Opening Statement of Commissioner Mark Wetjen Before the Second Meeting of the CFTC’s Energy and Environmental Markets Advisory Committee (Washington, DC)

July 29, 2015

I commend Commissioner Giancarlo for holding this important Energy and Environmental Markets Advisory Committee meeting and I look forward to today’s discussion.

Last week I had the opportunity to meet farmers, market intermediaries and other ag-related users of derivatives in Iowa, Illinois, and Minnesota.  I was further sensitized to the continued usefulness of these markets for hedging purposes among that community, as well as the continually changing market dynamics that demand flexible and always-changing hedging responses.  The vagaries and risks in the agricultural markets are many and unpredictable, and the position-limits framework must account for this if it’s going to work.

When the CFTC’s position-limits rule was re-proposed, I specifically indicated my interest in exploring more practical solutions for making policy decisions about non-enumerated hedges entered into by end-users, like those we heard from last week.

I remain open to hearing about more flexible ways to approach the granting of non-enumerated bona fide hedges, especially in light of the Commission’s resource constraints.  It would seem that leveraging the resources and expertise of the exchanges to assist in analyzing those transactions could be quite useful, and I look forward to hearing from the market participants about their views.  In order for a framework like this to work, the Commission needs to set the appropriate parameters around what could be acceptably viewed as a bona fide hedge.

Last Updated: July 29, 2015