Commodity Markets Transparnecy And Accountability Act Of 2008

Floor Speech

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Mr. MORAN of Kansas. Mr. Speaker, I rise today to express a serious concern with H.R. 6604. With the demand of rising energy costs, we're bringing to the floor a bill that will, in my opinion, do little to bring down the price of energy. In fact, certain provisions of this bill may lead to an increase in prices and may reduce market transparency and increase market volatility.

I want to be clear. I favor changes at the CFTC and believe we can change the act to improve market transparency, oversight, and enforcement activities. I have been working with CFTC and market participants to create a bill that will enhance those functions while giving regulators the necessary tools to prevent market manipulation and fraud. This bill, however, was put together, in my opinion, too quickly and goes too far.

When changing the Commodity Exchange Act, Congress must proceed in a deliberate manner and take into account the advice of industry users, the CFTC, the President's Working Group, and other experts. This bill should be referred back to the Committee on Agriculture so that we can refine provisions to actually enhance transparency and not exclude legitimate market participants.

One of the problems of this legislation is that it will likely reduce market transparency. This is because of certain provisions like the one dealing with the Foreign Board of Trade that seek direct access to U.S. and provisions that require reporting for certain over-the-counter and exempt commercial markets. That will push traders to foreign markets. Rather than giving the CFTC a better picture of the market, it will reduce the picture that the CFTC has and potentially increase fraud and manipulation. It restricts the CFTC's ability to see the market.

Second, this bill attempts to define a ``bona fide hedging transaction.'' In its current form, section 8 will exclude legitimate commercial market participants from properly hedging risk. This will cause an immediate disruption in the markets as the legitimate market participants are forced out. It will reduce market liquidity and increase price volatility.

I am also concerned with provisions in this bill that require routine reporting and potential use of position limits in over-the-counter transactions that are fungible. ``Fungible'' is not defined and suggests that a significant amount of OTC transactions could be implicated by this section. I am especially concerned about the authority given in section 14 to CFTC to impose position limits on OTC trades.

Finally, Mr. Speaker, not only should this bill be returned to committee because of these provisions so that we can take more time and develop a better product, I also recognize that this bill needs to address the root problem of high energy prices, and this will not do so.

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