Opening Statements

Remarks as prepared for delivery:

Good Afternoon. Thank you for joining us for our second meeting of the Commodity Exchanges, Energy, and Credit Subcommittee of the House Committee on Agriculture.

Yesterday, we kicked off the work of this new subcommittee by hearing from several representatives from the community of derivatives end users on their thoughts regarding the CFTC reauthorization process this committee will be undertaking in the days ahead.

Today, we will continue that examination with a focus on perspectives from the futures and swaps marketplace.  We are fortunate to be joined by a panel of distinguished witnesses who are here to share their perspectives as derivatives market participants. The industry is well-represented today by two of the largest derivatives exchanges, a key self-regulatory organization, and two important industry trade associations. We hope to come away with a greater understanding of the challenges that each of them face.

Derivatives markets have changed in the five years since the passage of Dodd-Frank, both because of and in response to the new rules written by the Commission.  Many of the witnesses before us today have seen daunting changes in regulatory burdens and business practices.  Perhaps none more so than Mr. Bernardo, who testified in front of our committee a little over four years ago, in February of 2011.

At that time, the rules governing his soon-to-be SEF had not yet been written.  They wouldn’t be proposed until June of 2011, and they were not finalized until August of 2013.  In the 18 months since the rules were finalized, the CFTC still has not finalized the registration of a single SEF.  Mr. Bernardo has seen the entire process of creating the SEF rule structure rise and set, and yet he is still facing considerable uncertainty about the business he operates.

Likewise, the further into implementation we get, the more cross-border jurisdictional issues that seem to arise.  Today, we will hear testimony from five witnesses, four of who will mention the confusion and difficulty they are facing following competing, often conflicting, rules for these international markets.

The continuing uncertainty and ambiguity in the rules, compounded by the sweeping nature of these regulatory changes, pose challenges for the witnesses before us today and their customers – the end-users who rely on access to derivatives markets.

My goal throughout this process is to ensure that we have a healthy balance between market integrity and market access.  Derivative markets exist for those who have risks to hedge.  Hedgers need markets that are safe, but they also need markets with affordable execution, available counterparties, and consistent liquidity.  This subcommittee will continue to look for that healthy balance.

Thank you to the witnesses for appearing before us today. We look forward to hearing your perspectives on these issues and appreciate the time and effort you’ve put forward to be here.

With that, I’ll recognize our Ranking Member, Mr. Scott, for any remarks he’d like to make.