H.R. 6604, the Commodity Markets Transparency and Accountability Act of 2008, prohibits the Commodity Futures Trading Commission (CFTC) from permitting a foreign Board of Trade to provide its U.S. located members with access to the CFTC electronic trading system, and orders a matching system for energy or agricultural commodities unless the Board of Trade meets requirements similar to those imposed upon U.S. exchanges.
Background
Production agriculture relies on smoothly functioning futures markets for risk management and price discovery. Unfortunately, in recent months concerns about agricultural futures market performance have grown, and the ability of producers and processors to use those markets for hedging has in some cases been seriously compromised. At the same time, agricultural producers have a strong interest in transparent and efficient energy futures markets, since so many of their input costs are directly related to U.S. and world energy prices. National Grange is concerned that energy futures prices have been unduly affected by new capital flows, including passively managed, long-only index funds. These funds and other sources of speculative capital may also be affecting agricultural futures markets to the extent that these markets are not fully available to farmers trying to hedge their crops.
On September 22, 2008, the U.S. House of Representatives passed H.R. 6604. This legislation would benefit farmers and the entire economy by ensuring that the nation’s commodity futures markets are utilized for their original purpose – to serve as a marketplace where producers and users of commodities can hedge their commercial transactions free of manipulation.
H.R. 6604 addresses National Grange concerns about both agricultural and energy markets in a balanced, responsible, and bipartisan way. It will require transparency and improved access to market critical information, as well as establishing reasonable requirements to limit speculative positions. It would require the CFTC to set trading limits for all agricultural and energy commodities, in order to prevent excessive speculation. The bill will strengthen the CFTC with both new legal authority and increased staffing as it grapples with complex and important new issues of oversight, surveillance and regulation. Finally, the legislation will help market users by enhancing transparency and accountability in exempt commercial markets, foreign boards of trade and other venues, and by clarifying the appropriate treatment of hedgers and speculators.
Grange Policy
Family Farm Policies and Farm Preservation Programs
-
Federal, state, and local agencies should work for efficient economic development policies that treat the agriculture industry on equal terms with other businesses and industries such as small business loans, tax incentives, marketing practices, and other programs that would help small farmers. The National Grange supports government rural development programs that provide local off-farm employment for rural people and that provide an improved income for small-and medium-sized farms.
Action Needed
Please e-mail your U.S. Senators urging them to vote in favor of H.R. 6604 before the end of this session of Congress. Please feel free to cut and paste the following sample letter. If you do not know your Senators’ e-mail addresses, please click here to find them.
Sample Email
Dear Senator ___________,
I am writing for your support of H.R. 6604, the Commodity Markets Transparency and Accountability Act of 2008. This legislation prohibits the Commodity Futures Trading Commission (CFTC) from permitting a foreign Board of Trade to provide its U.S. located members with access to the CFTC electronic trading system, and orders a matching system for energy or agricultural commodities unless the Board of Trade meets requirements similar to those imposed upon U.S. exchanges.
Production agriculture relies on smoothly functioning futures markets for risk management and price discovery. Unfortunately, in recent months concerns about agricultural futures market performance have grown, and the ability of producers and processors to use those markets for hedging has in some cases been seriously compromised. At the same time, agricultural producers have a strong interest in transparent and efficient energy futures markets, since so many of their input costs are directly related to U.S. and world energy prices. The National Grange is concerned that energy futures prices have been unduly affected by new capital flows, including passively managed, long-only index funds. These funds and other sources of speculative capital may also be affecting agricultural futures markets to the extent that these markets are not fully available to farmers trying to hedge their crops.
H.R. 6604 addresses my concern about both agricultural and energy markets in a balanced, responsible, and bipartisan way. It will require transparency and improved access to market critical information, as well as establishing reasonable requirements to limit speculative positions. It would require the CFTC to set trading limits for all agricultural and energy commodities, in order to prevent excessive speculation. The bill will strengthen the CFTC with both new legal authority and increased staffing as it grapples with complex and important new issues of oversight, surveillance and regulation. Finally, the legislation will help market users by enhancing transparency and accountability in exempt commercial markets, foreign boards of trade and other venues, and by clarifying the appropriate treatment of hedgers and speculators.
On September 22, 2008, the U.S. House of Representatives passed H.R. 6604. This legislation would benefit farmers and the entire economy by ensuring that the nation’s commodity futures markets are utilized for their original purpose—to serve as a marketplace where producers and users of commodities can hedge their commercial transactions free of manipulation. I am hopeful that the Senate will also pass H.R. 6604 before the end of this legislative session.
Thank you for your consideration on this matter.
Sincerely,
Your Name
Your Grange name and number
|
If you have any questions or comments regarding this Action Alert, please contact Molly Thompson at mthompson@nationalgrange.org or by calling 1-888-4GRANGE.
Thank you for your grassroots participation in the National Grange Legislative Program.
|
