Date: 1992-10-02
Speaker: DE LA GARZA (democrat)
Chamber: H

Mr. Speaker. this legislation is a reauthorization of the Commodity Futures Trading Commission. It reauthorizes them for 2 years. It makes some positive changes in the operation. It addresses some of the concerns regarding the trading of futures. and basically this morning we had the last meeting of the conferees on the House side. All of them. are in agreement. The minority Is in agreement. and I suggest that this is a good conference report for us to adopt at this time. Mr. Speaker. I am pleased to bring to the floor the conference report to accompany H.R. 707. the Futures Trading Practices Act of More than 3 years ago public confidence In the Integrity of the futures trading Industry was severely shaken as the result of a highly publicized FBI sting operation at the Chicago exchanges. Although the sting operation involved a relatively small number of traders. these abuses tainted the entire industry and brought Into question the effectiveness of the Federal oversight of the Commodity Futures Trading Commission [CFTC]. In the aftermath of that Investigation. the House Agriculture Committee conducted Its own Indepth investigation of the future trading industry. Following that Investigation. the House Agriculture Subcommittee on Conservation. Credit and Rural Development held hearings and developed legislation to address the various shortcomings in current futures trading regulation. This legislation was further refined by the full committee on Agriculture and was approved unanimously4200--by the House of Representatives. Unfortunately. similar legislation did not reach the Senate floor during the 101 st Congress. We renewed the drive for new regulatory reform legislation early in the 102d Congress. The House. by a vote of 39527. again gave Its approval to the committees package In March of last year. And the Senate passed its own version by a substantial margin. Our colleagues in the House and the Senate have given us a strong. clear mandate on the need for regulatory reform. Mr. Speaker. the thrust of both bills Is to strengthen the regulatory framework In order to better deter and especially detect fraud and abuse that may be perpetrated on the floors of futures markets. However. each Chamber took a fundamentally different approach to these Issues. and since November of last year the conferees have been trying to hammer out acceptable compromises. Today I am pleased to present to our colleagues the product of our worka strong bill that will begin to bring futures trading regulation into the modem age. Let there be no doubt about the need for this legislation. While the futures exchanges are to be commended for generally Improving their own Internal oversight against fraudulent trading practices. Congress cannot rely on their good word alone. While the CFTC Itself has taken important steps to help ensure that trading on exchanges Is fair and orderly. the agency can take Its mandate only so far. This conference report makes amendments to the Commodity Exchange Act that will ensure that the CFTC has the authority and the mandate to more effectively regulate the futures market and better protect Investors and the integrity of the futures markets. We have tried to Incorporate the best and most workable provisons In the House and Senatepassed bills. The agreement gives CFTC the powers to effectively crack down on trading fraud and forces exchanges to Improve their audittrail standards. It also Imposes other selfregulation requirements on the futures markets themselves. To ensure that the exchanges of sufficient Incentives to guarantee that audit trail Improvements are made. the bill provides that In any trading pit which falls to meet the enhanced requirements. the privilege of dual trading shall not be available to its brokers. Mr. Speaker. the Senate version of this bill Included provisions relating to regulatory Jurisdiction over complex financial Instruments. No similar provisions were included In the House bill and. as a result. the House conferees were called upon to develop positions in this areawithout the benefit of the normal committee process. I want to commend our Members for the approach they took In addressing Issues so knportant to the competitiveness--as well as the safety and soundnessof our Nations financial system. The provisions adopted In title V of the bill will help secure the competitive position of U.S. financial Institutions while maintaining sufficient safeguards to protect against systemic risk and fraud. The conferees agreed to the Senate provision regarding Federal oversight of margin levels on stock Index futures. This provision gives the Board of Governors of the Federal Reserve System authority to review the stock index futures margin levels sat by exchanges and order chanGes f it decides those levels are inappropriate. The provision aso permits the Fed to delegate this new authority to the CFTC. Mr. Speaker. amcng the most difficult and complex Issuos that faced the conferees Involved the regulatory treatment of certain types of dsdvate financial trmnsactions. such as swaps and hybrid finaricl transactions. The conferees settled on an interim regulatory strategy that essentially gives the CFTC the authority to exempt these types of transactions from regulation as long as they are consistent with the public interest. However. this is an area that the House Agriculture Committee will continue to study and will likely want to revisit In the next Congress. To give us a hard start In that area. the conferees have directed that the CFTCIn corporation with the Federal Reserve Board and the Securities and Exchange Commissionconduct a comprehensive study of the markets for swap contracts and other offexchange derivative financial products. It is our hope that such a study will fill In some of the Information gaps we now have In the nature of these complex products. Mr. Speaker. this conference report carefully. balances the need to keep our Nations futures markets competitive In the global market while ensuring that the public Interest is served and protected. The administration and particulariy the Commodity Futures Trading Commission have cooperated with us In the development of this legislative package. even though we have had our differences along the way. I want to extend my personal appreciation to CFTC Chairman Wendy Gramm. the other Commissioners and their staff for their assistance. I want to also thank my House and Senate colleagues who worked long and hard on this legislation. I particularly want to highlight the work and leadership exhibited by the gentieman from Oklahoma . who chairs the Subcommittee on Conservation. Credit and Rural Development. The expertise he has developed In this Issue area and the wisdom he has shown In helping us finalize the conference report are greatly appreciated. I am also grateful for the cooperation and contuibution from our distinguished colleagues from the Committees on Energy and Commerce. and the Committee on Banking. Finance and Urban Affairs. Mr. Speaker. the popular perception of futures trading in Chicago is that of highstakes speculators. The reality. though. is futures markets provide a useful price risk management tool for literally millions of people. particularly within our Nations agriculturebased industries. These people are individual farmers and ranchers. grain elevators operators and feedlots owners. fanerowned cooperatives. grain companies. and other agribusiness firms. This conference report strengthens the authority of the Commodity Futures Trading Commission so It can effectively protect the American public and ensure the integrity of the futures markets. I urge adoption of the conference report. Mr. Speaker. I move the previous question on the conference report.