................    34
    NCBA, letter of support......................................    36
    U.S. Cattlemen's Association, letter of support..............    37
Behnam, Hon. Rostin:
    Committee questionnaire, Office of Government Ethics 
      Executive Branch Personnel Public Financial Disclosure 
      Report and 5-day letter filed by Behnam, Rostin............    38

Question and Answer:
Behnam, Hon. Rostin:
    Written response to questions from Hon. Debbie Stabenow......    92
    Written response to questions from Hon. John Boozman.........    95
    Written response to questions from Hon. Sherrod Brown........    98
    Written response to questions from Hon. Kirsten E. Gillibrand   100
    Written response to questions from Hon. Ben Ray Lujan........   102
    Written response to questions from Hon. Raphael Warnock......   105
    Written response to questions from Hon. John Hoeven..........   106
    Written response to questions from Hon. Joni Ernst...........   110
    Written response to questions from Hon. Tommy Tuberville.....   112
    Written response to questions from Hon. Charles Grassley.....   116

 
NOMINATION OF THE HONORABLE ROSTIN BEHNAM, OF MARYLAND, TO BE CHAIRMAN 
     AND A COMMISSIONER OF THE COMMODITY FUTURES TRADING COMISSION

                              ----------                              


                      WEDNESDAY, OCTOBER 27, 2021

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., via 
Webex and in room 216, Hart Senate Office Building, Hon. Debbie 
Stabenow, Chairwoman of the Committee, presiding.
    Present or submitting a statement: Senators Stabenow, 
Brown, Klobuchar, Bennet, Gillibrand, Smith, Booker, Warnock, 
Boozman, Hoeven, Ernst, Marshall, Tuberville, Grassley, Thune, 
Fischer, and Braun.

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE 
    OF MICHIGAN, CHAIRWOMAN, U.S. COMMITTEE ON AGRICULTURE, 
                    NUTRITION, AND FORESTRY

    Chairwoman Stabenow. Good morning, and I call to order 
today's hearing on the nomination of Mr. Rostin Behnam to 
become Chairman of the Commodity Futures Trading Commission 
(CFTC). Congratulations on your nomination, Russ. It is good to 
see you. I know your wife--I know that Dinah and two of your 
three beautiful girls are working their way through security at 
the moment, so we look forward to officially welcoming them, 
Nina, Farah, and I know that your third little one, Roxana, is 
a baby at home, so we say hello virtually to her.
    I also want to welcome Commissioner Dawn Stump. Thank you 
for attending today, and I think your support is a testament to 
Russ's ability to work in a bipartisan manner with fellow 
commissioners, and yours as well, to be here today. We are very 
appreciative.
    To say that I am excited about Russ's nomination is an 
understatement. I was very fortunate to work with Russ for 
several years when he handled CFTC issues for our Committee, 
and he provided invaluable counsel on matters related to our 
derivative markets. I have even heard that Russ keeps a poster 
of Michigan agriculture in his office as a reminder of the 
important work of this Committee.
    The CFTC is critical to ensuring farmers and consumers 
alike can trust the stability of financial and agricultural 
markets to hedge their risk. If confirmed, Chairman Behnam will 
oversee the CFTC at a time when our markets are undergoing a 
significant evolution. For example, we are seeing an explosion 
and growth of digital assets and other financial technologies. 
With these new technologies, while they are popular, among many 
consumers they are particularly vulnerable to fraud and abuse 
and lack the customer protections built into more traditional 
financial markets.
    Many of these digital assets are commodities. If confirmed, 
Chairman Behnam will need to thread the needle to ensure this 
industry can continue to innovate in ways that are smart, while 
posing less risk to customers. I look forward to working with 
Commissioner Behnam and the Commission in this effort as we 
consider whether additional legislative authorities are needed.
    We are also reaching a tipping point in our response to the 
climate crisis, as we know, and Commissioner Behnam has been a 
leading voice in examining how this crisis can impact our 
financial markets. Without a doubt, the CFTC is small but 
mighty, and yet even as its responsibilities continue to 
expand, unfortunately its funding has failed to keep pace. It 
is inexplicable that the CFTC has been underfunded for so many 
years. This puts our financial system at risk. The CFTC is the 
only financial regulator that is not supported by user fees, 
leaving it particularly vulnerable to dips in its budget.
    I am disappointed to see that CFTC, unlike other financial 
regulators, was not funded at the level requested in the 
President's budget request, and I am going to continue to fight 
to get adequate resources for the CFTC to carry out its 
important mission.
    The CFTC also needs a full slate of commissioners to 
accomplish its mission. I look forward to holding a hearing, as 
soon as possible, for the two Democratic nominees and working 
closely with Senator Boozman to have a Republican nominee put 
forward as soon as possible so we can complete this important 
commission.
    Commissioner Behnam has support from a broad range of 
stakeholders across the financial and agricultural sectors, and 
I would ask unanimous consent that their letters be entered 
into the record. Ordered, without objection.

    [The letters can be found on pages 34-37 in the appendix.]

    Chairwoman Stabenow. Now as I am turning to my friend and 
our Ranking Member, Senator Boozman, I do notice, Russ, that 
your family is now with us, so Dinah, welcome to you and the 
girls. We are so glad to have your family with us today on this 
important occasion.
    Senator Boozman.

 STATEMENT OF HON. SENATOR JOHN BOOZMAN, U.S. SENATOR FROM THE 
                       STATE OF ARKANSAS

    Senator Boozman. Thank you, Madam Chair, and I am pleased 
to welcome Mr., or rather Commissioner, Mr. Commissioner Behnam 
to the Committee as we consider his nomination to be Chairman 
of the Commodity Futures Trading Commission. I congratulate you 
on your nomination and your willingness to continue to serve 
your country. If confirmed, Mr. Behnam will have the Acting 
title removed and he will officially take the helm of an agency 
that regulates a wide range of financial products that are 
essential tools for end users like farmers, ranchers, 
municipalities, and pension funds, which use them to hedge 
commercial risk.
    Beyond legacy commodity contracts that market participants 
have used for centuries to manage risk, derivative markets have 
also grown to include certain digital assets. While digital 
assets and distributed ledger technology are revolutionizing 
financial transactions and the way people manage their money, 
questions remain as to the proper role Federal regulators 
should play in encouraging further innovation in digital assets 
while ensuring that market participants are protected.
    Addressing climate change and its potential impact on 
markets has also been at the forefront of both domestic and 
international policy discussion and an issue Mr. Behnam has 
made a priority during his tenure at the CFTC.
    Commissioner Behnam, I look forward to hearing your vision 
for leading the CFTC, particularly as it pertains to any 
upcoming rulemakings related to climate change and how you plan 
to engage with other financial regulators to preserve the 
CFTC's jurisdictions over derivatives, including digital 
currencies.
    Before I conclude my statement I would like to offer a few 
observations about the nature of the Ag Committee and our 
special role in the lives of American farmers, ranchers, and 
rural communities. The Ag Committee is at its best when we work 
together. Today is an excellent example of this. The Senate 
received Mr. Behnam's nomination on September 20th, our staffs 
have worked in a coordinated fashion to review his paperwork 
and his record, and today we meet in a bipartisan fashion to 
hear from the nominee, whom I feel confident will be confirmed, 
and certainly we will support, to be the next Chairman of the 
CFTC.
    Unfortunately, days like today have become less frequent. 
The Committee has recently strayed from its traditions, and I 
fear the consequences to American agriculture, our farmers, 
ranchers, and rural communities. In the last 40 years, in this 
Committee, regardless of the party that controlled the Senate, 
there was some level of bipartisan input into the 
reconciliation process. That tradition ended this year. 
Consideration of the agriculture provisions of the American 
Rescue Plan Act earlier this year and the current 
reconciliation legislation represent the first time in more 
than 40 years leadership of the Committee has chosen to abandon 
our bipartisan traditions.
    Unfortunately, it appears our country's farmers and 
ranchers are not being consulted either. I know that I count on 
the wisdom and experience of our country's producers and the 
leaders from our rural communities to inform me. I have no 
evidence that in the development of the reconciliation bill 
that any input was sought from our major farm organizations. In 
fact, when I asked them if they were consulted, they tell me 
that they were not.
    Many of our fellow citizens who live in rural America 
believe that people in Washington think--and I stress think---
they know what is best for our farm families and our rural 
communities. There is a feeling among many of the people who do 
not live in our Nation's cities that their political leaders do 
not value their expertise or their opinions, and do not 
understand their lives.
    When the Senate Ag Committee decides to forego the 
expertise and the opinion of those we are entrusted to 
represent, we are not living up to what should be our 
commitment to our farmers, ranchers, and rural communities.
    With that I yield back, and we look forward to your 
testimony. You have got a wonderful little family there, and 
they have got to be your greatest asset.
    Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you, Ranking Member Boozman, and 
I am going to officially introduce Commissioner Behnam now.
    I do want to say, though, in response to my friend, Ranking 
Member, that while unfortunately the reconciliation process 
over both times and over recent years has been a partisan 
process, I do want to thank the hundreds of organizations that 
have given input to what is being recommended on climate-smart 
conservation and forestry and so on, and much of this being 
taken from our hearing on forestry that we did together, which 
was so excellent, and our work on Growing Climate Solutions, 
which, of course, is bipartisan.
    I want to thank the, literally, several hundred 
organizations, including every mainstream agricultural group in 
the food and agriculture alliance that has been working so hard 
on the issues around addressing the climate crisis in a way 
that works for farmers and ranchers and foresters. We thank all 
of them for very important input and support, and look forward 
to moving forward, as always on this Committee, in a bipartisan 
way to address their needs.
    Commissioner Behnam was unanimously confirmed as 
Commissioner in 2017. Before that, he served as Senior Counsel 
on our Agriculture, Nutrition, and Forestry Committee. As a 
practicing attorney, he worked at the New Jersey Office of the 
Attorney General within the Bureau of Securities. Russ earned 
an AB from Georgetown University and a JD from Syracuse 
University College of Law.
    During his tenure, Russ has shown tremendous leadership and 
have been on the forefront of issues critical to global market 
stability. As one of the first financial regulators to ring the 
alarm on the climate crisis, his Climate Subcommittee authored 
a landmark report analyzing the significant risks climate 
change poses to the financial system, with input from members 
of the agriculture and energy markets, financial industry, and 
the environmental public policy sector. That is the kind of 
foresight we need, frankly, strengthening the markets for the 
risks to come.
    Under Russ's leadership, the Market Risk Advisory Committee 
played a leading role in the transition to a new benchmark 
interest rate to improve the transparency and reliability of 
interest rates for certain loans and contracts.
    Russ, your experience in financial markets and agricultural 
communities will make you an excellent leader to steer the CFTC 
in the face of new challenges, and I look forward to hearing 
more about your vision for the Commission moving forward.
    Before doing that, I do have a couple of questions that I 
need to ask you. If you would rise first of all, to administer 
an oath we have to do for all of our nominees. Please raise 
your right hand.
    Do you swear or affirm that the testimony you are about to 
provide is the truth, the whole truth, and nothing but the 
truth, so help you God?
    Mr. Behnam. I do.
    Chairwoman Stabenow. Thank you. 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.
    Chairwoman Stabenow. Thank you very much. You may now 
proceed with your opening statement.

    STATEMENT OF THE HON. ROSTIN BEHNAM, OF MARYLAND, TO BE 
 CHAIRMAN AND A COMMISSIONER OF THE COMMODITY FUTURES TRADING 
                           COMMISSION

    Mr. Behnam. Chairwoman Stabenow, Ranking Member Boozman, 
members of the Committee, it is an honor to sit before you 
today as a nominee to serve as Chairman of the Commodity 
Futures Trading Commission. I extend my gratitude to President 
Biden for nominating me, and Chairwoman Stabenow and Ranking 
Member Boozman for holding this hearing today.
    I would first like to recognize and thank my wife, Dinah 
Bengur, and our daughters, Nina and Farah, for being here 
today, and send my love to our youngest daughter, Roxana, who 
is at home. I would like to thank my parents whose hard work 
and sacrifices have provided the safe footing for each of my 
steps, both personally and professionally.
    I would like to acknowledge a few people who are here. My 
in-laws, Vicki Schultz and Oz Bengur, who have been extremely 
supportive to me and Dinah; also my chief of staff, David 
Gillers; and a few of my staff back at the agency, Laura Gardy, 
John Dunfee, and Alicia Lewis. I would also like to thank my 
friend, Greg Stallkamp, and his family. They came from Chicago. 
Greg is an original Michigander and he introduced me to 
Northern Michigan, so I am indebted to him for life.
    Finally, I would like to acknowledge Commissioner Stump, 
who, Chairwoman, you acknowledged as well. She is a great 
colleague, she is a great advocate and asset for the 
Commission, and above all else she is a good friend.
    Finally, I would like to thank you, Chairwoman Stabenow. In 
July 2017, sitting before this Committee, I committed to you 
that I would endeavor to use your values and balanced judgment 
as a compass for my own actions. I hope I have fulfilled that 
promise, and recommit to the same if confirmed as Chairman.
    Much has changed since 2017. The COVID-19 pandemic has had 
profound impacts on global financial markets, the U.S. economy, 
and most importantly on our daily lives. Like all Americans, 
CFTC staff have adjusted routines, impressively fulfilling the 
agency's mission while facing unprecedented challenges. The 
CFTC's future success starts and ends with building a diverse, 
expert staff supported with appropriate resources and 
leadership.
    From a market integrity and resiliency standpoint, I am 
proud to report to this Committee that the U.S. derivatives 
markets performed very well during the pandemic's early 2020 
onset. Leaning on post-financial crisis reforms, CFTC markets 
met historically unprecedented volume and volatility with the 
powerful benefits of central clearing, capital and margin 
requirements, data reporting, and increased transparency.
    As the U.S. economy strengthens, CFTC-regulated derivatives 
markets will play a critical role in ensuring a complete 
recovery, including in the rural economy. America's farmers and 
ranchers have long relied on derivatives markets to manage risk 
and discover prices. If confirmed as Chairman, the CFTC will 
continue to engage, listen, and decisively act to support 
American agricultural producers.
    Additionally, manufacturers, energy producers, pension 
funds, financial institutions, and countless other small and 
large businesses rely on derivatives markets to manage risk. 
Safe, transparent, liquid, and well-regulated derivatives 
markets are a critical component of a healthy, vibrant U.S. 
economy. The CFTC will do its part to promote, ensure, and to 
protect market integrity.
    Looking forward, domestic and global coordination remains 
an agency priority. Early 2020 hearkened back to 2008, 
reminding us that the interconnectedness of global financial 
markets requires persistent engagement toward maintaining 
resiliency and protecting the financial system and U.S. economy 
from future crises.
    More specific to the CFTC, clearinghouses play a critical 
role in the safety and soundness of the financial system. In 
addition to annual CFTC examinations of systemically important 
clearinghouses, I believe continuous discussion among 
regulators and market participants about emerging risks and 
evolving market structure is critical to strengthen resiliency.
    Customer protections are at the heart of the CFTC's 
mission. If confirmed, I will prioritize policy that 
invigorates a culture of compliance reinforced by an 
enforcement program that roots out fraud, manipulation, and 
market abuse, and sends a strong, clear message to bad actors, 
particularly at a time of rapidly advancing technology.
    Cybersecurity remains an ever-present priority. As we 
collectively face greater threats, clearly executed 
cybersecurity strategies will benefit all market participants 
and the resilience of the American economy. The stakes are 
simply too high to fall short on a full commitment of resources 
and expertise.
    I will end my statement with a few words about new and 
emerging risks and opportunities. The pandemic has taught us 
much about the importance of preparing for extreme but 
plausible events. In March of this year, I formed the Climate 
Risk Unit to explore the CFTC's role in managing climate-
related financial market risk, and supporting an orderly 
transition. Derivatives will play a key role in market-based 
solutions. While focusing on the risks climate change poses is 
imperative, I do not want to lose sight of the opportunities 
that are endemic to a transition. I believe the CFTC must play 
a role in this market growth if the larger transition goals are 
to be met.
    Finally, the growth and widespread adoption of digital 
assets presents many novel issues for all regulators. Against 
this backdrop, the CFTC has actively used our existing 
statutory authority to stop and deter fraud and manipulation in 
these emerging markets. If confirmed, the CFTC will continue 
its proactive approach to protect customers and strengthen 
market resiliency. I look forward to working with this 
Committee to reexamine--and, if appropriate, expand--the CFTC's 
authority to ensure both the benefits and promise of the 
emerging digital asset market and the underlying technology can 
be harnessed without undue harm to customers and financial 
market stability.
    Thank you for your time and I look forward to answering 
your questions.

    [The prepared statement of Mr. Behnam can be found on page 
30 in the appendix.]

    Chairwoman Stabenow. Well thank you very much, and let me 
begin where you ended, in terms of digital assets, because as 
you have indicated, we are seeing a rapid expansion in the 
trading of digital assets and the market is volatile and a 
target for fraud presenting significant risks for investors. 
Could you talk a little bit more about what you believe the 
CFTC can do, should do in protecting customers, promoting 
transparency, and at this point, do you think that the agency 
needs additional authority and resources to really achieve the 
goals that you think are important to achieve?
    Mr. Behnam. Thanks, Senator. The CFTC has responsibly but 
aggressively been pursuing enforcement cases in the digital 
asset marketplace for a number of years now. We have been one 
of the few cops on the beat, because of limited statutory 
authority related to anti-fraud and anti-manipulation. Even in 
the past few months alone we have brought a $100 million case 
against a digital asset exchange and a $40 million case against 
a stablecoin.
    This is the tip of the iceberg. As of yesterday, the total 
size of the digital asset market was $2.7 trillion, and among 
that $2.7 trillion, nearly 60 percent were commodities. With 
that in mind I think it is important for this Committee to 
reconsider and consider expanding authority for the CFTC.
    This would certainly be a departure from our historical 
role as a derivatives regulator, but given the size, the scope, 
and the scale of this emerging market, how it is interfacing 
and affecting customers, retail customers, and then with the 
scale of the growth being so rapid, potential financial 
stability risks in the future, I think it is critically 
important to have a primary cop on the beat, and certainly the 
CFTC is prepared to do that, if this Committee so wishes.
    Chairwoman Stabenow. Well, thank you, and I look forward to 
working with you. I know our whole Committee will be very 
interested in exploring this more and what is the appropriate 
role, what additional authorities would make sense to be able 
to manage the risk and address the fraud, which obviously is a 
very important responsibility for the CFTC.
    Our American farmers and ranchers and agricultural 
consumers depend on the derivative markets for price discovery 
and to manage risk. This reliance assumes a strong commitment 
to promoting market integrity and customer protections. Are 
agricultural futures still an effective risk management tool 
for producers, and if confirmed, how would you engage with our 
producers and prioritize issues of interest to them?
    Mr. Behnam. Thanks, Senator. Based on conversations I have 
recently had with producers and folks across the country, U.S. 
futures markets are working quite well for American 
agricultural producers. That said, we have worked very hard in 
the recent past to address a number of issues around price 
transparency, convergence, and the emerging role of technology 
in our markets.
    We will continue, especially if confirmed, to engage 
directly with American agricultural producers here in D.C., but 
more importantly, across the country, which I know is a big 
commitment from all of the Commission. With new emerging risks 
we definitely need to engage on a one-to-one basis to ensure 
that any issues that may arise are addressed in a timely and 
effective way.
    Chairwoman Stabenow. Thank you, and speaking of new 
emerging risks again, as a commissioner you have shown 
leadership in calling for regulators and market participants to 
examine the risks that the climate crisis poses to our global 
financial system. You know, we have recently passed, with a 
strong bipartisan vote, the Growing Climate Solutions Act, and 
now, as we are moving forward, what role, if any, should the 
CFTC play with respect to the emerging voluntary carbon 
markets?
    Mr. Behnam. Thanks, Senator. I think, really quite simply, 
in thinking about the Growing Climate Solutions Act, you are 
creating a financial market. The efficacy of allowing foresters 
to sequester carbon and then get paid in lieu of that is really 
based and contingent on a well-functioning, transparent 
financial market, where the credits can be bought and sold.
    We have seen this in the past, and I think it is important 
for a regulator like the CFTC to be a part of that conversation 
so that we can share our expertise, our decades-long expertise 
in establishing markets that have integrity, that have the core 
components of a well-functioning market, which are pre-trade 
and post-trade transparency, clearing, settlement, best 
practices, and a number of things that will preserve and ensure 
a fair, transparent market that is free from fraud and 
manipulation.
    Chairwoman Stabenow. Thank you. I see my time is up. I will 
turn now to Senator Boozman.
    Senator Boozman. Thank you, Commissioner. You mentioned the 
Growing Climate Solutions and the importance of developing that 
market. You would agree that that market needs to be in the 
public sphere versus the government trying to do that?
    Mr. Behnam. Senator, I agree with that. I would suggest 
that if the bill is passed and signed into law a market like 
that could certainly benefit from the experience and expertise 
that the CFTC has as a commodity regulator. I think the last 
thing that you would want, or other members who are strong 
advocates for that bill is to see the market side of that 
effort fail, because if it does, like I said earlier, the soft 
of driving point of the bill itself will not be accomplished.
    It is important to have those elements of a fair, 
transparent market functioning well so that those credits can 
be bought and sold in an appropriate way.
    Senator Boozman. A fair and transparent market, again, in 
the public sphere, you know, not the government. I am sorry. 
The market being such that it is bought and sold, as markets 
are now, versus the government being the one that is buying and 
selling.
    Mr. Behnam. Absolutely. Yes.
    Senator Boozman. Very good. Aggressively addressing climate 
change has been at the forefront of many regulatory decisions 
coming out of the administration. I think it is fair to say 
that you hope it will be one of your legacy issues. In February 
2020, you spoke at the Crop Insurance and Reinsurance annual 
meeting where you discussed the effects of severe weather 
relating to insured losses and inability to plant vital crops.
    You also mentioned transition risks relating to 
transitioning to a low-carbon economy through carbon-neutral 
energy sources. You mentioned the possibility of assets being 
stranded in wholesale portfolios such as coal mining, power 
generation, oil and gas being especially exposed to transition 
risk. I commend you for identifying there are larger economic 
repercussions if the execution or transition to carbon 
neutrality is not done in a thoughtful or calculated manner.
    Can you expand a little on your past remarks and talk about 
the risk involved in moving too far, too fast, and what 
systemic risk climate change poses to financial markets?
    Mr. Behnam. Thanks, Senator. Certainly transition risk is 
arguably the most important challenge that we are going to 
face, because it is going to require a delicate balance of 
moving forward toward carbon neutrality but not moving too 
fast, because statistically it has been pretty clear that we do 
not have alternative power sources and energy sources to meet 
the demand that we currently have with traditional carbon-based 
energy sources.
    We have to move forward. I do think that if we do not move 
forward at a quick enough clip then we are going to have larger 
sort of disasters and systemic issues that arise. We have to be 
mindful of current demand from consumers and Americans across 
the country and making sure those are met by either current 
energy sources and emerging new energy sources.
    I think from a systemic standpoint I do not think climate 
change poses a systemic risk to the financial system at this 
moment. There are some sub-systemic shocks that have been 
occurring across the country, and I would just identify floods 
in the Midwest, forest fires out West, hurricane season in the 
Gulf Coast or the East Coast. You can see how each of these 
weather events, as they are becoming more frequent and more 
extreme, creates sub-systemic shocks to the region, and 
potentially the financial system.
    My concern is as we go forward that you are going to have 
more frequent weather events, and if they are compounded or 
simultaneous then that could pose a larger threat to the 
financial system. As I pointed out earlier, we have learned 
quite clearly from 2008 and 2020 the interconnectedness of the 
financial system, so even if you do have failures or issues 
within liquidity crises or clearing in one region or one area 
of the country it could certainly have downstream effects 
across the rest of the country.
    I think those are things we need to be mindful of at this 
point as we move forward in addressing some of the climate 
issues and risks that it poses to the economy.
    Senator Boozman. Very good. There is talk now of financing 
the massive spending bill that is potentially going to be on 
the floor, taxing unrealized gains. Do you have concerns that 
we have the knowledge as to the financial risk related to that, 
the financial possibilities as people, you know, try and cash 
in, try and do this and that, to pay for those unrealized 
gains?
    Mr. Behnam. Senator, I do not know. I have not looked at 
the sort of repercussions that might exist.
    Senator Boozman. You agree that there is potential for real 
repercussions in that regard?
    Mr. Behnam. There would be potential outcomes if, you know, 
a lot of investors started to liquidate positions, but I cannot 
tell you----
    Senator Boozman. It might be good that we actually studied 
that before we went forward.
    Mr. Behnam. I am happy to look into it, and if we can be of 
service or a resource we will certainly provide that.
    Senator Boozman. It certainly would affect the portfolio 
that you are commissioner of?
    Mr. Behnam. I would imagine that investors that have 
positions in futures or swaps may change their position or 
their strategy based on tax law.
    Senator Boozman. It probably would be a good idea for 
somebody to ask you.
    Mr. Behnam. It should make sense. I guess from my 
standpoint, from a regulator standpoint, I have to ensure 
market integrity, resiliency, and the lack of stability issues. 
I do not know if a changing portfolio because of tax policy 
would necessarily present stability issues or market structure 
issues. It would certainly change valuations, but I am not a 
price-setting--we are not a price-setting agency. We are just 
looking at stability issues.
    Senator Boozman. Thank you, Madam Chair. Thank you very 
much.
    Chairwoman Stabenow. Thank you very much. We next have 
Senator Brown with us, I believe remotely, and then Senator 
Marshall will be next. Senator Brown?
    Senator Brown. Thank you, Madam Chair, and Acting Chair 
Behnam, good to see you again. Congratulations on your 
nomination, of course.
    I want to focus on enforcement and ensuring penalties are 
appropriate. Specifically, we discussed in the past, and I know 
we have a meeting, more than one, scheduled later this week, 
about the practice of allowing corporate bad actors to 
cooperate on self-report in exchange for smaller penalties, a 
tradition that frankly does not work very well. I am concerned 
that practice, putting it mildly, does not improve compliance.
    How does the agency balance cooperation with good 
enforcement and ensure that compliance improves?
    Mr. Behnam. Thanks, Senator. It is an important question 
and I will say, at the onset, I am fully supportive of 
cooperation. I think it is a good strategy for law enforcement 
agencies, both civil and criminal. You rightfully point out 
having the right balance is really critical to ensuring a 
credible cooperation program, where creating incentives for 
folks to come in and report either intention or unintentional 
wrongdoing, but also we do not want just a slap on the wrist. 
We want to put a penalty in force that is going to deter future 
bad acts. That is really, in my mind, building a culture of 
compliance, holding individuals accountable, from the lowest 
ranking to the most senior ranking, and changing the culture 
and the attitude of the firm so that we are not just having an 
enforcement program that is the cost of doing business. We 
really want to steer away from that.
    I think in the past few years we were a little bit out of 
balance, and if confirmed, I certainly am going to reevaluate 
our cooperation program and ensure it is balancing both those 
incentives with the appropriate penalty so that we do not have 
recidivist actors in the future.
    Senator Brown. Thank you. Chair Stabenow touched on this. I 
wanted a little more depth and detail from you. Your agency and 
other Federal regulators have been looking at digital assets 
and cryptocurrencies, including working together as part of the 
President's working group on a report on stablecoins. I chair, 
as you may know, the Banking and Housing Committee, and we have 
great interest in this, jurisdictions of the different agencies 
potentially overlap. There are two members of this Committee 
that sit on the Banking and Housing Committee, Senator Smith 
and Senator Warnock, and I know they have interest in this.
    Are there additional tools that would be helpful for CFTC 
on this?
    Mr. Behnam. Absolutely, Senator. We are a market regulator. 
We are one of two, as you well know, with our sister agency, 
the SEC, and the markets and the market transactions that are 
taking place right now are a huge part of the risks that 
digital assets pose. I think it is important to have a full, 
encompassing conversation about prudential risks, banking 
risks, clearing and settlement risks. We really also need to 
have a conversation about market regulation and sort of the 
exchange, the purchase and sale of these coins in a regulatory 
structure for both the securities and the commodities.
    Senator Brown. Thank you. I appreciate the progress of this 
Administration on diversity. Never enough but far, far, far 
better than his predecessor, and really predecessors. I am 
especially interested in diversity where it has, frankly, been 
at some of its worst, and that is financial regulators. I would 
like to hear--and I go through the whole not just your agency 
but the Fed and Treasury and OCC and FDIC and more--I would 
like to hear about what you have been able to do so far, and if 
confirmed, how you would do more to improve diversity at the 
agency.
    Because you understand, I think, Mr. Behnam, you understand 
that a more diverse agency is better government. Just like my 
office and my committee staff, its diversity helps me come to 
better conclusions because I hear different aspects and 
different views and different approaches, and we all, as our 
friend, Paul Wellstone, used to say, ``We all do better when we 
all do better.'' Talk about that in the last minute or so, if 
you would.
    Mr. Behnam. Thanks, Senator. I agree with you completely, 
and since I became Acting Chair I created the Chief Diversity 
Officer within our Office of Minority and Women Inclusion. This 
is a new position, and my goal really for this position is to 
create an all-agency effort to recruit at the lowest levels but 
also at the senior levels of leadership so we can have that 
diverse work force.
    There is no doubt right now, as an agency we are behind, 
and we have a lot of work to do, but I am very hopeful that 
this new position, with support from the Chairman's office, the 
Commission and staff, will do more recruitment, activity, 
engagement with communities across the country so that we are 
not only recruiting senior-level executives and senior-level 
professionals but creating a bench for the future.
    Our budget constraints over the past decade have affected 
our ability to recruit and retain, and I am hopeful that going 
forward we can do a better job of sort of being on par with the 
other financial regulators to recruit through Summer Honors 
Programs or a Pathways Program for young graduates so that we 
incentivize and create a reason for them to come into public 
service and stay there for a career.
    We are going to lose a lot of people over the next five to 
10 years because of attrition and retirement, and I really 
think it is important to recruit the next generation of public 
servants through a wide-ranging campaign that is certainly 
implementing diversity, inclusion, and equity across the board.
    Senator Brown. Thank you, Mr. Behnam. Thank you, Chair 
Stabenow.
    Chairwoman Stabenow. Thank you very much, and I believe 
that Senator Marshall has stepped out for a moment so we will 
turn to Senator Tuberville.
    Senator Tuberville. Thank you, Madam Chair. Thank you, Mr. 
Behnam, for being here today. Thanks for your service.
    You know, if confirmed, rural America is going to be 
counting on you to be their voice. You have been on the team. 
Now you are getting ready to be the leader. That is a huge 
step. You know, our Nation's farmers and ranchers, they rely on 
the derivatives market to hedge risk to protect them from the 
losses of a bad year, which we have had several, especially in 
my State of Alabama over the last few years with the weather.
    You know, to speak for rural America you have got to know 
rural America, and our country's agriculture industry is the 
envy of the world and we need to keep it that way. Your 
predecessor, Dr. Tarbert, went above and beyond, you know, to 
engage with the ag community and folks outside Washington, DC. 
and Wall Street. He set the gold standard. You have got big 
shoes to fill and I hope you are able to do that.
    What have you done in the time that you have been on CFTC, 
you know, in the last few years, to get yourself immersed into 
the rural communities?
    Mr. Behnam. Thanks, Senator Tuberville. Great question and 
I fully appreciate your point about us committing as an agency 
to rural America.
    I will tell you, I spent six and a half years working on 
the Ag Committee as counsel, and I grew up in northern New 
Jersey. I was not very familiar with rural America and the 
challenges that rural Americans and agricultural producers 
face. Those six years opened my eyes. It afforded me the 
opportunity to travel across the Midwest and visit farms and 
ranches and talk to producers and see what challenges they are 
facing and the challenges of our food system and why we are the 
envy of the world.
    Since becoming a commissioner I have taken several trips 
across the Midwest. That was sort of put on hiatus because of 
the pandemic, but my goal and my sort of strategy is direct 
engagement. I love to travel. I love to visit folks. I love to 
sit down and talk to them one-on-one and hear about their 
issues, and really relating it back and leaning on my 
experience of working on a farm bill and working on several 
pieces of legislation that deal directly with Rural America and 
American agriculture, and having those personal relationships 
so that I can be more empathetic in terms of understanding the 
challenges that folks face that I did not necessarily 
understand or appreciate growing up.
    If confirmed, I am going to continue that strategy, 
continue outreach. We are going to do our best as an agency-
wide effort to make sure that we are engaging with producers 
and the entire constituency of American agriculture, and 
hearing their voice and hearing their challenges and taking 
action in a very expedient way so that, as you point out, these 
markets continue, as they have for the past 150 year, serving 
the purpose that they are fit for.
    Senator Tuberville. Yes, our farmers and ranchers, they are 
struggling in some areas. You need to hear their voice, because 
I hear them every day, and I want to invite you to come down to 
Alabama, once confirmed.
    During your time as Acting Chairman you have tied up a lot 
of our agency resources looking at climate risk. You released a 
report last year with recommendations that were largely outside 
the CFTC's jurisdiction. What do you view as the agency's role 
when it comes to climate? Give me your definition.
    Mr. Behnam. We are a risk management agency, and for 
decades, quite frankly, we look at weather. We look at climate 
change, because we have to see what it means for agricultural 
producers, for energy providers. I think as the climate is 
changing and we are seeing a more broad-based effort from the 
private sector to address climate change, both the physical 
impacts and the transition risks, we, as an agency, need to 
keep up with that. We need to make sure delivery points for 
grains are not having challenging because of weather events. We 
need to make sure that flooding events in the spring is not 
affecting planting season or harvest. We need to look at the 
forest fire season out West and see how that is affecting the 
American rural economy and the sort of fruit bowl in 
California. These are all issues that I think are directly 
related to the agency.
    On the one hand we need to support market-based solutions 
of innovative futures product and derivatives products that are 
going to help your farmers and ranchers hedge risk. On the 
other hand, we have to support transition, which can be 
anything from developing and supporting carbon markets or 
coming up with solutions in the interest rate space or the 
currency space so that investors can put money toward renewable 
sources of energy and other things that will help the 
transition, as Senator Boozman pointed out, rightfully, be 
smooth and not too imbalanced, because those are going to be 
serious challenges.
    My goal is to listen, to convene, to have a conversation, 
and to really work in tandem with what the private sector has 
done, and is doing, so that we can be a part of the 
conversation and ultimately support it. Because there is the 
climate risk management portion but there is also the 
supporting the transition, and I do think the agency can and 
should play an important role in both.
    Senator Tuberville. Yes. One last question. Being the 
leader of this group, do you foresee adding climate scientists 
to your staff, or do you have any now, or are people more in 
tune to what is going on in climate other than, you know, what 
I call you guys, bean counters or whatever?
    Mr. Behnam. We do not. Senator, we do not have any 
positions for a climate scientist at the agency. We are 
predominantly an agency of lawyers, investigators, economists, 
and accountants. As I said earlier, because of the nature of 
our job and the relationship with product agriculture, energy, 
and other commodities, we have always been in tune to weather 
and climate, and I think we will just continue that going 
forward without having to bring on any climate scientists.
    Senator Tuberville. Basically you are going to use the 
experts' opinion, which is what we all should do.
    Mr. Behnam. Correct.
    Senator Tuberville. Yes. Thank you. Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you, Senator. Now Senator 
Gillibrand will join us remotely.
    Senator Gillibrand. Thank you, Madam Chairwoman. Thank you 
so much for appearing in front of this Committee today and 
congratulations on your nomination.
    As you are aware, producers, such as dairy farmers on the 
ground in New York are impacted by the futures market. Their 
lives are directly influenced by market changes in the policies 
that you will develop and implement. If confirmed, will you 
commit to visiting New York State producers to see the boots-
on-the-ground effect of the agency that you will continue to 
lead?
    Mr. Behnam. Senator, absolutely, and I am proud to say that 
I think I have taken two trips already up to central New York 
and visited a number of dairy farms up by Utica and Syracuse. I 
am looking forward to going back and certainly working with 
your office to support New York dairy.
    Senator Gillibrand. Thank you. In September 2020, the CFTC 
released a report entitled ``Managing Climate Risk in the U.S. 
Financial System.'' Recommendation 4.1 from your report states, 
``All relevant Federal financial regulatory agencies should 
incorporate climate-related risks into their mandate and 
develop a strategy for integrating these risks in their work, 
including into their existing monitoring and oversight 
functions.''
    Can you briefly explain the challenges that climate change 
poses to financial markets and what would your plans be to 
implement the recommendations of the CFTC? In your opinion, how 
can the CFTC address the challenges of climate change?
    Mr. Behnam. Thanks, Senator. The first part of your 
question, in terms of what risk climate change poses to 
financial markets, you know, I use hypotheticals and examples 
frequently. July 2018 to June 2019 was the wettest year on 
record in the Midwest, and we can imagine growers in the 
Midwest not being able to plant seed and certainly harvest, and 
what does that mean for their ability to pay their loans, to 
generate revenue? Then when they are unable to generate revenue 
because of a lack of harvest, what does that mean for the loans 
they have to a regional or a local bank or a credit union? That 
is a very simple micro-example but you can see how that may 
cascade if it is across multiple States or multiple regions, 
and then it is compounded with other weather events across the 
country.
    These interconnected links between the financial system can 
have compounding effects that ultimately provide, or at least 
could suggest a sub-systemic or ultimately systemic shock to 
the financial system. Those are the types of physical risks 
that we have to be mindful of and the feedback loop that would 
result from it.
    In terms of what the CFTC can do, we are obviously very 
focused on derivatives, futures swaps, and options, and these 
products, at their core, provide risk management and price 
discovery, and in the transition away from carbon-emitting 
energy sources and to neutral economy, these products are going 
to be invaluable to supporting the allocation of capital toward 
renewable energy sources and then just managing risk on a day-
to-day basis for American producers but also large and small 
businesses.
    My goal, if confirmed, is to convene a large group, to talk 
to manufacturers, to talk to ag and energy providers, to talk 
to public interest groups and financial institutions, as I was 
saying to Senator Tuberville, see what they are doing and then 
work along with them so that we can support both managing and 
mitigating physical impacts but ultimately supporting the 
transition in a thoughtful way that does not create unintended 
consequences.
    Senator Gillibrand. Well, that makes sense. Earlier this 
year, President Biden issued Executive Order 14030, which 
focused on climate-related financial risk. One of the goals of 
this Executive order was to encourage the Treasury Secretary to 
work with Financial Stability Oversight Council (FSOC), of 
which you are a member as Chair of the CFTC, to assess climate-
related financial risks to the stability of the U.S. financial 
system.
    I know that last week FSOC released a new report in 
response to that Executive order. How else would you leverage 
your experience sponsoring the Market Risk Advisory Committee 
and your position as a councilmember of FSOC to further realize 
the goals of this executive order?
    Mr. Behnam. Thank you, Senator. You know, I have been 
working on this issue for a number of years, have gained a lot 
of experience through engagement with all sorts of entities and 
companies across the value chain that touch every part of our 
economy. I have certainly had a number of conversations with 
the Secretary and my other colleagues who had different 
financial regulators. I am very encouraged by the work the FSOC 
is doing under Secretary Yellen's leadership, and I think we 
are heading in a very positive direction.
    I think the CFTC has a rich dataset. We have a rich history 
of managing climate risk and risk generally. We, I think, are 
going to be able to participate in the larger macro 
conversation of what are better disclosures for investors, what 
is the language we want to speak, which is taxonomy, what are 
the standards that we want to have across the board so that the 
systems we are putting in place to transition to a net zero 
economy are efficient and effective, and then, ultimately, what 
we can do within the CFTC ourselves, mostly within the 
voluntary carbon markets or some of the other innovative 
products that are being listed that have to do with ESG or 
natural resource risk management.
    We are seeing a number of those products, market-based 
solutions again, that are starting to be listed on our 
exchanges, which is very encouraging, and quite frankly, just a 
sign of the times about what the market and what financial 
institutions are thinking and what their customers are 
demanding.
    Senator Gillibrand. Thank you. I know my time has expired, 
Madam Chairwoman. I would like to submit for the record two 
series of questions, one about cyber and one about the 
derivatives market. I am also on the Intel Committee so I am 
doing a great deal of work on the cyber area, so I would also 
like to arrange a meeting with you to talk about some of my 
cyber concerns post this hearing, if that is okay with you.
    Mr. Behnam. Absolutely. I look forward to it.
    Senator Gillibrand. Thank you. Thank you, Madam Chairwoman.
    Chairwoman Stabenow. Absolutely, and thank you. Those are 
such important issues.
    We will now turn to Senator Braun and then Senator Smith. 
Senator Braun?
    Senator Braun. Thank you, Madam Chair. Mr. Behnam, good to 
be talking to you here today. I have been involved in 
agriculture for nearly 30-some years, and I remember when I was 
in farming entity and using the Board of Trade and those 
options. Sometimes that was the only way you could carve out a 
profit. Back in the days of the LDPs and direct payments, that 
was a big tool to pull the trigger on. Oftentimes it was when 
you would do a hedged or arrived contract then have to fix in 
the basis was the most difficult part of it.
    That is an example of what farmer have to do every day to 
be successful in a very thin margin. My concern would be with 
the biggest player out there, rather than us, which is China. 
China has really shown itself to be, in a variety of markets, a 
country that is willing to shortcut the process when it comes 
to something more complicated than growing corn and beans and 
then selling it with intellectual property, and just a place 
that you have to pay attention to.
    Do you fear that at some point down the road--and to me, my 
observation was they did not adhere to some of the agreements 
they had in place during the Trump administration. Commodity 
prices were a little soft. All of a sudden when that political 
situation got resolved in November, all of a sudden, farm 
prices go way up, and a lot of it had to do with China then 
exercising what it was supposed to have done.
    For all the good things we do here, providing the marketing 
tools that the Board of Trade and the Mercantile Exchange give 
us, what about a player that is out of bounds with the way most 
other countries operate? Does that complicate your job? Would 
you hold them accountable for it if you saw them doing 
something to pricing that was caused by them and not by the 
markets?
    Mr. Behnam. Senator, thanks for the question. To address 
the second question first, naturally there would have to be 
some tie or some relationship with our law and our enforcement 
authority. We would certainly look at any action, and take 
action if we could, but again it would be subject to any 
authority we had.
    The larger question about the issue you raised is 
important, and I will say I have been focused on it. I have 
been having a lot of bilateral conversations about it 
internally, here in the U.S., and then also externally, 
overseas. I think one point to take away, and you know this 
well--you essentially said it--is the U.S. has historically 
been the gold standard for benchmarking commodities, and we 
continue to be, anything from ags and energy to precious metals 
as well, in certain circumstances. I think it is very important 
for this Committee to hear that, from a national security 
perspective, we should aspire to remain in that position. We 
are seeing emerging markets grow across the world, and 
rightfully so as we are having more diverse markets sort of 
develop in different parts of the world, that is natural 
outgrowth of it, whether it is in any part of the world.
    I do think, given the size of our economy, given national 
security concerns, and the historical reference of many of 
these commodities being benchmarked here, whether it is WTI 
crude or corn and beans or any of the previous metals that are 
critical to our economic infrastructure, we should do 
everything we can, and I certainly look forward to working with 
you to keep it that way.
    Senator Braun. It is interesting because China, just a few 
decades ago, was a developing country. Now they want to still 
maintain that status. They are about a $14 trillion economy. We 
are about a 22. EU is about 20. You add all that up, that is a 
lot with just a few players. We have got some issues but not 
the kind that I am talking about with China, even with the EU.
    I think we are that place that sets the standard is the 
clearinghouse for how you price things. We have never had a 
geopolitical opponent, in my mind, that has got the capability, 
especially somewhere down the road when they are larger than we 
are. They, to me, look like they stage things and do reveal 
some of their behavior in the short run, be wary of it in the 
midterm and long term.
    One other question before my time runs out. I think your 
entity has been running since 2013, where you are not 
authorized but were still funding it. That should be an 
anomaly, not something that we do routinely. What is your 
feeling about that, and what do you intend to do to get it back 
into a place where you are authorized and appropriated?
    Mr. Behnam. Senator, you are right. Obviously doors have 
been opened and we are doing our job and fulfilling our 
mission, regardless of the lack of authorization. It is 
important. It is important for morale at the agency. It is 
important for a mandate from the authorizing committee in the 
Congress to do our job. If confirmed, certainly I welcome to 
work with you and other members of the Committee to create a 
smart, balanced, measured, reauthorization bill that addresses 
these new challenges that we are facing, whether they are 
overseas or domestic, and really looking forward for the 
agency. Because over the past 10 years we have had some 
uncertainty around our budget, and in my current role as Acting 
Chair, just in the past 10 months, as the sort of CEO of the 
agency, I have observed the repercussions of that, and they are 
real. I think certainty and a recognition of the importance of 
the agency, an increasing consistent budget will help us do the 
job that we need to do so that we can prevent crises, whether 
it is in traditional ag markets, energy markets, or the growing 
digital marketplace.
    Senator Braun. I am glad to see you are of that opinion. We 
need to do so. Thank you.
    Chairwoman Stabenow. Well thank you very much, and I agree, 
and I know that Senator Boozman and I will be working on that 
together with the whole Committee on how we move forward on 
reauthorization.
    We will now turn to Senator Smith and then Senator 
Marshall.
    Senator Smith. Thank you, Madam Chair, and it is wonderful 
to see you again. Thank you so much for our conversation 
yesterday. I appreciated it. I really appreciated the spirit of 
putting consumer protection front and center of your work and 
the work of the agency, and it is wonderful to see your family 
here also, so thank you.
    When we spoke yesterday, I talked about my concerns about 
the largely unregulated cryptocurrency and decentralized 
finance markets that are attracting billions of dollars in 
investments from Americans. As we discussed, the United States 
has the best, most trusted markets in the world, in large part 
because financial regulators keep a close eye to root out fraud 
and manipulation, so that people can truly trust these markets.
    While you can certainly lose money when your investments 
perform badly, regulators have worked really hard to make sure 
that banks and broker-dealers and derivatives merchants are not 
stealing people's money. This is incredibly important.
    I am concerned, though, that many consumers do not fully 
understand the risks of fraud and market manipulation in some 
of these unregulated digital asset markets, and I was glad to 
see that you mentioned recent data talking about how this 
impacts communities of color, in particular.
    Chair Behnam, could you just share with us how you see 
this, what you see as the most significant risks to ordinary 
investors in these new markets and how they disproportionately 
affect communities of color?
    Mr. Behnam. Thanks, Senator, and I appreciate the 
conversation yesterday as well. You know, the emerging 
technologies and the tokens and the coins that are associated 
with them, they sort of hit the market in a very loud and 
bright way for the past number of years. If you look at charts, 
there has certainly been a lot of volatility, even in the 
recent past few months. If you look at the price from 10 years 
ago to now, it has appreciated quite a bit. I think a lot of 
people have made quite a lot of money off of it, and they view 
that as an opportunity to make more money in the future.
    As we know, history tells us, with markets, there are 
movements up and down, and I think without a clear, transparent 
regulatory structure, which I think will certainly benefit the 
market itself--to your point, we have the deepest and largest 
and most trusted derivatives markets and capital markets in the 
world because of the regulatory structure we have here, and I 
firmly believe that. Some may differ in their opinion but I 
firmly believe that.
    I do think with the emerging technology and the vision for 
what these coins and these crypto assets contemplate--because 
there is a whole vision for the future of the internet behind 
these coins--that if we were to build a transparent, thoughtful 
regulatory structure it could benefit the market and the larger 
technological goal.
    Customers are certainly looking at this right now as a 
speculation. It is touching retail customers, and as you 
pointed out and we discussed, there is a large portion of the 
community of people of color that are invested in this. There 
could be many reasons, but this goes to our banking system, and 
potentially underbanked communities, and the ease with which 
folks are able to purchase and sell these coins, to transfer 
money or to buy different things.
    Those are the types of issues and concerns that raise red 
flags for me, and I think hopefully for you as well, so we can 
come up with thoughtful legislation that would give the agency 
more authority and ultimately protect customers.
    Senator Smith. Thank you very much for that. I appreciate 
your perspective on this, and I think that we share the same 
approach as we make sure that people have opportunities to 
participate in a market that is free and transparent and can be 
trusted.
    Minnesota is home to the Minneapolis Grain Exchange, which 
is a small but very important institution for farmers and users 
around the country, as well as for the local community. 
Complying with CFTC rules for the Minneapolis Grain Exchange 
takes significant resources, but their customers are much 
better off because they know that they can buy and sell grain 
and other commodities futures there on a closely regulated 
market, free of fraud and manipulation.
    I am concerned about these emerging, decentralized finance 
vehicles and how they might undermine the regulated markets and 
give an unfair advantage to firms that are operating outside of 
CFTC rules, potentially illegally.
    How do you view these financial innovations that seem to be 
ignoring, or seeking even to dodge requirements to operate 
within kind of longstanding Federal regulatory frameworks?
    Mr. Behnam. Thanks, Senator. It is important for us, I 
think, collectively, to be balanced in our approach and 
understand that innovation will change market structure over 
time, but we can move too quick. Our financial system and the 
infrastructure that it is built on, which, in large part, is 
intermediation, right. It is a customer going to a broker, an 
Futures Commission Market (FCM), or going through an 
Introducing Broker (IB) or an associated person and getting 
access to markets. A lot of this decentralizing of finance is 
exactly that--it is decentralizing finance such that the points 
of access become much shorter and more direct. Naturally there 
could be benefits to that, but there can also be a lot of 
risks, because those layers of protections that we have built 
over time, through law and rules, are just being taken away.
    With all that in mind, I think we have to be measured and 
thoughtful about how we view this technology and potentially 
the upside in benefits, but we also want to be aggressive and 
thoughtful in our enforcement, in our current view of this 
technology so that those who are, as you say, playing outside 
the rulebook are held accountable, because it could potentially 
create an impartial and unlevel playing field that is certainly 
a disadvantage to those who comply with the rules.
    Senator Smith. Thank you so much. Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much. Senator Marshall.
    Senator Marshall. Thank you, Madam Chair, and Commissioner 
Behnam, welcome so much to the all-powerful Agriculture 
Committee. I, too, greatly appreciate a face-to-face 
conversation. I do feel a great responsibility to be able to 
look the people of Kansas in the eye and say, ``Yes, I 
interviewed, I talked to the CFTC Commissioner and Chairman.'' 
I look forward to supporting your nomination and working with 
you in the future.
    The CFTC has certainly been a great risk management tool 
for so many of my ag producers, especially my cattle industry, 
but more and more the row crop folks are getting involved with 
it as well. Really with the exception of the cow-calf 
operations, I think it is being greatly utilized, and we have 
briefly talked that and I look forward to, you know, how we can 
make sure that they have access to this risk management plan as 
well. I think, in brief, I would say if it is not broken, do 
not fix it, and I think we are in a pretty good spot.
    As we kind of started our conversation yesterday, maybe I 
will come back to carbon tax, the carbon market, and how do you 
see those might be interacting with the CFTC and derivatives?
    Mr. Behnam. Thanks, Senator, and I again appreciate your 
willingness to meet with me on Monday.
    Like I said, I want to engage with the marketplace such 
that I think the CFTC can play an important role in being a 
partner in what is happening in the private sector right now. 
We are seeing the emergence of products on our listed exchanges 
that are related to carbon offsets. We are seeing the emergence 
and listing of products that are related to natural resource 
scarcity. We are obviously seeing the emergence of voluntary 
carbon markets. If there is a collective will to push forward 
and scale these markets and these products such that they 
retain appropriate risk management uses, I do confidently think 
that the CFTC can play an important role in supporting those 
goals.
    I will certainly be measured in my approach. We will 
engage, we will have a dialog, and I will not predetermine any 
conclusions. If there is a way for us to be supportive in 
mitigating risk, we will do it. If there is a way for us to 
help support transition, we will also do it.
    Senator Marshall. Great. Yesterday we talked about the 
climate risk unit, and I just want to get you on record, I 
guess, just to kind of share with what your vision is of that. 
I guess I would just ask you to be committed to, wherever we go 
with this topic, is that you will be committed to a cradle-to-
grave assessment of carbon, that whether we are growing 
cherries in Michigan, that those trees are grabbing carbon out 
of the air all year long. If we are growing rice in Arkansas, 
photosynthesis is occurring, and that we are getting credit for 
the carbon that we are grabbing as well. That we are getting 
credit for past practices as well as future practices.
    I am always surprised when someone up here asks me about, 
``Have you heard of no-till farming?'' We have been doing that 
for over 20 years on our farm. Or something about, you know, 
cover crops. My goodness. We have been doing that for decades 
as well.
    I want to be inclusive in this and not look at just 
tailpipe emissions, if you will.
    Mr. Behnam. Senator, you have my commitment. I am very 
familiar with those programs and understand there are multiple 
tools in the toolbox, especially within the context of managing 
climate risk and carbon sequestration, all the things you said. 
The CFTC, within the context of the Climate Risk Unit, will be 
one sort of spoke in that wheel, contributing what we can, 
engaging, talking, and hopefully sharing our expertise and 
lessons with those who think they can use it.
    Senator Marshall. Great. Maybe we will finish up with 
Winter Storm Uri, and I know you are very familiar with the 
situation, that the prices for natural gas for heating homes 
literally went up exponentially--not doubly, not triply, but we 
were paying exponential prices. Many families in Kansas, for 
the next year, will be suffering a doubling in their utility 
bill to heat their home already, and that was before we had 
natural gas prices double over the past several months.
    When there is an event like that and so much money is 
exchanging hands--and I know the producers got a little piece 
of the pie, and it just looks like the markets might be a place 
for some potential wrongdoing--what would be the CFTC's role in 
trying to investigate, and are there any lessons learned, 
anything that we can do to prevent this from happening again?
    Mr. Behnam. Thanks, Senator. I would say, in terms of 
natural events, climate events, or just events that are 
affecting our physical commodity markets, whether it is ag or 
energy, we have a great team of economist, we have an 
intelligence branch, our Market Oversight Division. We are 
constantly observing and looking at market events and how 
prices are moving, with the caveat that we are not a price-
setting agency and this is the natural dynamics of supply and 
demand. In many respects we are prepared and looking forward to 
seeing what is happening to prices across the board.
    That said, just to clarify, and I know you know this well--
we discussed this--we do not have jurisdiction over cash market 
transactions, so in this case power generation or natural gas. 
However, we do have fraud and manipulation authority, so in a 
case like this, where you saw a huge spike in the cost of 
energy and power, and where some may have made off really well 
and others not, we are constantly surveilling markets. We are 
hearing and listening to tips and communicating with folks on 
the ground. If there is any allegation or suspicion of fraud or 
manipulation in the cash market we then do have authority to go 
and use our regulatory and law enforcement power.
    Ultimately, it relates to the futures market. If we see any 
suspicious activity that could be related to those climate 
events we certainly have direct jurisdiction over that and 
would bring an enforcement action against any of the 
participants in that particular activity.
    Senator Marshall. Thank you, Chairman. I yield back.
    Chairwoman Stabenow. Thank you. Thank you very much.
    Well, we have no other members that have signed on 
virtually. I am going to turn to Senator Hoeven and then we 
also have a vote that just started.
    Senator Hoeven.
    Senator Hoeven. Thank you, Madam Chairman. Thank you, Mr. 
Behnam, for being here today. What do you see as the primary 
role of the CFTC at this time?
    Mr. Behnam. Senator, thanks for the question. I would say 
as we are moving forward there are emerging risks that we are 
not accustomed to sort of thinking about. I have discussed them 
a fair bit with the digital asset space, some of the climate 
risks that we are facing for sure. I think it is important for 
us, as an agency, to be nimble, to focus on our constituencies 
in the ag sector and the energy sector, producers and end 
users, and understand that at the heart we are a customer 
protection agency.
    At our heart we are a support and a foundation for the 
American economy, through risk management and price discovery. 
We need to balance both our historical responsibility--
something that we do very well and care about deeply--with some 
of these new, emerging risks that we are facing and I think are 
squarely within our remit and our expertise.
    Senator Hoeven. Do you have an opinion as to the role the 
CFTC can play in a market-based approach to providing CO2 
credits for agriculture?
    Mr. Behnam. Senator, I think at this point certainly 
voluntary markets are going to be voluntary markets and market 
driven. As I mentioned earlier, we have decades-long of 
experience in regulating commodity markets. To the extent that 
markets are emerging and that we could be helpful in lending 
our expertise in terms of price transparency, risk management, 
and the fundamental structure of an operational, well-run 
market, we are certainly happy to contribute and be a part of 
that conversation.
    Senator Hoeven. Do you have any top-line recommendations or 
suggestions for us as we work to try to implement a market-
based approach to CO2 trading, and so forth?
    Mr. Behnam. Senator, thinking about the bill that you co-
sponsored, I believe, the Growing Climate Solutions Act, that 
is a market-based solution. I think we are creating a financial 
market where credits are going to be bought and sold, and it is 
important to have a market that has integrity, that has 
transparency, and that is free from fraud and manipulation. If 
you can create that then the outcome of what you are trying to 
accomplish--sequestering carbon and getting money into 
producers' and ranchers' and farmers' pockets, foresters' 
pockets--will be accomplished.
    To the extent, given our expertise and our history as a 
financial market regulator, we can be helpful in that space, I 
think it would be a net-net positive for everyone.
    Senator Hoeven. Is it your impression that the bill is 
heading in that direction, or trying to accomplish what you 
just described?
    Mr. Behnam. It is not my impression but I am simply just 
suggesting that as that bill moves forward, and if it is signed 
into law, we would certainly welcome the opportunity to 
participate, if that is what this Committee and the Congress 
wished.
    Senator Hoeven. Do you have any suggestions, 
recommendations, opinions, or observations regarding the supply 
chain challenges that we are currently facing in this country 
and how we might try to unravel those disruptions and address 
them?
    Mr. Behnam. Senator, certainly I think from a pandemic 
standpoint we have seen labor shortage issues, economic 
activity challenges for sure, but in terms of what I call a 
``choke point,'' this is something that I have thought about a 
lot, in the context of climate events. If you think about the 
ports across the country, the rail across the country, you 
know, it is not uncommon that the Mississippi floods and we 
cannot get a barge down from the Midwest down to the Gulf, and 
that affects grain prices.
    We only have so many choke points in this country, and when 
you have weather events, or in this case, a health crisis, it 
affects prices very directly. Does that affect our markets? 
Certainly. We see it in the price volatility and the price 
change. Can we do anything about it? If there is fraud or 
manipulation, certainly we can, but these are sort of external 
events that we have to identify, observe, and manage from a 
markets perspective.
    My opinion is just to be mindful of these choke points 
because I have observed that myself, as a commissioner, that it 
could be certainly a risk point for the country, going forward, 
if we continue to have these natural disasters.
    Senator Hoeven. Are there things that you will try to do 
with the CFTC that would help our small farmers and ranchers 
better hedge their livestock or crops? Are there things you can 
do to make it easier for them, more transparent, that would be 
helpful? Not so much to the sophisticated producers, of which 
there are many, and we want them to be able to use CFTC, of 
course, easily, but for the smaller guys, what can you do for 
them? How do you help them out?
    Mr. Behnam. Senator, we have had an issue in the livestock 
complex for a number of years. We have worked very hard within 
the agency to work on price transparency, to work on 
convergence, certainly, and then the role of technology in 
these markets I think is a big challenge for some of our 
producers. Understanding the difference and the challenge that 
a large producers and a small producer might face, I think it 
is incumbent on us--and I will certainly do this if confirmed--
to work with the entire constituency and value chain, work with 
the exchanges, and find out solutions, whether it is different 
contracts, different delivery points, more transparency, all 
the way down to the operational itself, to the processor, to 
the slaughterhouse, so that each point has clear and 
identifiable information.
    Because ultimately, a futures price is a reflection of cash 
market activity, and if we do not see appropriate transparency 
in the cash market and the activity that is happening, we are 
not going to see price discovery happening the way it needs to 
happen. I would certainly commit to you to working with you and 
producers in your State and making sure that we are working 
with the entire value chain, we are leaning on the exchanges, 
certainly, to be innovative and creative, and to make sure they 
are treating everybody equitably and fairly.
    Senator Hoeven. I appreciate that. Thank you.
    Chairwoman Stabenow. Thank you very much. I believe we have 
Senator Thune with us virtually. Senator Thune?
    Senator Thune. Madam Chair, thank you and Ranking Member 
Boozman for holding this hearing to consider this nomination, 
and Commissioner Behnam, thank you for appearing before the 
Senate Ag Committee and for your willingness to sit in this 
position.
    Let me ask you a question having to do with cattle prices 
and cattle markets. Cattle producers have experienced 
significant market volatility in recent years, and there have 
been concerns raised with potential market manipulation. During 
your time as a CFTC commissioner, what oversight actions have 
you taken to ensure the transparency and integrity of livestock 
markets, and if confirmed as Chair, will you commit to 
prioritizing oversight of these markets?
    Mr. Behnam. Senator Thune, thanks for the question. As a 
commissioner, and the agency created a Livestock Task Force in 
2020, to address some of the issues that we had been hearing 
for a number of years about transparency in the livestock 
market. We did feel that some of the issues were remediated, 
but certainly if some of your constituents are still facing 
those same challenges I fully commit to working with you, the 
value chain, and like I said to Senator Hoeven, the exchanges 
and other market participants to ensure there is appropriate 
levels of transparency and ultimately risk management 
opportunities and appropriate price discovery.
    Senator Thune. Well, we would look forward to working with 
you on that. To your point, yes, there is still just a lot of 
concern among livestock producers across South Dakota, and you 
probably heard it from Senator Hoeven in North Dakota and other 
places in the West, just about the lack of transparency in 
price discovery, the opaqueness of this market, and certainly 
the incredible volatility and wide spreads in the margins 
between what somebody who goes in to buy some beef in the 
supermarket--hamburger, steaks, whatever--is paying what a 
producer is receiving, and the huge margins that are being 
received by folks in the middle, namely the packers.
    You need to understand, this issue is still very real and 
one that I think is crying out for some solutions. There are 
some proposals out there legislatively. There are some 
proposals as the Justice Department reviews and looks at that. 
We just want to make sure that, you know, you have got a 
competitive marketplace. Free markets work when there is 
competition, and what we want to see is a competitive 
marketplace where livestock producers have access to a 
competitive market where they can receive a price that is fair 
for the product, for the commodity that they are raising and 
growing. Just I want to make that point to you and let you know 
that is something we are paying a lot of attention to.
    In 2015, the CFTC determined that bitcoin and other virtual 
currencies are commodities that fall under the CFTC regulatory 
jurisdiction. Since then, the CFTC has brought a number of 
enforcement actions and served as an important regulatory voice 
in the ongoing dialog about this technology.
    As you know, the Securities and Exchange Commission, or the 
SEC, is involved in this space as well. In your view, what is 
the regulatory role of the CFTC versus the SEC in this space, 
and if confirmed, what actions would you take to make sure that 
the SEC and CFTC are coordinating when it comes to oversight of 
virtual currencies?
    Mr. Behnam. Thanks, Senator. Yes, as you rightly point out, 
and I stated earlier in the hearing, more than 60 percent of 
the total value of the digital asset market space is in our 
commodities, and I think that squarely puts a huge 
responsibility in our space, given current authority, which is 
limited and based on fraud and manipulation.
    What strikes me as unique to these markets, as opposed to 
traditional commodities, is the retail-facing nature of them, 
as opposed to what typically is a wholesale market. We have 
individuals ranging in age and background, typically on their 
phone, using an app to buy and sell these crypto assets, which 
are very volatile and can create a lot of losses because they 
are subject to fraud and manipulation.
    We have been very forward-thinking in our enforcement 
activity. I think we have been measured but also aggressive. As 
Acting Chair, and if confirmed as Chair, I will continue to do 
so. I do believe this is a tough question. We will continue to 
work with the SEC. I have a good working relationship with 
Chair Gensler, and I will continue to work with him. This 
directly touches both of our markets, but the agencies have a 
rich history of working together and really dividing 
jurisdiction along thin lines, whether it is single-stock 
futures back in the 80's or security-based swaps after the 
financial crisis.
    We are a team, above all else, and we will work together, 
but we understand that we both have different missions and 
jurisdictions, and in the context of digital assets there will 
be some tough questions for this Committee to think about if 
there is going to be an expansion of authority for the CFTC 
into what is more a cash market than a derivatives market. 
Again, given the size, the scope, and the scale of the risk 
that is being faced and posed to customers and the potential 
financial stability risks, down the road, given the speed with 
which it is growing, I think these are important questions for 
the Committee to consider, and I certainly welcome the 
opportunity to discuss them with you so that we can have the 
best possible outcome.
    Senator Thune. My time has expired. I thank you for that 
answer. One quick, if you could just followup, what can we do 
to ensure that this technology benefits the United States and 
does not end up offshore in another jurisdiction?
    Mr. Behnam. Senator, this is a difficult question and one 
that has been posed to policymakers and elected officials for 
decades when it comes to new technology. I think we have to be 
measured in our approach to embracing technology, but we have 
to understand and appreciate new technology drives us forward. 
We have to be sort of threading a thin line to ensure that we 
are keeping technology, jobs, and advancements, which affect 
national security, which affects economic growth, which affects 
labor markets here in the U.S. That is critically important.
    We have to bring, collectively, the group in within the 
tent and make them understand that if you are going to do 
business in the United States it is going to be done within a 
thoughtful, regulated environment. As I said to Senator Smith 
earlier, I think that is the reason why we have the best 
derivatives markets and capital markets in the world, is 
because we have thoughtful regulatory regimes. It is not 
perfect but we are constantly tweaking and adjusting and 
engaging with Congress to make sure that we are striking the 
right balance so that we are, as you said, keeping technology 
and economic growth here in the U.S., but making sure it is 
safe for customers and does not cause undue risks to the 
financial system.
    Senator Thune. Thank you, Commissioner. Thank you, Madam 
Chair.
    Chairwoman Stabenow. Thank you. I appreciate your comments. 
Senator Klobuchar is on her way back. She was here earlier and 
she is trying to do her version of being in two places at once 
with the Judiciary Committee going on as well. Since we have 
not perfected ``Beam me up, Scotty'' yet, we will give her just 
a moment to be able to return. I believe she is--she is on her 
way at the moment.
    Let me just ask one other question I did not get to, Russ, 
and that relates to enforcement and the important functions 
that you have been talking about today. When we look at the 
strengths of the enforcement program--and I appreciate the 
balanced way the CFTC has proceeded and the transparency and 
integrity--but as we look at the reauthorization of CFTC and 
working together, Senator Boozman and I, to thoughtfully look 
at what is happening and get your input on what we might do to 
strengthen the law, what improvements, if you are confirmed, 
would you like to see in the program's effectiveness, and what 
kinds of things would be helpful to you as you move forward in 
this new position?
    Mr. Behnam. Thanks, Senator. Just quickly, I would have to 
absolutely give credit to my predecessor and his predecessor 
before that. We have had a strong enforcement program for a 
number of years. We have brought a lot of cases, a record 
number even in the past few. Continue to be creative and 
innovative but also thoughtful and measured, at least staying 
within the confines of the law, which is important obviously. 
Will continue to do that, if confirmed. I think we are facing 
so many new risks and so many new challenges that do not 
squarely fit within what our regulatory structure was built on 
decades ago, and that is why it is important for us to engage 
and have a dialog about the future of derivatives markets and 
the role of the CFTC in them. We will continue to do that.
    I mentioned to Senator Brown earlier cooperation. It is a 
very important tool to create incentives for bad actors, 
institutions to come in and say that, you know, they had done 
something accidentally or perhaps intentionally. I say that 
just because we want to build a culture of compliance, and I 
said that earlier, and it is important. Folks need to be held 
accountable. Actions are important, and they send a message, 
and that is what we are going to do from an enforcement 
perspective, is send a message that we expect folks to act 
within the boundaries of the law. We expect folks, from the top 
of an institution to the bottom, to understand that, to 
appreciate that, and to support that culture within an 
institution.
    We cannot just simply point a finger at one bad actor and 
say, ``You are out.'' There has to be a larger, thoughtful 
conversation with an institution so that those activities can 
happen. They can happen because you have systems built into 
place, and they can happen because you have a culture that does 
not allow them.
    Chairwoman Stabenow. Thank you very much, and I am going to 
turn now to Senator Klobuchar, who was here earlier, and I was 
saying, Senator Klobuchar, you are trying to be two places at 
once, as we frequently are. We are so glad that you made it 
back with us.
    Senator Klobuchar. Thank you, and thank you to your staff 
and to you for making this work. You are competing, 
Commissioner, with the Attorney General of the United States. 
That is all. All is good.
    I know some of my colleagues have talked to you, including 
Senator Stabenow, about the importance of the needs of farmers 
and ranchers and energy producers in your mission. Commercial 
end users, as you know, base their derivative trades and 
physical products as a way to hedge against the overwhelming 
risks that they face day to day, from weather conditions, price 
declines, high-input prices, and as we all know, and as I am 
sure you have discussed today, supply chain disruptions.
    Will you commit to working with farmers and ag industries 
to ensure that the CFTC decisionmaking takes into account the 
commercial risks inherent to agricultural production, 
processing, and marketing?
    Mr. Behnam. Yes. That is at the heart of our mission and we 
will certainly continue to do that, if I am confirmed.
    Senator Klobuchar. How would you balance the oversight and 
regulation of hedge funds and investors on Wall Street with 
those of farmers, co-ops, grain dealers, food processors, and 
others who produce food, fuel, and fiber?
    Mr. Behnam. Senator, certainly we need speculators and 
liquidity providers in the markets. They allow the commercial 
end users to offload risk. On the other hand you are absolutely 
right. We have a set of rules and a market structure that is in 
place, both at the agency and within the exchanges and with our 
partner at the National Futures Association, to ensure that 
commercial end users have fair, equitable access to these 
markets so that they can manage risk and discover prices, as 
intended.
    Senator Klobuchar. Thank you. As Chair of the Anti-Trust 
Subcommittee I have been, one--you will probably think I am 
going to consolidation in markets, which I will in a minute, 
but actually I have been working a lot both on that post as 
well as on the Commerce Committee to rein in some of the 
unaccountability that we see on the social media platforms when 
it comes to vulnerable users and the like.
    How does the CFTC detect and monitor fraudulent social 
media activity or Web platforms that offer illegitimate futures 
and future options trading or otherwise attempt to manipulate 
the markets?
    Mr. Behnam. Senator, it is a great question, and it is 
difficult for us. We certainly communicate with different app 
providers and different technologists who ensure whatever 
services they are providing do not violate the law and are not 
putting investors in a position where they do not know how they 
are allocating their money or their capital.
    This raises an interesting question about our ability to go 
out into the public space and use our education pool of money 
to have webinars, to use social media, to just connect with 
individuals and tell them about the risks of markets.
    Senator Klobuchar. Yes, it is kind of the best practices, 
but, you know, we used to do--I remember this when I was a 
prosecutor on senior fraud, and things you get in the mail or 
emails you get. Clearly this is going beyond that when you come 
with financial scams associated with digital trading and the 
like. I hope you will take that on in your new position.
    Mr. Behnam. Absolutely.
    Senator Klobuchar. I know my friend, Senator Thune, asked 
about increasing transparency, pricing in the cattle markets, 
where obviously there has been these issues, both during the 
pandemic and before and after. I was going to ask you here one 
last question on heating spikes. Derivative markets are not 
just useful for ag products but impact many consumer issues. If 
confirmed, will you commit to monitoring and acting on 
potential market manipulation for consumer-facing commodities 
like heating fuel and propane? Pretty important in the ``M'' 
States up here of Michigan and Minnesota.
    Mr. Behnam. Yes. I fully commit to doing that.
    Senator Klobuchar. Okay. Very good. What additional steps 
can the CFTC take to minimize exorbitant price spikes in the 
future?
    Mr. Behnam. Senator, we are limited in our authority in 
terms of fraud and manipulation, but certainly we will engage 
with producers and end users and just monitor activity across 
the country to the extent we can ensure minimizing spikes.
    Senator Klobuchar. Okay. Thank you, and I will followup in 
writing about the natural gas spikes issue as well as maybe 
more on consolidation. I really appreciate you being here, and 
I wish you good luck. Thank you.
    Mr. Behnam. Thank you.
    Chairwoman Stabenow. Thank you very much. This concludes 
today's hearing. Thank you, Russ, for sharing your vision for 
the future of the CFTC and your commitment to protecting Main 
Street consumers and our businesses.
    The record will remain open until tomorrow at 5 p.m. for 
members to submit additional questions or statements. With that 
the hearing is adjourned.

    [Whereupon, at 11:36 a.m., the Committee was adjourned.]

      
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