House tackles CFTC reauthorization

House tackles CFTC reauthorization

House bill reauthorizing CFTC includes provisions to change residual interest and margin requirements.

THE House moved first on reauthorization of the Commodity Futures Trading Commission (CFTC), and the Senate also is considering introducing its own bill later this year, top agriculture committee members said.

Late on April 7, a bipartisan package called the Customer Protection & End-User Relief Act was proposed by House Agriculture Committee chair Frank Lucas (R., Okla.), ranking member Collin Peterson (D., Minn.) as well as Reps. Michael Conaway (R., Texas) and David Scott (D., Ga.). The committee marked up the bill last Wednesday without any amendments.

It would reauthorize CFTC and also improve the agency's operations. The package tackles some provisions in the Dodd-Frank Wall Street Reform & Consumer Protection Act that have had unforeseen implications for end users, such as farmers who use the futures market for hedging.

Another component of the bill requires CFTC to quantify the costs and benefits of future regulations and orders.

National Grain & Feed Assn. (NGFA) vice president for marketing/treasurer Todd Kemp said two of the big positives in the bill include changing the residual interest calculation to the close of business the day after the trade is made and also precluding producers and hedgers from having to pre-fund margin accounts.

NGFA applauded the bill's clarification of recording and recordkeeping requirements that it said "have proved unfeasible for some grain hedgers."

With the era of former CFTC chairman Gary Gensler and doing business via no-action letters coming to an end, Lucas felt that it was important for the committee to look at rational steps to address end user concerns.

Since the bill proceeded without major changes during markup, House Agriculture Committee leadership expects that it will continue to obtain broad bipartisanship support.

Lucas said he had hoped that the House's proposal would urge the Senate to also take action on CFTC reauthorization so the two chambers could conference and finalize a bill.

Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) played down any thought that the Senate would do just a one-line reauthorization of CFTC without also trying to make enhancements to the agency.

Stabenow said she, too, will consider a broader reauthorization bill that provides protection to end users and against market situations that led to the MF Global and Peregrine bankruptcies. She said there are common areas across party lines and chambers on how to help end users.

Stabenow noted that her committee also is looking at whether an insurance fund needs to be set up, which is something that was discussed in Senate hearings on CFTC matters in the last year.

Stabenow said she is "hopeful" that her committee will address CFTC reform this year but also recognizes that it will become more difficult to accomplish as fall elections near.

 

CFTC nominees

During an April 8 business meeting, the Senate Agriculture Committee also approved by voice vote the three nominees for the vacant CFTC commissioner positions, which advances the nominees to the full Senate for final approval. The nominees include J. Christopher Giancarlo, Timothy Massad and Sharon Bowen.

Stabenow expressed confidence in the nominees even though they have no agricultural background. She said each of the nominees have been reaching out to industry groups, and she also is strongly advocating for reactivation of the CFTC agricultural advisory committee.

In a statement, Senate Agriculture Committee ranking member Thad Cochran (R., Miss.) said he supports Giancarlo's nomination because of his expertise in swaps markets, which are important to U.S. agriculture, but he hopes other senators, before a vote, will seek stronger assurances from Massad and Bowen "that their lack of experience in agriculture or futures markets will not hinder their ability to address the complex issues before the commission."

Members from both parties have expressed concerns over Bowen's nomination. Stabenow said she expects individual votes on the candidates but would not object to combining all three in a package if necessary.

Volume:86 Issue:15

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