26 • OIL
&
ENERGY
THE COMMODITY MARKETS OVERSIGHT
Coalition (CMOC) is a non-partisan alliance
of organizations that represent commodity
dependent American industries, businesses,
end-users and consumers. We are the
farmers, truckers, heating oil retailers,
mom and pop gasoline station operators,
airlines and others who rely on transparent,
functional and stable commodity markets in
which to hedge our operations for themutual
benefit of those who deliver tangible goods
to markets and from which we take delivery
of tangible goods, as well as for the benefit
of the millions of consumers we serve. Our
members rely on functional, transparent and
competitive commodity derivatives markets
as a hedging and price discovery tool. As
a coalition, we favor government policies
that promote stability and confidence in
the commodities markets; seek to prevent
fraud, manipulation and excessive specula-
tion; and preserve the interests of
bona fide
hedgers and American consumers.
Since its inception in August of 2007,
our coalition and its member organiza-
tions have delivered testimony and written
Congressional leaders in support of these
reforms. While the Dodd-Frank Act was
indeed historic legislation, it was not perfect
legislation and Title VII reforms are no
exception.
As members of the committee work to
draft legislation to reauthorize the CFTC,
we encourage you to consider inadequa-
cies and inefficiencies in the Dodd-Frank
Act and related rules and regulations, and
changes in the markets since its enactment.
All the while, the committee should be
mindful of the need for stable, transparent
and accountable futures, options and swaps
markets and the effect on the confidence of
consumers, commodity end-users,
bona fide
hedgers and other stakeholders.
Why is an active, adequately funded
and fully authorized CFTC necessary?
The CFTCwas last reauthorized through
2013 in the Food, Conservation and Energy
Act of 2008, also known as the “2008 Farm
Bill”. At the urging of our coalition and in
response to dramatic changes in the market-
place, Congress expanded CFTC authority
over the futures, options and swaps mar-
kets during its 2008 reauthorization. This
included language from the bipartisan
“Close the Enron Loophole Act” expanding
oversight to “price discovery contracts” on
previously unregulated electronic trading
platforms. The 2008 bill also strengthened
antifraud provisions and increased civil
monetary penalties for manipulation and
attempted manipulation from $500,000 to
$1 million per violation.
However, much of the deregulation
of the derivatives markets under the
Commodity Futures Modernization Act
of 2000 (Pub.L.106-554) remained unad-
dressed until the enactment of the Dodd-
Frank Wall Street Reform and Consumer
Protection Act of 2010, simply referred
to as the “Dodd-Frank Act.” Building on
the reforms included in the 2008 Farm
Bill, Congress used the Dodd-Frank Act
as a means to further address the crisis of
opacity, instability and diminished con-
fidence in the derivatives markets and to
address factors that lead to the 2007-2008
bubble in commodity prices.
Even with its imperfections, one cannot
say that Dodd-Frank was unnecessary or
that the new authorities granted to the
CFTC under the Act were inappropriate.
In the mid-1990s the over-the-counter
derivatives market had a notional value of
The Commodity Market Oversight Coalition (CMOC) recently testified before the U.S. Senate Agriculture Committee during a hearing to solicit input from
stakeholders as it drafts new legislation to reauthorize the Commodity Futures Trading Commission (CFTC). CMOC selected Eugene Guilford, Federal Policy
Counsel for the Connecticut Energy Marketers Association, to deliver its testimony. The following is the Coalition’s written testimony, as presented by Guilford.
Coalition
Testifies on
Commodities
Trading
