The U.S. House of Representatives voted to approve a bipartisan bill to increase the transparency, oversight, and anti-manipulation authority over commodity futures and options markets. The House overwhelmingly passed the Commodity Markets Transparency and Accountability Act of 2008, H.R. 6604. The bill, sponsored by House Agriculture Committee Chairman Collin Peterson of Minnesota, passed by a vote of 283-133.
H.R. 6604 strengthens trader position limits on oil and other futures markets as a way to prevent potential price distortions caused by excessive speculative trading. It directs the Commodities Futures Trading Commission to get a clearer picture of the over-the-counter markets, and it calls for new full-time CFTC staff to improve enforcement, prevent manipulation, and prosecute fraud.
I am proud that we could work across party lines today to pass this bill which will bring much-needed transparency to commodities and futures markets." Peterson said
The National Farmers Union also praised the legislation. "This legislation will provide the adequate oversight and transparency the CFTC needs to function properly and ensure the markets operate in a fair and open manner,” says Tom Buis, NFU president. "This legislation also addresses the concerns producers have about speculation in the energy futures markets, a particular concern for agriculture producers whose input costs are directly related to U.S. and world energy prices.
Provisions included in the Commodity Markets Transparency and Accountability Act 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 CFTC to set trading limits for all agricultural and energy commodities, in order to prevent excessive speculation.
. Limit eligibility for hedge exemptions to bona-fide 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. Despite record trading volume in the futures and options markets, CFTC staffing is at its lowest level since the agency was created in 1974.
. Authorize CFTC to take action if it finds disruption in over-the-counter markets for energy and gas.
. Require the CFTC to study the effectiveness of establishing position limits in over-the-counter markets.
Congressional oversight of commodity futures trading is under the jurisdiction of the House Agriculture Committee, chaired by Peterson. Previous Committee action on H.R. 6604 and a summary of the bill's provisions can be found on the House Agriculture Committee website at http://agriculture.house.gov/inside/legislation.html.
Source: U.S. House Committee on Agriculture, National Farmers Union