MFA Update on CFTC Reauthorization Bill: Senate Version May Include User Fees (with Lofchie Comment)

MFA issued an update on the status of the CFTC reauthorization legislation (H.R. 4413) and further reported that Senate Agriculture Committee Chair Debbie Stabenow (D-MI) is seeking to include a "user fees" measure in the potential bill.

According to the MFA Update on CFTC Reauthorization, attention is on the Senate Agriculture Committee for possible legislative action. Notably, the Update stated that there are indications that Chair Stabenow's staff put together an unreleased draft of CFTC Reauthorization legislation that they have reportedly shared with Ranking Member Thad Cochran (R-MS) and his staff to "exchange views."

MFA stated that while it is unclear what specific policy initiatives have been included in the draft legislation, it is MFA's understanding that the draft addresses issues such as (i) funding, (ii) enhanced customer protection, and (iii) potential relief for certain end-users from provisions of Dodd-Frank. MFA also stated that Chair Stabenow's draft supposedly does not include certain governance reform provisions that were included in Title II of the House-passed measure, such as cost-benefit analysis and internal procedural issues.

Lofchie Comment: In the futures markets, the consequences of Dodd-Frank are likely to be (i) materially increased costs for market participants executing futures (some of which may eventually end up being paid in user fees), and (ii) a reduction in the number of futures commission merchants. As to the issue of imposing a mandatory cost-benefit analysis on the CFTC's rulemaking, there would seem no compelling reason why the CFTC's rulemaking process should not be conformed to that of other regulators, including the SEC. While the regulators have treated the obligation to perform a cost-benefit analysis with varying degrees of seriousness, at least the existence of such an obligation should serve as a reminder to the regulators that rule compliance is not free, and that the burdens of new regulations should be defensible in light of any asserted benefits.

See: MFA Update on CFTC Reauthorization; H.R. 4413. Related news: Former Senator Blanche Lincoln Voices Support for the CFTC Reauthorization Bill (June 24, 2014); House Votes to Reauthorize the CFTC (June 24, 2014); House Committee on Rules Releases Amended Customer Protection and End User Relief Act (June 12, 2014); House Agriculture Committee Approves Bipartisan Legislation to Reauthorize CFTC (with Lofchie Comment) (April 9, 2014); House Agriculture Committee Introduces Legislation to Reauthorize CFTC (with Lofchie Comment) (April 8, 2014).