Agricultural Swaps Regulation - Comment Letter - CME Group - October 28, 2010

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Agricultural Swaps ANPRM
October 28, 2010

From the comment letter:

"In effect, Dodd-Frank appears to give the CFTC three basic choices for agricultural swaps:

  1. Retain the status quo — the Part 35 exemption would remain unaltered and parties could still apply for individual exemptions under CEA § 4(c);
  2. Develop a specific regulatory regime for agricultural swaps under Section 4(c); or
  3. Treat agricultural swaps the same as all other swaps for regulatory purposes under the CEA and repeal Part 35 CME Group strongly favors the third choice described above: equal treatment for agricultural commodity swaps and repeal of Part 35.

...

"CME Group strongly favors the third choice described above: equal treatment for agricultural commodity swaps and repeal of Part 35. Derivatives trading was born in the U.S. two centuries ago in agricultural markets. Agricultural markets are as valuable to our nation's economy as any other, and in many instances more valuable. Statutory regulatory structures and restrictions that are good for other physical commodity swap markets in energy and precious metals, for example, are good for agricultural commodities as well. Dodd-Frank's various mandates on clearing and exchange-trading transparency, dealer regulation, and amplified business conduct standards should apply to agricultural swaps activities on the same terms as other swaps. Similarly, as with all other swaps, only Eligible Contract Participants ("ECPs") should transact in agricultural commodity swaps unless on a fully-regulated DCM."


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