DATE: March 3, 2005
CONTACT: KATHRYN REXRODE

SUBCOMMITTEE EXAMINES COMMODITY FUTURES TRADING COMMISSION REAUTHORIZATION

WASHINGTON, D.C. – Congressman Jerry Moran, Chairman of the House Agriculture Subcommittee on General Farm Commodities and Risk Management, chaired a hearing today to examine the reauthorization of the Commodity Futures Trading Commission (CFTC). The Subcommittee heard from one witness, Dr. Sharon Brown-Hruska, Acting Chairman of the CFTC.

The CFTC was established in 1974 and the authorization will expire in September 2005. The CFTC was last reauthorized four years ago resulting in the enactment of the Commodity Futures Modernization Act of 2000 (CFMA). The provisions created in CMFA included major changes in the Commodity Exchange Act (CEA) regarding the regulation of exchange-traded futures contracts, over-the-counter (OTC) derivatives, and "security futures," contracts based on individual stocks, which were previously prohibited.

“In my view, the Commodity Futures Modernization Act of 2000 may be one of the most successful pieces of legislation passed out of our committee since I came to Congress. Our Subcommittee held a series of hearings on the implementation of CFMA in the last Congress. At that time, it appeared the CFMA had accomplished much of its intended purpose: a regulatory relief to foster industry growth and a level playing field, while still protecting market integrity for all participants,” said Congressman Moran.

Since the passage of the CFMA, the futures industry has experienced significant growth. In the last four years, the volume of futures and options contracts traded on the U.S. exchanges has increased from 600 million contracts a year to over 1.6 billion contracts a year. Additionally, the number of products traded on these exchanges has more than doubled from 266 to 556.

Brown-Hruska testified that the markets have become more global under CMFA. “There is more access than ever for U.S. customers wanting to trade on foreign exchanges as well as for foreign customers wanting to trade in the U.S. markets. …In short, the CFMA has permitted a level of innovation in these markets not seen since futures contracts were first traded in Chicago during the 19 th century,” said Brown-Hruska

An additional subcommittee hearing is planned for next Wednesday, March 9, at 10 a.m. in 1300 Longworth HOB. The Subcommittee will hear testimony from industry representatives next week in their review of the CFTC reauthorization.

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