CFTC Chair Massad Testifies before Senate Agriculture Committee Regarding CFTC Funding and Priorities (with Delta Strategy Group Summary)

CFTC Chair Timothy G. Massad expressed concern over Congressional funding for the agency in testimony before the Senate Committee on Agriculture. Chair Massad was the only witness at the hearing titled: "The Commodity Futures Trading Commission: Effective Enforcement and the Future of Derivatives Regulation."

Chair Massad explained that, in order to protect market participants from fraud and manipulation by means of adequate market surveillance, the CFTC would need far more resources than are offered currently in the omnibus spending package. The target budget, Chair Massad explained, is that of the President's original budget request for $280 million. Chairman Massad said that, although he would be open to user fees if done correctly, his goal is to increase government funding for the CFTC.

Chair Massad stated that while position limits are a very important tool, the CFTC also must make sure to allow "bona fide hedging," and added that the list of "bona fide" hedges should include the types of transactions that commonly occur in agriculture. According to Chair Massad, the CFTC is working currently to create "bright line" rules that would distinguish between bona fide hedging by commercial participants and excessive speculation. He stressed, however, that the CFTC does not have the resources to fully investigate the circumstances around the instance of every transaction, which could make drafting such rules challenging.

In a separate opening statement, Chair Debbie Stabenow (D-MI) encouraged Congress to come up with a long-term solution for providing the CFTC with the necessary resources to regulate effectively. Mentioning the omnibus bill that was announced the night before and which increased funding for the CFTC and SEC, Chair Stabenow commented that CFTC funding remains "insufficient and now comes with new restrictions at a time when the Commission is being asked to do more with less."

Click here to view a summary of the hearing from Delta Strategy Group.

See: Testimony of Chairman Massad; Chairwoman Stabenow's Opening Statement; Video Archive of Committee Hearing; Chair Stabenow's Statement in Support of CFTC Funding.