A 45-member coalition has fired off a letter to House committees opposing a bill that would delay implementation and enforcement of derivatives market reforms under the sweeping Dodd-Frank Wall Street Reform Act for 18 months.
The Dodd-Frank law requires commodity trading reforms to be implemented by both the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission by July 21 of this year, one year after President Obama signed the legislation into law (see Daily GPI, July 22, 2010). But the House Republican bill (H.R. 1573) would postpone implementation until at least Jan. 1, 2013.
"Further delay in the implementation and enforcement of these reforms could greatly diminish market competitiveness, stability and confidence, and will preserve today's artificially high commodity prices caused by excessive speculation in the derivatives markets. Therefore we oppose H.R. 1573," wrote the Commodity Markets Oversight Coalition (CMOC) in its letter to the leaders of the House Agriculture Committee and House Financial Services Committee. The CMOC represents commodity-dependent industries, businesses and end-users.
"The CFTC is faced with a colossal task of implementing the most sweeping reforms of these markets in a generation. It will be responsible for oversight of about half of the roughly $600 trillion (notional value) global over-the-counter derivatives marketplace. The CFTC has already fallen behind on some of the most important new rulemakings, including the imposition of speculative position limits on commodities trades, which were required by Jan. 17 for energy and April 17 for agricultural commodities," the group said.
"We believe that congressional intervention in the form of H.R. 1573 would erode the long overdue reforms to address the excessive speculation that is contributing to today's artificially high commodities prices."
CFTC Commissioner Bart Chilton opposed the legislation as well. "While I appreciate and agree with those that want to ensure regulatory reforms are drafted in an appropriate fashion and not done in a hasty manner due to stringent timetables, legislation to delay the Dodd-Frank Wall Street Reform and Consumer Protection Act is not needed in my opinion," he said.
Chilton agreed that while it was important to implement regulatory reforms "correctly," he said they were also "time sensitive." While regulatory agencies "may not be able to make every deadline required under the reform bill because we want to fine-tune such rules and regulations, the urgency Congress has already placed on getting reforms implemented is just as important today as it was when this...legislation became law," he said.
Republican lawmakers who introduced the bill included Rep. Spencer Bachus of Alabama, chairman of the House Financial Services Committee; Rep. Frank Lucas of Oklahoma, chairman of the House Agriculture Committee; Rep. K. Michael Conaway of Texas and Scott Garrett of New Jersey. The House Agriculture Committee has scheduled a business meeting to consider the measure Wednesday.
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