WASHINGTON, April 11, 2016 - Senate Agriculture Committee Chairman Pat Roberts released a reauthorization bill for the Commodity Futures Trading Commission that would protect grain elevators and other end users from speculative position limits, but the draft tossed some more controversial provisions in a House-passed measure.
The Senate bill, which the committee is scheduled to debate on Thursday, also would block the CFTC from reducing the trading threshold for being required to register as a swap dealer until the commission completes a study that would show why the lower limit is justified.
As Agri-Pulse reported earlier, Roberts dropped several provisions in the House bill (HR 2289) in a bid to win Democratic support. They included one that would require the CFTC to conduct a cost-benefit analysis for all changes in regulations. Cross-regulatory regulatory issues also were left out.
But the top Democrat on the committee, Debbie Stabenow, immediately rejected Roberts’ proposal and predicted it wouldn’t pass the Senate. She faulted the legislation for failing to authorize increased funding for the CFTC as well as “tinkering with active rule making decisions” by the agency.
“Our farmers, ranchers, and manufacturers deserve a CFTC that is not squeezed for resources. Financial markets are changing rapidly and the CFTC needs tools to help ensure that market participants have the market certainty they deserve to remain competitive,” Stabenow said.
Roberts, R-Kan. said the bill “provides real reforms for end-users who were never intended to be regulated as if they caused the 2008 financial crisis.” Other provisions would guarantee new customer protections in the wake of the disasters of M.F. Global and Peregrine Financial, he said.
The White House threatened to veto the House bill, which passed last June.
The Roberts bill includes provisions that would write into law some regulatory changes the commission has already made, including a move to relieve market participants of record keeping requirements that the grain industry considered unworkable.
But the bill also would force the CFTC’s hand on a pending decision about what transactions would qualify as “bona fide hedging” and therefore be exempt from position limits. The bill would ensure that anticipatory hedging could qualify for the exemption, such as when a grain elevator hedges grain that it expects to be delivered over a weekend.
The National Grain and Feed Association said the provision affirms “that anticipatory hedging is indeed bona fide hedging, an important signal to the commission as it seeks to finalize its position limit rule.”
The bill also would allow regulated entities to appeal CFTC actions directly to the U.S. Court of Appeals for the D.C. Circuit rather than first going to a district judge.
The House passed its version of the bill last June, 246-171, with the support of only nine Democrats. The White House said the bill threatens “the financial security of the middle class by encouraging the same kind of risky, irresponsible behavior that led to the Great Recession.”
A similar bill passed the House in 2014 but went nowhere in the Senate. The CFTC has been operating without statutory authorization since September 2013.
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