LAST Tuesday, the Senate approved three nominees for the vacant commissioner seats on the Commodity Futures Trading Commission (CFTC).
The Senate approved new CFTC chairman Timothy Massad and commissioner J. Christopher Giancarlo by a voice vote and commissioner Sharon Bowen by a vote of 48-46.
CFTC normally seats five commissioners but has been operating with only two for most of the year.
CFTC was originally designed to oversee agricultural and commodity trading but now has been tasked with playing a critical role in implementing the reforms contained in the Dodd-Frank Wall Street Reform & Consumer Protection Act.
Walt Lukken, president and chief executive officer of the Futures Industry Assn., said it's important for CFTC to have a full slate of commissioners as it takes on the important work ahead.
"The derivatives industry plays a vital role in hedging risk and reducing price volatility, so it's important that CFTC rule-making ensures a healthy, well-regulated and dynamic futures market," Lukken said. "The Dodd-Frank act greatly expanded the scope of the CFTC's authority, and there are still many important issues that need to be addressed in the implementation of that law. So, it is all the more important that the CFTC have a full complement of commissioners at this critical moment in its history."
House Agriculture Committee chair Frank Lucas (R., Okla.) said he's hopeful that Massad will lead CFTC by consensus, which he said would be better for America's economy in the long run.
"Specifically, I am hopeful that he will reverse recent commission actions that seem to ignore the concerns of our farmers and ranchers, as well as pursue commonsense reforms that will bring certainty to the marketplace for America's manufacturers, energy firms and utilities," Lucas said.
"The House Agriculture Committee just passed a wide-ranging, bipartisan CFTC reauthorization bill that makes numerous reforms, including improving the operations of the agency, protecting futures customers and reducing regulatory burdens on job creators. Chairman Massad can start there if he needs a blueprint for action," Lucas added.
Massad most recently oversaw the Troubled Asset Relief Program. During his nomination hearing before the Senate Agriculture Committee, he said over the course of his career, he has seen how important hedging forms of risk are for everyone in agribusiness, from fertilizer companies to rural electric cooperatives.
Giancarlo, the only Republican nominee, said he is open to increasing his knowledge of the agriculture sector and noted that although agriculture makes up only 10% of the interests represented under CFTC's oversight, it is still "very important." Giancarlo also expressed interest in chairing the CFTC Agricultural Advisory Committee, which has met only once since 2011.
A common thread among questions from Senate Agriculture Committee members during the nomination hearing related to the proposed rule on position limits, which CFTC had re-proposed, with the comment period ending in February.
At the time, Massad said he planned to make it a priority to finalize the rule on position limits. Giancarlo said he hopes the final rule carefully considers all of the comments received and ensures that end users have the proper exemptions they deserve without creating new loopholes.
Earlier in May, acting CFTC chairman Mark Wetjen, with the support of commissioner Scott O'Malia, had directed CFTC staff to hold a public roundtable on June 19 to consider certain hedging issues related to market practices in physical commodity derivatives.
CFTC also reopened comment periods for two previous proposals — the position limits proposal and the aggregation proposal — for a three-week period starting June 12 and ending July 3 (two weeks after the roundtable).
CFTC specifically asked market participants to comment on the following issues: hedges of a physical commodity by a commercial enterprise; setting spot month limits in physical delivery and cash-settled contracts and a conditional spot month limit exemption; setting non-spot limits for wheat contracts; the aggregation exemption for certain ownership interests of greater than 50% in an owned entity, and aggregation based on substantially identical trading strategies.
Todd Kemp, vice president for marketing/treasurer for the National Grain & Feed Assn., said he is pleased that CFTC soon will be back at full strength.
"We look forward to working with incoming chairman Massad, as well as commissioners Giancarlo and Bowen and their staffs, on issues of particular importance to agricultural and agribusiness hedgers," Kemp said. "We are especially glad to see that the comment period for the proposed rule on speculative position limits will be reopened for a more robust public discussion of the bona fide hedging definition and other critically important issues."