Washington — The US Senate late Tuesday confirmed two remaining commissioners to Commodity Futures Trading Commission, potentially enabling action on a rule setting federal position limits in commodities futures and swap markets.
Joining the commission will be a Democrat, Dan Berkovitz, a former general counsel at the CFTC and Senate staff member, and a Republican, Dawn DeBerry Stump, a former futures industry lobbyist and Senate staffer whose confirmation idled in the Senate for a year.
Pending at the CFTC is a long-stalled proposed rule setting federal position limits in 25 physical commodity futures and swaps markets. It has potential to affect the level of participation in energy derivatives markets as well as impacting hedging strategies.
CFTC Chairman Christopher Giancarlo has held off on the contentious matter as well as the rule setting capital requirements for swap dealers and major swap participants until a full complement of commissioners was in place. Politics surrounding the position limits rule shifted after the presidential election, with more industry stakeholders taking the stance that a need for federal limits had not been adequately demonstrated.
NEW PROPOSAL
Giancarlo, during Senate testimony in July, said he hopes to put forward a new proposal on position limits by the end of 2018 or early in 2019. He has said comments on a version proposed at the end of the Obama administration made clear the CFTC had not yet gotten it right. In particular, he worried the measure could constrain hedging practices used by agriculture producers, manufacturers and the energy industry.
Berkovitz, at his Senate confirmation hearing, said "it is essential" that the CFTC complete the rulemaking in a timely manner. He promised to work with colleagues to set limits "to ensure that speculative positions do not have any undue impact or effect on commodity prices." His background includes work as a senior staff lawyer for the Senate Permanent Subcommittee on Investigations, where he played a key role in a June 2006 staff report that found speculation played a part in rising oil prices.
HEDGING STRATEGIES
Stump, at her confirmation hearing in July 2017, also promised to work to complete a position limits rule and said her priority was to ensure that the strategies the agricultural sector uses for hedging are not blocked in the future by "unworkable bona fide hedging restrictions."
Stump has served as president of Stump Strategic, a consulting firm she founded, and previously worked on an advisory board to the Futures Industry Association and as a vice president of NYSE Euronext. As a Senate aide, she represented the Senate Agriculture Committee in crafting derivatives portions of the Dodd-Frank Act.
The Natural Gas Supply Association, in a statement Wednesday, said it was pleased the CFTC now has five commissioners. "With the added insight of the two new commissioners, the commission can focus on its continued implementation of Dodd-Frank," said NGSA President Dena Wiggins. "We hope their contribution will facilitate a robust and healthy natural gas market, which fosters the investment essential to US economic growth."
