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Ranking Member Boozman's Opening Statement at Oversight Hearing of the CFTC

WASHINGTON—U.S. Senator John Boozman (R-AR), ranking member of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, released the following opening remarks, as prepared, at an oversight hearing of the Commodity Futures Trading Commission (CFTC).

Thank you, Chairwoman Stabenow, for calling today’s hearing. I would also like to welcome Chairman Russ Benham back to the committee.

The CFTC is vital to our agriculture stakeholders who have used derivative markets for price discovery and risk management for over 150 years. The information from these markets underpins many of the risk management tools administered through USDA’s Federal Crop Insurance Program. Futures and options contracts have been effective because the CFTC implements comprehensive rules, diligently polices the cash and derivative commodity markets, and works to protect market participants.

Through a pragmatic, principles-based approach, the CFTC has built and implemented constructive, workable regulatory frameworks for markets to function efficiently. One needs to look no further than to the futures market, which has proven to be the gold-standard and one of the more resilient markets in times of market stress, largely due to the CFTC’s regulatory framework. We witnessed this during the pandemic—producers hedging their risk weathered market volatility and emerged relatively unscathed. The CFTC was the cop on the beat, monitoring the futures markets to ensure that even in times of unprecedented disruption, end users’ positions were safe.

Because of the important role derivative markets play in price discovery and liquidity for agricultural risk management, it is essential this committee exercise its oversight authority and ensure the CFTC is continuing to implement a balanced regulatory regime and reasonable enforcement approach that protects market participants against fraud and manipulation. This legacy must continue.

Regarding regulation, the CFTC must remain committed to its principle-based regulatory framework. Participants deserve clear rules and transparency in these marketplaces.

The CFTC, like any regulatory agency, needs to deliver guidance in a clear and timely manner. Anything short of that creates a climate of uncertainty and additional risk for end-users.

That is why I am pleased to see Chairman Benham recently committed to considering codifying certain no-action relief. I encourage the agency to do so soon where no-action letters have been repeatedly extended.

Again, timeliness is key here. If extension of relief is needed, it should be granted sooner rather than later.

When properly enacted, this framework, along with trust between regulators and participants, are leading contributors to a successful regulatory atmosphere.

In order to maintain that trust, any data sharing between agencies must be limited and done with proper protections in place.

That is precisely why Congress explicitly granted the CFTC sole authority to publish specific and anonymized market participant data in Section 8 of the Commodity Exchange Act. The only exceptions are for limited legal actions taken by the government.

No other agency has the expertise to publish this sensitive and proprietary material in a manner that safeguards registrants’ data and protect their confidentiality.

If this important responsibility is not handled properly, it will cause registrants to lose trust and in turn damage a vibrant market, risk eroding liquidity, and undermine price discovery.

I also believe the CFTC deserves adequate funding in order to effectively regulate, and I am committed to that goal. However, increased funding must not come from user fees.

User fees are passed down to agriculture end-users, and may cause market participants to exit markets, which reduces the liquidity necessary for farmers to hedge against pricing risk. Given the volatility of commodity markets, Congress should not impose another burden on agriculture’s ability to manage risk.

Finally, the CFTC has a role in regulating digital commodity markets, and recent market events reinforce the need for greater federal oversight of the industry. This committee has studied this emerging sector and the recent events which have caused consumers to question the safety of digital commodity markets. I am confident the CFTC is suitable for an expanded role in regulating the digital commodity spot market. I am committed to working with Chairwoman Stabenow and our colleagues to create the safeguards the market needs.

I look forward to Chairman Benham’s testimony about how our derivatives and commodity markets are functioning, the work the agency is undertaking and ideas on how to improve the agency and the marketplace in these challenging times.