Giancarlo to sponsor CFTC ag committee, notes EU rule
October 18, 2018
Commodity Futures Trading Commission Chairman Christopher Giancarlo announced Wednesday in Chicago that he will sponsor the CFTC's Agriculture Advisory Committee.
In a speech to the FIA Expo, Giancarlo said, "I will be taking on sponsorship of the Agriculture Advisory Committee and will be reaching out soon to members.
"The Ag Advisory Committee met last year in Kansas City under Commissioner [Rostin] Behnam's interim sponsorship, for which we are grateful. I look forward to sponsoring another Ag Advisory Committee meeting in Kansas in conjunction with the CFTC's 2nd Ag Commodity Futures Conference in early April 2019."
In a wide ranging speech, Giancarlo criticized European Union derivatives regulations. Giancarlo noted that under CFTC rules, letters of credit "have been used for generations in American agriculture" but would not be permitted as an initial margin payment under European rules. "Prohibiting the use of letters of credit would cause American FCMs (futures commission merchants) to have to post tens of billions of dollars in additional clearinghouse margin. It would be devastating to the FCM industry and to American agriculture."
He said, "The CFTC will not allow U.S. market participants to be put in the completely untenable position of having to choose between violating domestic laws and regulations or violating foreign laws and regulations. It is completely irresponsible for European regulators to seek to put U.S. market participants in this position."
Giancarlo continued, "If a satisfactory resolution of this situation cannot be found, the CFTC will have no choice but to consider a range of readily available steps to protect U.S. markets and market participants. Be assured that the CFTC has a range of options, short of further legislative action, that it can execute unilaterally in response to an extraterritorial overreach by a non-U.S. authority. They include revisiting the CFTC's Part 30 regime to withdraw existing exemptions in particular overseas jurisdictions. They also include delaying or withholding CFTC staff relief for non-U.S. entities from such jurisdictions. Other effective options are available in conjunction with fellow U.S. regulatory agencies."