In a letter to the leaders of the Senate Appropriations Committee's Financial Services Subcommittee, the National Grain and Feed Association (NGFA) and several other significant U.S. agricultural producer and agribusiness groups urged the lawmakers to incorporate the full budget of $281.5 million requested by the Commodity Futures Trading Commission (CFTC).
"The commission's responsibilities have expanded dramatically in recent years, but funding has not kept up," noted the NGFA and 15 other ag groups in a May 31 letter submitted to Subcommittee Chairman James Lankford, R-Okla., and Ranking Member Christopher Coons, D-Del. "For U.S. agricultural futures markets that are utilized extensively by our members to manage their market and business risks, this regulatory oversight is absolutely crucial."
The groups outlined several rulemakings and other initiatives at the CFTC that have direct bearing on price-discovery and risk-management functions that affect U.S. agriculture that could be hampered without adequate funding, including:
- Issuance of a Speculative Position Limit Final Rule: "As this very important rule moves toward final status, it is imperative that CFTC has sufficient staff and resources to get the rule right."
- Regulating Automated Trading/High-Frequency Trading: "Commission oversight continues to be needed to help ensure that high-frequency trading doesn't overwhelm or otherwise adversely impact agricultural futures contracts."
- Block Trading: "Now that block trading has been extended to agricultural contracts (by the CME Group), close scrutiny is merited by the commission to preserve appropriate liquidity and transparency for agricultural futures markets."
- CFTC Commitments of Traders Report: "Enhancements to provide additional frequency and transparency are needed, but will require personnel and technology resources" from the agency. This report is important in providing transparency regarding participation in U.S. futures markets.
The letter also emphasized that the CFTC needs funding to hire important personnel. "Without sufficient resources to staff the commission and invest in needed technology upgrades, the CFTC's ability to perform these important functions, as well as to continue its core regulatory mission, will be undermined," the letter noted.
The groups sent a similar letter to House appropriators on May 9, but that committee approved only a slight increase in the CFTC budget from the current $249 million to $255 million.