The U.S. House of Representatives adopted a five-year reauthorization of the Commodity Futures Trading Commission (CFTC), H.R. 2289 this week. The legislation would reauthorize the CFTC through the year 2019 and provides exemptions to non-financial companies from regulations on derivatives issued by the agency under the 2010 Dodd-Frank financial regulatory overhaul (PL 111-203).

The American Soybean Association (ASA) signed a letter with other agricultural stakeholders earlier this week, urging members of the House of Representatives to vote yes on H.R. 2289.

The legislation contains a number of important provisions for agricultural and agribusiness hedgers who use futures and swaps to manage their business and production risks. Some, but certainly not all, of the bill’s important provisions include:

• Sections 101-103 – Codify important customer protections to help prevent another MF Global situation.
• Section 104 – Provides a permanent solution to the residual interest problem that would have put more customer funds at risk – and potentially driven farmers, ranchers and small hedgers out of futures markets – by forcing pre-margining of their hedge accounts.
• Section 308 – Relief from burdensome and technologically infeasible recordkeeping requirements in commodity markets.
• Section 310 – Requires the CFTC to conduct a study and issue a rule before reducing the de minimis threshold for swap dealer registration in order to make sure that doing so would not harm market liquidity and end-user access to markets.
• Section 313 – Confirms the intent of Dodd-Frank that anticipatory hedging is considered bona fide hedging activity.

The Senate has not yet acted on the CFTC reauthorization.