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Hearing of Senate Committee on Agriculture, Nutrion and Forestry to Consider the Reauthorization of the Commodity Futures Trading Commission

Location: Washington, DC

Hearing of Senate Committee on Agriculture, Nutrion and Forestry to Consider the Reauthorization of the Commodity Futures Trading Commission


The Chairman. The committee will come to order. Good morning.

The authorization of the Commodity Futures Trading Commission, the Federal agency responsible for overseeing the
trading of commodity futures contracts, will expire on September 30, 2005. Commodity futures contracts are traded on
agricultural, energy, and metal commodities and increasingly on financial instruments, such as instrument rates and foreign
currencies. Reauthorizing the CFTC is an important task before the committee this year.

The Commodity Exchange Act is the basic law that empowers CFTC to oversee commodity futures markets. In 2000, as part of the last CFTC reauthorization, the Congress made what most experts agree were landmark reforms in the Commodity Exchange Act by passing the Commodities Futures Modernization Act. The CFMA provided legal certainty for the over-the-counter swaps market and also streamlined the regulatory process for exchange traded futures markets. The CFMA shifted the CFTC away from a prescriptive, rules-based regulatory approach to a more flexible market-oriented approach based on broad core principles.

Since the passage of the CFMA, the industry has seen tremendous growth in trading volume on both the exchange traded
futures markets and over-the-counter derivatives markets. This year, as part of the reauthorization process, the committee
will review the Commodity Exchange Act, as amended by CFMA, to determine whether additional changes in the law are needed to help CFTC continue to foster open, competitive, and financially sound commodity futures markets and to protect the market users and the public from fraud and manipulation.

Most of the folks I have met with are generally pleased with the Commodity Exchange Act, as amended by the CFMA Act of
2000 and are not seeking many, if any, changes in the legislation this year. We will take in thoughts and suggestions
on this important question from a wide array of witnesses over the course of two hearings the committee is holding on CFTC
reauthorization this week.

Today, I am pleased to welcome Commodity Futures Trading Commission Acting Chairman Sharon Brown-Hruska and a group of outstanding people from the private sector representing U.S. futures exchanges and the futures industry. I look forward to hearing your testimony.

Senator Harkin has let us know that he will be here. He is running behind, and we have a number of other Senators who have indicated their intention to attend. They will likely arrive as we proceed through the course of this hearing.

Madam Chairman, it is again a pleasure to have you with us this morning. We look forward to your comments and we will take those comments at this time. Thank you.

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