U.S. Sens. Pat Roberts (R-KS) and Heidi Heitkamp (D-ND) introduced legislation on Friday that would support farmers and ranchers who are in need of protection from any future reinterpretation of regulations from the Commodity Futures Trading Commission (CFTC), as well as repeal a regulation that impeded international trading-data sharing.
The CFTC recently preserved a rule on the allotted time farmers and ranchers have to send payments to their Futures Commission Merchants (FCMs).
“As the Senate Agriculture Committee works to reauthorize the CFTC, I am prioritizing the protection of end-users, like the folks at the local grain elevator, from over-burdensome or unrealistic regulations,” Roberts, chairman of the Senate Committee on Agriculture, Nutrition and Forestry, said. The committee has jurisdiction over the CFTC. “This legislation ensures that the CFTC rules work as well in rural America as they do on paper.”
The main issue of concern is the CFTC’s residual-interest rule, which requires customers dealing in futures to fully cover the profit margin of their futures contracts by the end of the day following a trade, i.e. the next day. The CFTC addressed the original concerns of farmers and ranchers by eliminating the automatic termination of the phased-in period, which would have required the payment to be made by the close of business on the day of the trade. The Roberts-Heitkamp legislation ensures that the time frame remains at the end of the day following a trade and would block the CFTC from changing that rule at any point in the future.
The bill also would repeal a rule that impeded trading-data sharing required by regulators to monitor various levels of risk in various global markets and watch for trends that indicate market manipulation.
“For our farmers, elevators and businesses to effectively do their jobs, they need to be able to hedge using futures markets,” Heitkamp, a member of the Senate Agriculture Committee and a champion of end-user rights within the futures and swaps commodity markets. “They should know that any oversight of those efforts supports and protects them, rather than unnecessarily burdening them. Our bill would provide farmers and grain elevators with the time they need to meet their margins, while protecting customers and the markets from fraud or other reckless behavior by bad actors. The recently enacted rule by the CFTC was an important step, and our bill would play an important role in providing permanent certainty for farmers, elevators and businesses that they will be protected.”