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October 2, 2013

October 2, 2013 – House Agriculture Committee General Farm Commodity and Risk Management Subcomittee hearing entitled "The Future of the CFTC: Perspectives on Consumer Protection."

Despite the broad nature of the hearing title, the focus of the meeting concerned a contentious provision in a rule proposed by the CFTC last November, in part, to address problems created by the mismanagement of the Peregrine and MF Global situations. At issue was the same day margin requirements often referred to the the residual interest requirement.

All six witnesses represented industry participants. They complained that after 39 years of interpretation of the underlining Commodity Exchange Act, the CFTC now believes it must require same day collateral as a matter of law.  If the proposed regulation is adopted without extending the time period until at least 6 PM of the next trading day, as suggested by the industry, all witness believed that some market participants would be forced to leave the futures market.

Of note regarding the issue of sufficient funding for the CFTC, Terry Duffy, representing CME, testified that any tax or user fee on transactions to fund the operation of the regulator would be financially disastrous to the industry.

Congressional Activities
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