Biden begins work on commodity trading oversight

President-elect Joe Biden's agenda for overseeing commodity trading is starting to take shape, with former Commodity Futures Trading Commission (CFTC) chairman Gary Gensler joining the presidential transition team, sources say.

Before the election last week, Biden offered few details as to how he would regulate commodity trading and finance. But Gensler's new role may signal a willingness to consider tougher rules on Wall Street. Gensler led the CFTC from 2009-14 and pursued sweeping regulatory changes to implement the 2010 Dodd-Frank finance law.

"The entire Democratic Party has accepted the [senator Elizabeth] Warren (D-Massachusetts) criticism that we were too solicitous and should have been tougher on Wall Street," says an official who served under former Democratic president Barack Obama. "The fact they brought Gensler in confirms that."

US presidential transition teams do not directly set policy, but their advice can heavily influence political appointments and offer ideas on short-term priorities. Biden's transition team has not confirmed the role of Gensler, who did not respond to a request for comment, nor did it offer further specifics on its financial oversight agenda.

Oil industry officials and Wall Street traders bristled at how Gensler ran the CFTC because of the fast pace and broad scope of rules he put in place in the aftermath of the 2008-09 financial crisis. Gensler led the agency when it issued a rule setting position limits on trading of crude, natural gas and commodities. A court threw out that rule in 2012, and it took regulators eight years to finish a replacement this year.

Gensler angered some in the industry, a financial industry lawyer said, but the one-time Goldman Sachs partner is more "palatable" than political officials aligned closer to Warren or US senator Bernie Sanders (I-Vermont).

Oil and gas officials similarly say they are not anticipating disruptive changes to the commodity trading regime put in place in the 10 years since Dodd-Frank passed, particularly given the bipartisan support for some recent rules.

"I am hoping for stability in the market and sending signals they are not going to redo everything that has been done," a gas industry official said.

Democratic CFTC commissioner Dan Berkovitz, who served as general counsel under Gensler for much of his term as chairman, is a top candidate to become CFTC's chairman once Biden is sworn into office on 20 January, sources say. Another possibility for the leadership role is fellow Democratic commissioner Rostin Behnam, who has sought more consideration of climate risk in the agency's oversight.

Besides the position limits rule, the CFTC this year also issue a final rule for capital requirements for swap dealers. Berkovitz and Behnam voted against the two rules because of concerns they were insufficiently stringent. But it would likely take at least a year to pursue any changes.

By Chris Knight