ATA Supports CMOC’s Call for Legislative Reform of Derivatives Markets
ARLINGTON, Va., May 5 /PRNewswire-USNewswire/ — The American Trucking Associations (ATA) strongly supports the Commodity Markets Oversight Coalition’s (CMOC) call for legislative reform of derivatives markets to strengthen oversight, transparency and stability, and limit the role of financial speculation in regulated, over-the-counter and off-shore markets.
Yesterday the coalition sent a letter to Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) urging the Senators to “enact responsible legislation that will protect legitimate commercial hedgers and consumers from excessive speculation and systemic risk, not create new loopholes for financial interests.” The coalition also voiced support for the “Wall Street Transparency and Accountability Act,” which was reported out of the Senate Agriculture Committee. CMOC applauded Senators Blanche Lincoln (D-Ark.) and Chris Dodd (D-Conn.) for work on the important derivatives reforms that will be considered on the Senate floor as part of a broader financial reform package.
In the letter, CMOC members said they are “especially supportive of the narrow exemption from mandatory clearing requirements for legitimate commercial end-users that use derivatives to manage risks associated with their businesses.” CMOC told Sens. Reid and McConnell that “financial entities, including hedge funds, investment banks and insurance companies, have begun to use commodity derivative contracts to hedge the risk of a declining dollar or rising interest rates. While these financial entities have a legitimate interest in hedging their risk, they are not producers, distributors or end-users of physical commodities.”
“Excessive speculation has caused dramatic increases in the price of crude oil, which harms end users, like America’s trucking industry,” said ATA Vice President Rich Moskowitz. “The Senate must resist Wall Street’s lobbying to broaden the end user exemption to entities that neither produce nor consume the physical commodities upon which the derivative contracts are based.”
CMOC opposes any expansion of exemptions in the derivatives title in such a way as to create new loopholes for financial market interests. The coalition also opposes:
- Expanding the end-user clearing exemption to financial entities or anyone other than legitimate commercial end-users utilizing derivatives markets to hedge commercial risk.
- Eliminating the category of “Major Swap Participant” and replacing it with a system of exemptions that would allow hedge funds and other financial players to exempt large portions of their derivatives portfolios.
- Lowering capital/margin requirements for financial players, including swap dealers, major swap participants and other financial entities.
- Eliminating “too-big-to-fail” prohibitions with respect to federal assistance for swap dealers and other financial participants.
- New powers allowing the Treasury Secretary to exempt entire categories of swaps from regulation, which would undermine the authority of independent regulators like the Commodity Futures Trading Commission and the Securities and Exchange Commission.
CMOC is an alliance of consumer advocates and commodity producers, marketers and end-users that rely on derivatives to hedge commodity price fluctuations and to insulate their businesses and consumers from risk. For three years the coalitions has called for legislative reform of derivatives markets to strengthen oversight, transparency and stability, address regulatory inadequacies in the existing derivatives markets, and limit the role of financial speculation in regulated, over-the-counter and off-shore markets.
CMOC’s letter to Sens. Reid and McConnell can be found at:
The American Trucking Associations (www.truckline.com) is the largest national trade association for the trucking industry. Through a federation of other trucking groups, industry-related conferences, and its 50 affiliated state trucking associations, ATA represents more than 37,000 members covering every type of motor carrier in the United States. Follow ATA on Twitter @TruckingMatters (www.twitter.com/truckingmatters), or become a fan on Facebook (http://tinyurl.com/y4qwp6h).
SOURCE American Trucking Associations