Good morning. Thank you Commissioner Dunn for chairing today’s meeting of the Agricultural Advisory Committee and for your leadership. I also join Commissioner Dunn in thanking my fellow Commissioners and the expert panelists and staff that have joined us this morning.
I note the importance of the timing of today’s meeting. This is the first public meeting of the Commission since the President signed the historic Dodd-Frank Wall Street Reform and Consumer Protection Act. That legislation will, for the first time, bring comprehensive regulation to the over-the-counter derivatives marketplace. Specifically, the Dodd-Frank Act will subject all derivatives dealers to comprehensive oversight and require standardized derivatives to be traded on transparent trading platforms and be centrally cleared. This will greatly reduce risk in our economy and will benefit the American public.
As the CFTC works to implement the Dodd-Frank bill, the Agricultural Advisory Committee’s views and recommendations will be important. In addition to asking questions today about wheat convergence and ICE’s cotton contract, I am particularly interested in hearing the views of this committee regarding how rules should be written for agricultural swaps. Don Heitman from our staff will give an overview of how Dodd-Frank specifically impacts agricultural commodities, and I encourage panelists to share their thoughts.
I also am interested in hearing the views of this committee on the ICE Futures U.S. Cotton No. 2 contract. It is important that exchanges periodically review contract specifications and make sure that they are keeping up with changing markets. For example, it is important that exchanges review delivery points so that they best reflect the changing characteristics of the physical marketplace. I look forward to hearing the results of such a review by ICE and recommendations from our panelists.
I also look forward to hearing the panelists’ views on convergence in the wheat markets. Recently, the Chicago Board of Trade implemented a change in storage rates on their Soft Red Winter Wheat contract to address the lack of convergence in the CBOT wheat market. This lack of convergence has significant implications for hedgers and goes to the core of our markets. Without convergence, hedgers lose confidence in the marketplace. I am interested in hearing about the early results of the CBOT’s experience with the variable storage rate.
In addition, we will be hearing from the Kansas City Board of Trade, which is now confronting a similar problem with convergence in their Hard Red Winter Wheat contract. I recently went to Kansas City and met with a cross-section of farmers and grain elevator officers. As I said in those meetings, it is essential that the exchange address the problems in this market, which appear to be related to the contract. I am interested in hearing about any progress the exchange has made in addressing this issue.
Lastly, I look forward to our third panel and their discussion of livestock price reporting.
Again, I’d like to thank Commissioner Dunn and my other fellow Commissioners as well as the Agricultural Advisory Committee members for participating in today’s meeting. I look forward to learning from the presenters and having a productive dialogue.
