The House Agriculture Committee approved bipartisan legislation on July 24 to increase transparency, oversight, and anti-manipulation authority over futures and options markets. "The Commodity Markets Transparency and Accountability Act of 2008" was sponsored by Committee Chairman Collin Peterson (D-Minn.) and was approved by the panel on a voice vote.
The committee held several hearings on the legislation earlier this summer. Peterson said the legislation would "bring much-needed transparency to commodities and futures markets, helping to restore the markets as a mechanism for price discovery and risk mitigation that work to benefit producers, processors and consumers." He noted that it was difficult to quantify the potential influence of speculative trading on futures markets, but it is a real issue with the crude oil and agricultural markets seeing record volatility and a lack of convergence between futures and cash prices in some contracts. Specifically, the bill would:
* Require foreign boards of trade to share trading data and adopt speculative position limits on contracts that trade U.S. commodities similar to U.S.-regulated exchanges.
* Require the Commodity Futures Trading Commission (CFTC) to set trading limits for all agricultural and energy commodities, in order to prevent excessive speculation.
* Limit eligibility for hedge exemptions to bonafide hedgers.
* Codify CFTC recommendations to improve transparency in dark markets by disaggregating index fund and other data in energy and agricultural markets as well as requiring detailed reporting from index traders and swap dealers.
* Call for a minimum of 100 full-time CFTC employees to enforce manipulation and prevent fraud.
* Authorize CFTC to take action if it finds disruption in over-the-counter markets for energy and gas.
The legislation and a section-by-section summary can be found on the House Agriculture Committee website at
http://agriculture.house.gov/inside/legislation.html. (Contact: Charlie Ingram)