"This legislation is critically important to farmers and ranchers, grain elevators and other agricultural hedgers," said
The Risk Hedging Protection Act [S. 2601] would alleviate concerns raised by a broad range of futures market participants - including farmers and ranchers, grain merchants and futures brokers - regarding the so-called "residual interest" provision in a rule finalized last fall by the
Under the residual interest provision, futures customers likely would be required to "pre-margin" their hedge accounts, potentially resulting in a doubling of the amount of funds sent to their FCMs, due to a drastically shorter time period during which margin funds must be received by the FCM - a reduction from the current three days to the morning of the day following a futures trade (known as T+1). The Roberts-Heitkamp bill would provide additional time until
In Congressional testimony, the NGFA has estimated that a typical country elevator, if required to pre-margin, could be required to submit twice as much margin money to maintain their futures accounts, thereby putting twice as much money at risk in another FCM insolvency.
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