CFTC CHAIRMAN MASSAD'S STATEMENT BEFORE CFTC AGRICULTURE ADVISORY COMMITTEE

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 
Opening Statement of Chairman Tim Massad before the CFTC Agriculture Advisory Committee Meeting
December 9, 2014

As Prepared for Delivery

Thank you all for coming. I want to welcome you to this meeting of the CFTC’s Agricultural Advisory Committee. This forum is a valuable opportunity to discuss evolving market issues relevant to our work.

Let me begin by thanking the CFTC staff involved in planning this gathering. Thank you to them, and to all of our professional staff, whose hard work on behalf of the American public is extraordinary. Thank you also to Dr. Randy Fortenbery for serving as Committee Chair. He flew all the way from Lewiston, Idaho to get here, and I appreciate his extensive knowledge and ability to keep us running on time. I’d also like to thank our guest, Secretary Vilsack, for being generous with his time. His coming here today demonstrates the importance of the Department and the CFTC working together. We’ll do more of an introduction before he speaks.

Much of what we do here at the CFTC can seem removed from everyday life. Most Americans do not participate directly in the markets we oversee. But as you know, the agency’s origins are in agriculture, an industry that is basic and important to the lives of all American families. Futures on agricultural commodities have been traded in the US since the 19th century and have been regulated at the federal level since the 1920s. Today, agricultural derivatives are now only one piece of the markets we oversee, but they are fundamentally important. The ability of the Ag sector to hedge commercial exposures is critical to having a successful agricultural industry, and to putting food on the table for all of us. The CFTC’s job in overseeing these markets should not only help participants be able to hedge effectively. It should help these markets thrive, and in turn help the agricultural economy thrive. And I know strengthening the ag economy, and fostering investment and new opportunities in the ag economy are important to all of you and to Secretary Vilsack.

Our ability to successfully oversee these markets requires listening to market participants. It is helpful to hear your thoughts on what we are, or should be, doing. And that is why this Advisory Committee is so important. I know travelling to Washington two weeks before the holidays—which is a very busy time—is not always easy. But I know I speak for all the Commissioners in saying that your presence and your participation on this Committee are much appreciated.

I joined the Commission about six months ago, as did Commissioners Bowen and Giancarlo. The three of us have benefitted from Commissioner Wetjen’s experience as we got up to speed. I am pleased that all three of my fellow commissioners are here today.

We have all been listening and learning from market participants like you. In the last six months, we have focused on moving forward important reforms, to promote greater transparency and market integrity. But we’ve also made it a priority to address areas where our rules may not be working as well as they should. Our goal is not to create unnecessary burdens on commercial end users but to build a reliable, orderly framework for oversight in which vibrant markets can thrive.

In the last few months, we have taken a number of steps to that end.

I know some of our recent actions have been especially important to the agricultural industry, such as our proposal on “residual interest,” and our changes to certain recordkeeping requirements. We’ve addressed contracts with volumetric optionality, making sure publicly-owned utilities can access the energy swaps markets, and making sure end users can use their treasury affiliates for swap transactions and still benefit from the Congressional end user exemptions.

Today, we will discuss a few topics important to the agricultural markets that we have decided upon in consultation with you. We’ll first discuss how the current agricultural economy is impacting CFTC-regulated markets and then discuss how to best calculate deliverable supply for commodities, a topic that is critically important to establishing position limits. We also will spend a little time discussing what the agency has been doing lately, and what we should consider having this Agriculture Advisory Committee discuss in the future.

Thank you again for being here and contributing your ideas. I look forward to a productive discussion.