Opening Statement of CFTC Chairman J. Christopher Giancarlo before the Agriculture Advisory Committee Meeting, Overland Park, Kansas

April 11, 2019

Good morning.  Thank you all for joining us today. 

I am pleased to welcome our new Agricultural Advisory Committee (AAC) members. 

I also want to thank Commissioner Behnam for overseeing this meeting last year last year here in Kansas.  The Committee had a lively discussion about ensuring that price discovery and risk management endure as agricultural markets evolve.  That meeting was the first CFTC advisory committee meeting in anyone’s memory that took place outside of Washington.  Today’s meeting may well be the second.

But before we get down to business, I would like to pay homage to one of my predecessors: Kalo Hineman, former CFTC Chair, native Kansan and livestock producer.   

It was Chairman Hineman, in fact, who was responsible for the creation of this Ag Advisory Committee.  He reasoned that the Commission would invariably make better policy and regulatory decisions if it increased its engagement with agricultural market participants and their representatives. 

Chairman Hineman was also a firm believer in bringing people with disparate viewpoints together to discuss important market issues and reach consensus.

It is in that spirit that we have seated here together one of the most diverse and experienced membership of any Ag Advisory Committee.

Chairman Hineman was not only a proponent of marketplace engagement, he was a champion of market innovation. 

One of his signature achievements was the re-emergence of options in agricultural markets. 

The original Commodity Exchange Act of 1936 banned options outright and for the next several decades they were not traded on U.S. exchanges.  Finally, in 1982, redesigned options were reintroduced to agricultural markets. 

During his tenure, Chairman Hineman crisscrossed the country speaking to agricultural groups explaining how this innovation could provide an affordable means of hedging extreme price risk for farmers.  He was absolutely correct in that options in agricultural markets serve that function today.  

It is useful to reflect on the legacy of Chairman Hineman as we begin our work in earnest on the Ag Advisory Committee.  That is that it’s easy to say no to an idea that may be novel or controversial.  What is hard to do is explore that new idea and develop it into something that can enhance markets and benefit market participants. 

It’s equally hard to create a regulatory environment that supports that type of continued innovation.  Let us not take the easy road, but the hard one, in order to ensure that the deepest and most liquid agricultural markets in the world remain a place where farmers, ranchers, elevators, producers and processors meet to manage risk and discover prices well into the future.

Today, we will have panels on the future of FCMs and cash market innovations, both very important and timely topics.  The CME group will also talk about the evolution of electronic trading in agricultural markets, another very timely topic.  We will close by going over new business, including subcommittee recommendations. 

As Chairman Hineman foresaw, advisory committees are important part of our work at the CFTC.  My colleagues and I take them very seriously.  They facilitate communication between the Commission and market participants.  They provide a forum for information sharing and policy recommendations on a variety of regulatory and market issues that affect the integrity and competitiveness of U.S. markets.  They enable communication between the CFTC, the agricultural community, and various agriculture-related organizations that is critical to effective market oversight and policy development.

Next week in Washington, CFTC’s Global Markets Advisory Committee sponsored by Commissioner Stump and the Energy and Environmental Markets Advisory Committee sponsored by Commissioner Berkovitz will hold public meetings.  We also recently had a great discussion at the Technology Advisory Committee meeting sponsored by Commissioner Quintenz.  Each of these meetings is important to the work of the Commission and I salute my fellow Commissioners for their sponsorship and support.

 I invite interested members of the public to engage with us through these advisory committees. 

Thank you again for being here and I look forward to today’s discussions.