The groups sent a letter to leaders of the U.S. Senate Appropriations Committee’s Financial Services Subcommittee asking for the funding. They sent a similar letter to House appropriators on May 9, but that committee only approved a slight increase in the CFTC budget to $255 million.
The CFTC is an independent agency of the U.S. government that regulates futures and options markets.
“The commission’s responsibilities have expanded dramatically in recent years, but funding has not kept up,” noted the 16 agriculture groups in a May 31 letter submitted to Subcommittee Chairman James Lankford and Ranking Member Christopher Coons. “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, which will require sufficient staff and resources to get the rule right.
• Regulating automated trading/high-frequency trading, which requires oversight to ensure it doesn’t overwhelm or otherwise adversely impact agricultural futures contracts.
• Block trading, which requires close scrutiny to preserve appropriate liquidity and transparency for agricultural futures markets.
• CFTC Commitments of Traders Report, which provides additional frequency and transparency but requires personnel and technology resources from the agency.
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.
Some of the groups who sent the letter included the American Feed Industry Association, the American Soybean Association, the National Association of Wheat Growers, the National Corn Growers Association, the National Grain and Feed Association, the North American Export Grain Association, the North American Millers’ Association and USA Rice.