The House Agriculture General Farm Commodities and Risk Management subcommittee held a hearing last week to examine reauthorization of the Commodity Futures Trading Commission (CFTC). The hearing focused on industry concerns over proposed CFTC regulations that the National Grain and Feed Association (NGFA), which testified at the hearing, says would increase customer risk.
NGFA testified that it was concerned about the part of CFTC’s proposal which “would decrease the time in which customers’ margin calls must arrive to their FCM from the current three days to just one day.” This change would be difficult, witnesses said, for customers who use checks instead of wiring money. Witnesses also expressed concerns over proposed CFTC regulations that would require customers to be fully margined on a 24/7 basis.
In a letter to the CFTC last month, a coalition of 20 agriculture organizations argued that the net effect of these changes could “discourage producer from using futures markets to hedge their production risk.”
Written by Marc Sager
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