On Tuesday,?U.S. Sen. Saxby Chambliss (R-Ga)., introduced the?End-User Protection Act. This comes in an effort for the??U.S. Commodity Futures Trading Commission (CFTC) ?to define?how to protect end-users, such as individuals and businesses, that utilize futures markets to hedge risks, reported AP.
In addition, the bill also addresses some of the consequences from Dodd-Frank regarding?end-users’ exemptions from the Act.?
Chambliss said of the bill, “I have seen many instances of late where the commission, in its zeal to finalize rules, has not given due consideration to those farmers, ranchers and end-users which Dodd-Frank sought to protect. Time and again, end-users brought their concerns to the commission and the end-user exemptions I helped to author were not honored. This bill ensures the CFTC will apply Dodd-Frank as Congress intended – not as they see fit.?
The bill includes the following,according to AP:
- Clarifies that non-financial end-users are exempt from the margin requirements applied by Dodd-Frank to many derivatives contracts.
- Provides a new definition for a ?financial entity? and further clarifies the intent of Congress for how inter-affiliate trades should be treated.
- Exempts from the rule those persons that would not ordinarily have to maintain communications records with the CFTC and allow members of a registered entity that is not registered or required to be registered with the commission in any capacity to maintain their own written records of each transaction in a commodity interest and any related cash or forward transactions.
- Repairs the long-standing ?de minimis? exception. The CFTC addressed the ?de minimis? issue through rulemaking and changed a longstanding practice of the ?de minimis? exception.?Though they attempted to address the need for a ?de minimis? exception, they also set into motion an automatic drop in the level by over 60% several years in advance.?
- Instructs the commission to perform true analysis of the cost and benefits of new rulemakings. Throughout the Dodd-Frank rulemaking process, industry participants have relayed concerns about the cost-benefit analyses performed by the CFTC.?Commissioners as well have vocalized their concerns that the model the CFTC has used is deficient in several areas. This bill amends the Commodities Exchange Act (CEA) ?to ensure that the CFTC is required to provide thoroughly developed and reasonable estimates of the costs and benefits of its rulemakings.