SPEECHES & TESTIMONY

Remarks of Commissioner Dawn D. Stump Before the National Cattlemen’s Beef Association Live Cattle Marketing Committee meeting at the 2019 Cattle Industry Convention

February 1, 2019

I want to thank my long-time friend Colin Woodall for the invitation to speak with NCBA’s Live Cattle Marketing Committee.  Having only recently been confirmed to my position at the Commodity Futures Trading Commission, I am extremely pleased that my first industry conference is before all of you, friends in the cattle sector.  Since I am now a Commissioner, I must also tell you that the views I express today are my own and do not represent those of the CFTC or my fellow Commissioners.  I grew up in the agricultural industry during the farm crisis of the 1980s. My hometown of Olton, Texas is almost exclusively dependent upon crop production, cattle feeding, and more recently dairy operations. I have seen first-hand the tremendous risks involved in these lines of business and know you all need access to a variety of effective risk management and price discovery tools, including the futures markets.

In 1974 the CFTC was created as an independent agency.  Prior to that time its predecessor, the Commodity Exchange Authority, was housed at the United States Department of Agriculture.  Since that time, the markets we regulate have grown to include those utilized by manufacturers managing risks associated with currency price fluctuations, utilities facing energy production disruptions, pensions hedging against retirement savings loss, and even banks who need to guard against interest rate fluctuations. While our mission has broadened over the years, one of my priorities at the agency is to ensure that we remain focused on our legacy mission in the agricultural markets. 

Speaking of legacies, and since its Super Bowl weekend, can we talk for a moment about my team, the Dallas Cowboys?  Growing up in Texas in the 1970s I recall taking great pride in our two Super Bowl wins and then while I was in college the team won three more championships.  Yes, I know the 49ers also have 5 Vince Lombardi trophies, as have the Patriots who are vying for their sixth on Sunday, and Pittsburgh outranks all with the most NFL titles.  So what makes these teams great?  I believe there are three critical factors: 1) the players take pride in their shared objective and actually set aside personal differences and work towards a common mission, 2) the game is instructed by remarkable coaches – some seasoned and some new, and 3) many, beyond those on the field, take pride in and monitor the teams’ performance thereby demanding well-functioning operations.

I would suggest that any successful marketplace also requires these components and I think you all are to be commended for recent efforts to bring various players in the cattle market together in the spirit of working towards preserving and updating risk management tools.  By taking a leadership role in engaging the market makers, the brokers, and the exchange, NCBA is a thought leader.  I am certain this was not easy, but I believe your team spirit and your concrete deliverables will yield a better outcome. Your industry has the benefits of great leaders in their fields being willing to tackle these challenges – some bring vast experience and others are innovators for the 21st Century and it is wise to embrace both.  Like your business operations that have benefitted from technological advancements, the futures markets have undergone a tremendous transformation in recent years – from open outcry to electronic trading.  Transition is difficult but hopefully the coordination you all are engaged in will yield an optimal outcome – something akin to having the experience of Bill Belichick and the enthusiasm of Sean McVay on the same team.  We need your veterans and your innovators to help us ensure the markets, albeit different from those of the past, are serving their intended purpose.  And finally, thank you for your efforts to ensure that those outside of this meeting are well served.  Like the fans of football, there are many depending on you, the players and coaches, succeeding in maintaining the integrity of the live cattle and feeder cattle futures markets.

We at the CFTC must lend support to your efforts by employing robust procedures for deterring market manipulation, acting on violations, and reporting back to stakeholders. We conduct examinations of the exchanges and clearinghouses, monitor ongoing market intelligence, conduct surveillance for market abuse, and have an extremely strong enforcement program.  I suppose in my football example we would be the field officials, though I am not sure I should compare myself to an NFL referee in our host city of New Orleans.