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Mr. PETERSON. Mr. Chairman, I yield myself such time as I might consume.
The bill before us today is bipartisan, reasonable legislation to reauthorize the CFTC. I believe this bill strikes the necessary balance to actually become law.
The Dodd-Frank Act tasked the CFTC with implementing a variety of new regulations to better protect the derivative market participants, and while the Commission has made great progress, recent cases have demonstrated there is more work that needs to be done.
H.R. 4413 better protects farmers and ranchers who use the futures markets by cementing into law several new regulatory provisions that arose out of the MF Global bankruptcy and the fraud that occurred at Peregrine Financial. The bill requires electronic confirmation of customer fund account balances held at depository institutions and prohibits firms from moving customer funds from one account to another without regulators' knowledge. The bill also examines two issues that have recently gained notoriety: high-frequency trading and funding for the CFTC.
Michael Lewis' book ``Flash Boys'' has made high-frequency trading a hot topic. But what many people don't realize is that high-frequency trading in securities markets is very different from high-frequency trading in futures and other derivatives markets. This is why the bill directs the CFTC to thoroughly examine this practice and report back to Congress their findings.
And once we have a better understanding of high-frequency trading in the markets regulated by the CFTC, we can then determine if further legislative action is necessary.
The bill also directs GAO to examine CFTC's funding needs. There has been a lot of debate in the House about the agency's funding level and how the fund should be used. And I am not sure anybody really knows. So having an independent third party, like the GAO, look at this question will better inform the debate going forward.
As the chairman said, H.R. 4413 also provides some much-needed clarity to end users, agriculture and energy producers, and others who actually use the derivatives market to hedge against risk and did not cause the financial collapse. Congress never intended for these end users to be regulated in the same manner as financial entities, and H.R. 4413 makes that clear. The bill also incorporates legislation already passed by the House, with strong bipartisan support, including end user margin exemptions, indemnification requirements, and relief for municipal utilities.
I know Members have raised concerns about two particular provisions in this bill, the cost-benefit section and the cross-border section. The cost-benefit language mirrors President Obama's Executive Order 13563, which imposed cost-benefit assessment standards on all government departments. I didn't hear any complaints about increased workload when the executive order was issued. But there are some complaints about what is in this bill.
I guess because the executive order exempted cost-benefit standards from legal challenges, some have suggested that the financial industry will use this bill's new standards to challenge CFTC rulemaking. But, frankly, I think the financial industry will continue to sue the CFTC regardless of whether we change the cost-benefit standards or not. It is the industry's nature to fight regulation. We will also be considering some amendments to address these concerns, and I look forward to this debate tonight.
Finally, I have heard some fears that this bill gives some foreign interests an automatic exemption from U.S. swap rules. So let's be clear. The CFTC has adopted these cross-border provisions. The SEC has not. And what it says in this bill is, if they don't agree, then the current regulations stay in place. So the CFTC's cross-border guidance is going to continue to be effective and remain in place, and whatever cross-border rule the SEC finalizes next week will also be effective. And what it says in this bill is that if they can ever reconcile those two things, then there could be some changes in how the cross-border rule is administered.
But given the history of these two agencies, the chances of them actually coming together on this are probably slim to none. We have been waiting 14 years for joint rules regarding portfolio margining for products under their respective jurisdictions. So their record of cooperation is not good. And as I said, right now, the CFTC has rules. They say that if somebody is doing business in the U.S., they are going to have to come under U.S. law, and that is the way it is going to stay.
So, Mr. Chairman, this bill is not perfect. But if we waited for perfection, we would be waiting forever, and we wouldn't be able to vote for anything. This bill deserves our support so we can move the process along to the Senate and hopefully see a bill signed into law before the CFTC reauthorization expires in September.
I urge my colleagues to support H.R. 4413, and I reserve the balance of my time.
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