Positive Developments at the Commodity Futures Trading Commission
When most cattle producers think about government agencies, the U.S. Department of Agriculture and the Environmental Protection Agency come to mind. But the U.S. Commodity Futures Trading Commission (CFTC) also plays a critical – if lesser-known – role in the lives of cattlemen and cattlewomen. That’s because the CFTC is responsible for regulating the markets for futures and options contracts that many producers use to manage their risk (learn more about futures and options contracts for cattle here). In the last few weeks, NCBA has taken note of a few positive developments at the CFTC, including:
- Increased funding. The CFTC recently received a funding increase of $19 million, bringing the agency’s budget to $268 million. This funding level will enable them to meet the regulatory demands of the 21st-century, digital markets. Having adequate funding for market regulators is vital to continue job growth and economic prosperity that allows the U.S. markets to remain the envy of the world.
- Maintaining market access. The CFTC and the Bank of England issued a statement assuring market participants that they will not face regulatory uncertainty after the United Kingdom withdraws from the European Union (EU). This is a positive sign that will allow markets to continue business as usual, while also providing certainty to financial institutions that could have been closed off from doing business in Brexit’s immediate aftermath.
- Protection for end-users. Four commissioners at the CFTC submitted a joint comment of concern regarding a new proposed method for calculating the amount of capital that a banking organization must hold when trading futures and options contracts. The commissioners’ statement discussed the key differences between general capital standards and the standards required for cleared futures and options. NCBA joined the CTFC in raising concerns, but NCBA’s comments focused on how the newly proposed calculations would negate the regulatory relief that Congress provided for cattle producers and other “end-users” in Dodd-Frank.