It is the NIBA's viewpoint that regulation and oversight of trade options is absolutely necessary. The regulation and oversight of trade options used by the grain trade industry should be no less stringent than the regulation and oversight of futures and options used by Introducing Brokers, Commodity Trading Advisors and Futures Commission Merchants. The NIBA believes that regulation of trade options is vitally important. Trade options are simply a hybrid tool using futures and options. If made available, they will be used by a naive and accepting public through a trusted local provider.
Producers often have blind faith in their local elevators.
Past experience has proven that this trust can be misplaced. Through a lack of regulation and oversight, the farmers who entered HTAs were not informed of the risks they were taking. In the futures industry, under the regulations that we are required to follow, our customers must complete extensive paperwork to open an account. We must disclose the risks of trading to our customers. By law, we have to provide a balanced presentation of the risks and rewards of a transaction.