The Hagstrom Report

Agriculture News As It Happens


Gensler: CFTC Ag Advisory Committee to meet this summer


Commodity Futures Trading Commission Chairman Gary Gensler said today the CFTC Agricultural Advisory Committee will meet this summer, but declined to say whether he would lead it.

Gary Gensler

Gary Gensler
“I look forward to convening the agriculture advisory committee this summer, Gensler said in a speech to the Agribusiness Club of Washington, a lobbyists’ luncheon group. Gensler told The Hagstrom Report afterward that he does not know whether he will chair the committee.

Gensler noted that former CFTC Commissioner Michael Dunn had chaired the committee before he left the commission, and he praised Dunn’s service.

Senate Agriculture Committee ranking member Pat Roberts, R-Kan., has urged Gensler to appoint a committee chairman, but Gensler told The Hagstrom Report afterward that the CFTC is in the midst of getting the charter for the agriculture advisory committee renewed. Federal advisory committees are chartered for two years, he explained, and the General Services Administration is in the midst of examining the committee under the act that governs these committees.

Gensler told the agriculture lobbyists that end users of swaps and derivatives should have nothing to fear from the regulations the agency is writing under the Dodd-Frank financial services reform bill, because end users will be exempt from regulation in most cases.

He also said that end users will benefit from new transparency rules in swaps markets.

“The U.S. swaps market remains today the largest dark pool in our financial markets,” Gensler said.

“The Dodd-Frank Act squarely addresses this by providing the public, for the first time, information on the pricing and volume of every swap transaction upon completion,” he said. “Furthermore, end users and other market participants all will benefit from seeing available bids and offers and gaining liquidity on transparent and competitive trading platforms.

“The pre-trade transparency required for trades between financial firms on these platforms is only for transactions standard enough to be mandatorily cleared and small enough not to be considered a block trade,” Gensler said.

“These transactions will benefit all others in the market by providing a reference price.
Farmers, ranchers and other end-users will get to see the pricing and volume of swap transactions on platforms, but get to choose whether or not to use the platforms — a win-win for end-users,” he said. “Furthermore, end-users will continue to be able to rely on customized transactions to meet their particular needs, as well as to enter into large block trades.”

Gensler also noted that the commission has already begun to receive position information for large traders in the swaps markets for agricultural, energy and metal products. Starting this fall, it will require for the first time real-time reporting on the agricultural and energy swaps markets both to the public and to regulators of nearly every swap transaction.

He also said he hopes to finalize regulations on physical commodities in the next month.

Gensler also noted that the CFTC has authorized agricultural swaps, which the Dodd-Frank Act prohibited unless the CFTC authorized them. “Farmers, ranchers, producers, processors and packers benefit from the ability to use agricultural swaps to hedge risk,” he said.

The chairman declined to answer a question about the MF Global bankruptcy investigation, noting that he had distanced himself from enforcement in that situation since he had earlier worked at Goldman Sachs where Jon Corzine, later the head of MF Global, was his boss.

Gensler also said that even though the comment periods on some of its rules have ended, the agency is still using its discretion to listen to stakeholders.

“A lot of you haven’t been bashful, but you don’t have to be bashful. You don’t have to go to Congress to complain about us. You can complain to us directly.”