WASHINGTON, April 9, 2014 – The House Agriculture Committee today approved legislation (H.R. 4413), by voice vote, that would reauthorize the Commodity Futures and Trading Commission and seek to provide reforms to protect against market failures.
The Customer Protection and End-User Relief Act, introduced Monday by Chairman Frank Lucas, R-Okla., and ranking member Collin Peterson, D-Minn., was approved quickly with no amendments. The bill seeks to ensure transparency and accountability at the CFTC to help farmers, ranchers, and end users manage risks to help keep consumer costs low. A summary of the bill can be viewed here.
“H.R. 4413 addresses some of the concerns we have heard over the past couple of years from a variety of stakeholders, especially in our agricultural producers and end-users,” Lucas said. “Our efforts will increase certainty in the marketplace, improve customer protections, and provide a more balanced approach to regulations impacting job creators.”
The lawmakers said the bill addresses concerns relating to protecting customers from another market failure such as MF Global and Peregrine Financial. It is the product of a multi-year process that included hearing perspectives from market participants, end-users, futures customers, and the CFTC.
“I’m not a big fan of regulations, but following the financial collapse it became clear that we needed to rein in some of the risky behavior that had been taking place and increase market transparency,” Peterson said.
Lucas said he plans to discuss a schedule for floor time with House leadership, and is hopeful of movement in the Senate. “I think the Senate is looking at the same set of issues,” Lucas said. “If we can get to the floor in a prompt fashion and maintain the bipartisan support we have here, I think that will encourage them.”
Rep. Michael Conaway, R-Texas, said the legislation would “protect end-users from being roped into reporting, registration, or regulatory requirements that are inappropriate for the level of risk they can impose on financial markets.”
Conaway said one of the most important changes the legislation would make is to require the commission to quantify the costs and benefits of a rule when it is first proposed. “This change will strengthen the rulemaking process and will result in better rules and a safer market,” he said.
Roger Johnson, president of the National Farmers Union, said he was pleased the bill would require a study on the impact of high frequency trading, but said there should be further studies on excessive speculation and its damaging effects on price discovery and the marketplace in general.
“Furthermore, it’s disappointing that a self-funding mechanism or user-fee for the CFTC was not included in the bill,” Johnson said. “The annual appropriations battles over CFTC funding are disruptive to the agency’s regulation of the $690 trillion swaps market.”
Committee passage of the CFTC reauthorization came a day after the Senate Agriculture Committee approved three nominees to serve on the commission, including a new chairman. Sen. Saxby Chambliss, R-Ga., and Sen. John Hoeven, R-N.D., have expressed concerns about a lack of experience in the agriculture sector among the nominees.After the House mark-up, Lucas did not want to weigh in on the nominees, saying, “We’ll let our friends in the Senate make that decision.”
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