CFTC creates subcommittee to examine futures contract amendment procedures; NGFA to submit nominees

By Todd Kemp, Senior Vice President, Treasurer

On Oct. 1, Commodity Futures Trading Commission (CFTC) chairman Heath Tarbert announced that the agency is accepting nominations for a subcommittee of its Agricultural Advisory Committee (AAC) to evaluate its policy on  implementing amendments to enumerated agricultural futures contracts with open interest, including:

• How changes to terms or conditions of futures contracts affect the value of existing positions;
• How the exchanges should assess market conditions in deciding, announcing or implementing amendments; and
• The scheduling of effective dates for futures contract amendments. 

Tarbert, who sponsors the AAC, is seeking nominations by Oct. 29 for membership on the subcommittee through a formal request in the Federal Register.

The CFTC initiative dovetails nicely with recent discussions between the NGFA’s Risk Management Committee and the CME Group about how to make futures contracts more responsive to market conditions. There has been occasional frustration among users about how long it takes to make changes to grain and oilseed futures contracts, and this CFTC effort should help provide clarity and a potential roadmap for more expeditious action when needed. Representatives of both CME and NGFA are expected to be involved.

Currently, Risk Management Committee member Patrick Coyle, COFCO International Grains US LLC, serves as NGFA’s representative to the AAC; and committee member Steve Strong, Bunge North America Inc., serves on the AAC as the representative of the North American Export Grain Association (NAEGA). In addition, Chris Betz, Michigan Agricultural Commodities, is the Michigan Agribusiness Association’s representative on the AAC.