Derivatives dealers, who fear uncertainty even more than they dislike regulation, are becoming increasingly worried about the void atop the Commodity Futures Trading Commission created by the resignation of chairwoman Mary Schapiro.
Although several names have been mentioned as potential successors to Ms. Schapiro, who resigned Dec. 6 to take a post at the National Association of Securities Dealers, the traders now say they are concerned that the budget impasse threatens to delay any confirmation.
That could leave regulation of bank-owned futures commission merchants in the hands of the staff members, they warned, adding that the absence of leadership also could disrupt the development of new products at the nation's futures exchanges.
"I would feel more comfortable to know the CFTC is being guided by an individual whose view of the world could be represented down the line in the commission, rather than leaving it to the interpretation of individuals and offices," said the head of one bank derivatives operation.
Another concern to some bankers is the absence of leadership needed to preserve liquidity of the futures markets in the face of problems like the collapse of Barings Brothers PLC last year. Many dealers use futures contracts to offset the risk of their over-the-counter derivatives products.
The yearning for a strong futures trading commission leader may seem curious, given the frictions between the industry and the agency under Ms. Schapiro.
One example was an enforcement action against MG Refining and Marketing Inc. last summer. In that case, the agency said the forward contracts sold by the subsidiary of German metal firm Metallgesellschaft were actually illegal off-exchange futures contracts.
That ruling raised a fire storm among bankers, academics, and even Congress members about the definition of a futures contract.
And some bankers continue to worry that without leadership, commission staffers may expand the agency's regulatory oversight into other over-the- counter products.
Many of those concerns were allayed last month, though. Rep. Pat Roberts, chairman of the House Agriculture Committee, and Rep. Thomas Bliley Jr., chairman of the House Commerce Committee, jointly wrote a letter to the commission asking for a clarification of its ruling in the MG Refining case.
The agency has until Jan. 11 to respond to the congressmen's inquiries.
Notwithstanding such clashes, some industry leaders noted that the agency had generally been responsive to the needs of its constituents.
"The commission has developed a unique regulatory approach which has promoted substantial innovation by the futures exchanges," said Mark Brickell, a managing director with J.P. Morgan Securities. This approach, he said, "has been of great benefit to those who use futures to manage their risks, including swap dealers."
Speculation on Ms. Schapiro's successor has focused on three government officials: Douglas E. Harris, currently the deputy comptroller of the currency for capital markets; Steven Wallman, one of only two Securities and Exchange Commission commissioners; and Jim Gilliland, general counsel for the Department of Agriculture.
The agency will still have three commissioners following Ms. Schapiro's departure on Jan. 26. Of these, Barbara Pederson Holum and John Tull are Clinton appointees, and Joseph Dial was a Bush appointee.
The President and Congress have moved slowly to find commissioners for the agency. The commission had an acting chairwoman for nearly 10 months before Ms. Schapiro won approval in October 1994.