Following the collapses of
The residual interest rule from the CFTC will eventually require futures customers to fully cover the margin of their futures contracts by the morning of the day following a trade. In order to comply with the new rule, brokers would be more likely to demand drastically increased initial payments from farmers, hurting the availability of funds that support the agriculture industry.
The end result may drive some farmers out of futures markets due to increased costs or restrict capital that could otherwise be used to hire, make capital improvements, and make other critical investments.
The Senators' bill, the Risk Hedging Protection Act, simply provides futures customers with an additional day to get their needed payments to brokers to meet the margin call, while still protecting customers and the financial markets.
"The reckless behavior by firms like MF Global put the livelihoods of hardworking North Dakotans at risk, and the CFTC is right to make changes that help identify bad practices. However, the rules need to be workable, so farmers can continue to make investments in grain, corn, wheat, and other products in the futures markets, and get their high-quality products to customers. This bipartisan bill is a commonsense fix to strike that right balance," said Heitkamp.
For text of the bill go here.http://www.roberts.senate.gov/public/?a=Files.Serve&File_id=07143f06-09f5-4973-88ea-852f3898b275 For a one pager on the bill go here.http://www.roberts.senate.gov/public/?a=Files.Serve&File_id=4bb236e6-4d54-4908-8c4f-57899d26f05ehttp://www.roberts.senate.gov/public/?a=Files.Serve&File_id=4bb236e6-4d54-4908-8c4f-57899d26f05e
The bill mirrors legislation already approved by the
Senator Heitkamp is a member of the
Senator Roberts, a former Ranking Member of the
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