THE Commodity Markets Oversight Coalition (CMOC), a broad coalition of associations representing Main Street businesses, filed an amicus curiae brief with the U.S. Court of Appeals of the District of Columbia in support of a Commodity Futures Trading Commission (CFTC) rule that would limit speculative trading in commodities.
The 2010 Dodd-Frank Wall Street Reform & Consumer Protection Act required CFTC to quickly adopt speculative position limits for all energy futures and swaps and report back to lawmakers on their impact after the limits had been imposed for one year.
Accordingly, CFTC approved a final rule on Oct. 18, 2011, that would have imposed speculative position limits on futures and swaps for 28 listed commodities.
Last September, a district court judge, responding to a legal challenge by Wall Street groups, vacated the rule, citing an "ambiguous" congressional mandate and CFTC's failure to determine if it should have made a finding of necessity before promulgating the final rule.
Agricultural groups that are part of CMOC include the National Farmers Union (NFU), American Feed Industry Assn. (AFIA), American Bakers Assn., National Grange, National Family Farm Coalition and R-CALF USA.
NFU president Roger Johnson explained, "Opponents to reform are trying to delay and dismantle the position limits rules. These are the most important part of Dodd-Frank, especially from our members' perspectives as users of commodity markets. We don't see the need for significant legislative change so long as the law is upheld."
AFIA has been part of CMOC since the Dodd-Frank financial reform process began. AFIA members represent commercial hedgers that rely on the futures markets for accurate, real supply and demand of commodities and are in support of the position limits rule.
AFIA president and chief executive officer Joel G. Newman added, "By filing this brief as part of CMOC, AFIA believes the Commodity Futures Trading Commission should be allowed to finish the rule-making process, and having the courts intercede at this time is not in the best interest of the markets or the end users of the commodities."
In its amicus brief, CMOC said it supports CFTC's position that Congress mandated a rule setting speculative position limits and cited nearly a decade of congressional investigations and dozens of hearings on the matter. During that time, lawmakers received expert testimony from CMOC members on the harm excessive speculation was causing their industries and constituent businesses.
"Congress had been gathering evidence for nearly a decade about excessive speculation and had already concluded that (excessive speculation) constituted an undue burden on interstate commerce," the coalition said in the brief. "Congress had studied and identified a serious crisis that it wanted remedied quickly and, therefore, mandated position limits."
The coalition also pointed to the congressional requirement that regulators conduct an expedited rule-making process. Congress also required a study into the effect of position limits one year after they had been imposed.
Given this, CMOC said "there should be no doubt that Congress was mandating swift and decisive action to end what it believed was a serious problem."