Proposed amendments to the omnibus Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173) cleared Thursday by the House Rules Committee for consideration on the House floor appeared to preserve the exemption for commercial commodities traders from requirements for clearing or exchange trading.
The 36 amendments selected by the Rules Committee, designed to be voted on en bloc, would endorse requirements for the Commodity Futures Trading Commission (CFTC) to set position limits and swaps and futures transactions and would allow the CFTC and the Securities and Exchange Commission (SEC) to set margin and security requirements for commercial traders. The procedures for consideration of the legislation and its amendments as proposed by the Rules Committee were voted out late Thursday.
The bill’s sponsors were working toward a final vote Friday on the 1,300 page bill that essentially would completely revise the rules for the U.S. banking and financial system. The Senate is working on similar legislation, but is not expected to take it to the floor until next year.
An amendment offered by the bill’s sponsors, Agriculture Committee Chairman Collin Peterson (D-MN) and Financial Services Committee Chairman Barney Frank (D-MA), provides that clearing would not be required “if one of the counterparties is not a swap dealer or major swap participant and can demonstrate business or risk management practices for non-cleared swaps.”
The amendments also would require the CFTC to establish aggregate position limits across markets for futures transactions for physically deliverable commodities that would be applicable to spot month, each month, and all months aggregated, and to hold hearings on such position limits. The CFTC is also authorized to provide exemptions to position limits.
Another Frank amendment would create authority for the CFTC and SEC to set margins in swap and security-based swap transactions involving end-users. Paul Cicio, president of the Industrial Energy Consumers of America, was highly critical of the margin and security requirements, saying this would “impose substantial fees on end-users when they trade or buy natural gas on a futures exchange. We are concerned that the chairman is still trying to impose unnecessary costs on industry.”
Earlier this week major natural gas and electric power organizations joined in a letter to House members urging that the end-user exemption from mandatory clearing or exchange trading of derivatives or swaps be preserved (see Daily GPI, Dec. 10).
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