The Congress has over ridden President Bush’s veto of the Farm Bill and in the process reauthorized the Commodity Futures Trading Commission through 2013. The bill gives the CFTC additional regulatory and enforcement tools necessary to oversee the futures industry, while clarifying and strengthening its authority over energy and foreign currency trading.
“We applaud and thank Congress for its efforts in completing this critical legislation. The CFTC provisions included in the Farm Bill represent years of hard work and bipartisan efforts to find the right balance of enhancing market oversight, transparency and enforcement while promoting market innovation and competition. This legislation is an important accomplishment to ensure proper protections of the markets, its participants and the public,” said Walt Lukken, CFTC acting chairman, and commissioners Michael Dunn, Jill Sommers and Bart Chilton in a joint statement.
Major provisions of the bill include the CFTC’s recommendation to Congress for additional tools regulate Exempt Commercial Markets (ECM) and enhancement of the CFTC authority over off-exchange retail foreign currency fraud.
Previously ECMs were not subject to full CFTC regulatory authority. The new legislation outlines criteria for when an ECM contract should be considered a “significant price discovery contract,” which would then require large trader position reporting, position limits; require the ECM to exercise self-regulatory responsibility; and exercise emergency authority regarding SPDC transactions.
The bill enhances CFTC authority over off-exchange retail foreign currency fraud by including the “Zelener fix;” creates a new registration category for retail foreign exchange dealers; and imposes minimum capital requirements for futures commission merchants and retail foreign exchange dealers that act as counterparties in such transactions.
