LAST Tuesday, the House approved its bill reauthorizing the Commodity Futures Trading Commission (CFTC) by a vote of 265-144.
The House provided for only limited debate on the bill and allowed just a handful of amendments to be debated.
During his floor statement in support of the bill, House Agriculture Committee chairman Frank Lucas (R., Okla.), a co-sponsor of the bill, said the bill is years in the making and thanked his colleagues from both sides of the aisle for their hard work on the bill.
"Ultimately, we developed legislation to reauthorize and reform the CFTC in a way that would not only improve operations at the agency but also protect customers from another market failure like what we saw with MF Global and PFG Best. Our efforts will also increase certainty in the marketplace and provide a more balanced approach to regulations impacting job creators," Lucas said.
However, Democrats opposed to the bill had said the changes to it undermine the enhancements made after the economic crisis and would hamstring the agency from enforcing its own rules. It was also argued that requirement for CFTC to conduct cost/benefit analyses of its proposed regulations would slow down implementation of the rules.
Rep. Randy Neugebauer (R., Texas) said the bill protects farmers and ranchers from increased regulatory costs associated with the Dodd-Frank financial reform bill and other rule-making.
"Farmers and ranchers in west Texas and the 'Big Country' use the futures and commodities markets as a business tool to help manage the inherent risks that they face, and this bill will allow them to continue doing so without being burdened by the cumbersome regulations of a one-size-fits-all CFTC," he said.
Walt Lukken, president and chief executive officer of the Futures Industry Assn., noted that as derivatives markets are adapting and responding to major regulatory transformations, it's important to provide stability and certainty to thrive, which he said the House Agriculture Committee recognized as it developed the bill.
The House approved by a voice vote an amendment that calls for a study of whether high-frequency trading increases market volatility, including short-term market swings such as the "flash crash."
The full House also approved an amendment that would exempt registered investment companies (RICs) that are currently registered with the Securities & Exchange Commission (SEC) under the Investment Company Act of 1940 from duplicative registration requirements with CFTC, allowing SEC to continue its full regulatory oversight and enforcement authority over RICs.
The amendment does not remove the jurisdiction and regulatory authority CFTC has over all futures, options and swaps transactions in which RICs invest on behalf of their customers, who include pensioners, retirees and savers.
The Senate has yet to propose its CFTC reauthorization bill, although Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) said her committee plans to take up a bill as well.
"The Senate will examine lessons from the past and consider ongoing challenges to the system as we write our bill," she said. "We have an important opportunity for market reform, to restore faith in the markets and help ensure they are transparent and functioning as intended, and we intend on doing that in a collaborative and bipartisan way."
Stabenow said the House bill has areas where the two chambers can certainly work together on a final CFTC reauthorization package.
However, she expressed disappointment that the House bill provides no additional funding mechanism and adds new layers of administrative burdens, hindering CFTC's ability to do its job effectively.