Lucas Opening Statement: The Future of the CFTC
Thank you all for being here today to discuss the reauthorization of the Commodity Futures Trading Commission. This is the first hearing on the issue, and the first in a series of hearings this Committee plans to hold in advance of writing legislation.
CFTC reauthorization gives the Committee an opportunity to review the CFTC's operations, examine the pressing issues facing the futures and swaps markets, evaluate how regulations are impacting end-users and the agricultural community, and determine how best to protect customer funds while restoring confidence in our markets.
The reauthorization also allows the Committee to take stock of past events, such as the passage of the Dodd-Frank Act of 2010, the ensuing rulemaking process, and the failures of MF Global and PFG Best. It is impossible to discuss the CFTC and the future of the CFTC without recognizing the impact of these events on the agency and its response to them.
Today, nearly three years after the Dodd-Frank Act was enacted, numerous Main Street businesses are still waiting to understand how new regulations affect them and their operations. Our food producers, our manufacturers, our technology companies, and our public power companies have all been impacted by new, financial regulations.
The agency's process for writing rules has lacked sequencing and coordination. For example, the agency defined swap dealer before it defined swap, which defies logic. How do you know if you're a dealer if you don't even know what you're dealing? Also, the SEC and CFTC have failed to coordinate on cross-border rules, so now we have two different definitions of "U.S. person" for trades with foreign counterparts.
In the wake of missing implementation deadlines, the CFTC has also issued dozens of last minute "no-action" letters, which has only contributed to a greater sense of uncertainty as businesses try to understand how or when to be in compliance if ever. It is telling that the agency has issued more "no-action" letters than finalized rules.
It would be one thing if the CFTC missed deadlines as the result of a thoughtful, rulemaking process that considers meaningful public comment and the unintended consequences of its actions. But, that isn't the case. Rather, the agency has been moving in a haphazard way that defies congressional intent and could jeopardize the United State's competitiveness in the global marketplace.
Today, we will hear perspectives from the futures and swaps marketplace, including the two largest derivatives exchanges, a futures commission merchant whose customers are farmers and ranchers, and industry trade associations who represent hundreds of companies. We hope to gain a greater understanding of the challenges they face.
Moving forward, we will continue our hearings with perspectives from end-users, futures customers, and of course, the CFTC.
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