CFTC Chair Announces Bi-Weekly Trader Data, USDA Coordination for Ag Markets
Commentary by Steven Lofchie
CFTC Chair Michael S. Selig announced that the agency will move the Commitments of Traders Report to a bi-weekly schedule by year-end and finalize a coordination agreement with the U.S. Department of Agriculture.
In remarks before the reconvened Agricultural Advisory Committee, Mr. Selig reprised his case for a deregulatory agenda to "future-proof" the agency (see prior coverage) and outlined new initiatives to support agricultural derivatives markets.
Mr. Selig said he directed CFTC staff to begin circulating the Commitments of Traders Report every two weeks, rather than the weekly format. Mr. Selig also stated that the CFTC is working with the U.S. Department of Agriculture to finalize a memorandum of understanding. He said the agreement will improve interagency coordination and provide producers with greater access to risk-management tools.
Addressing enforcement, Mr. Selig said the agency has ended the prior administration's "campaign of regulation by enforcement." He stated that the CFTC will focus on pursuing fraud, manipulation, and abuse rather than punishing market participants for technical or minor compliance missteps.
Mr. Selig added that the agency is reviewing existing regulations that unnecessarily burden market participants. He said the CFTC is working with prudential regulators to prevent bank capital requirements from discouraging bank-owned intermediaries from servicing the agricultural industry, noting that the number of futures CFTC merchants has fallen from roughly 90 before 2007 to fewer than 50 today following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Commentary
The decrease in the number of FCMs is notable, even in a period of financial industry consolidation. Dodd-Frank Act was supposedly going to increase competition in the derivatives markets; instead, it has increased concentration. It would be a useful exercise for the regulators to review every prediction by the proponents of Dodd-Frank to measure how many; i.e, few, of those predictions were realized. I would not be surprised if the success rate did not reach the Mendoza line.