Heath Tarbert, who officially began his term as the chairman of the Commodity Futures Trading Commission (CFTC) on July 15, took the time to answer several questions posed by NGFA about the rulemaking agenda for the agency under his leadership.
Tarbert was nominated by President Trump and approved unanimously by the Senate Agriculture Committee before being confirmed as chairman by the Senate in June with a broad, bipartisan vote of 84-9. The NGFA authored and coordinated a letter signed by 25 national production agriculture and agribusiness groups in support of Tarbert’s confirmation, which Senate Agriculture Committee Chairman Pat Roberts, R-Kan., referenced during the committee’s confirmation hearing. NGFA followed up with another letter, also signed by 25 organizations, sent on June 3 to Senate Majority Leader Mitch McConnell, R-Ky., and Senate Minority Leader Chuck Schumer, D-N.Y., supporting Tarbert’s confirmation on the Senate floor.
Below is the list of questions posed by NGFA and Mr. Tarbert’s responses:
Q: Congratulations on your confirmation as CFTC chairman. As you begin your tenure at the commission, what are your two or three top priorities during your time there?
Tarbert: Thank you, it is an honor to serve. In terms of setting priorities, I have been careful not to follow the “ready, fire, aim” approach that is all too common in Washington. I spent the first 30 days getting to know every corner of the agency, meeting with each division and office to gather their input before we finalize our agenda. We are tracking a number of issues, but broadly speaking, I want the CFTC to be a 21st century regulator that fosters innovation, puts everyday Americans first, and strengthens the resiliency of our markets and institutions. Ultimately, the purpose of our derivatives markets is to serve the needs of our agricultural hedgers and end-users – that is where my focus will be.
Q: During your confirmation process, you met with many of the agribusiness and producer groups that comprise the CFTC’s ag constituency. How do you intend to continue learning about agricultural issues, and what do you see as the commission’s most important role relative to agriculture?
Tarbert: Making sure our agricultural sector has access to adequate tools to hedge risk and discover prices was originally – and always will be – the very cornerstone of the Commodity Exchange Act. I am proud to sponsor the Agriculture Advisory Committee at the CFTC, on which NGFA is an important voice. This is a vital sounding board for the agency and I look forward to working with your representative, Patrick Coyle of COFCO International, and the other members. In the first 30 days of my chairmanship, I also took a trip to Kansas to meet with farmers and ranchers directly, and had the opportunity to tour a grain elevator. Every person I met with told me how they actively rely on the markets we regulate. Our agricultural sector is currently facing many challenges beyond its control, which makes the CFTC’s vigilant oversight of these markets absolutely essential.
Q: The speculative position limit rule is one of the final unfinished items of business in terms of implementing the Dodd-Frank law. Do you see a path toward a final rule that addresses position limit issues in other industries but doesn’t impose a “one-size-fits-all” solution that could limit risk-management strategies on which agribusinesses and producers have relied for decades?
Tarbert: It is time to get this rule done, and to get it done right. Limiting derivatives positions that could help unscrupulous traders manipulate commodity markets is just common sense. The trick will be making sure the final rule is balanced to limit “excess speculation” as Congress intended, while also providing for the judicious use of the risk-management strategies the agricultural sector has relied on for many decades. When we begin tackling this rule later this year, we will ensure bona fide hedging is properly taken into account so our nation’s agribusinesses and their farmer customers can continue to do what they do best: feed America and the world.
Q: With regard to grain and oilseed futures contracts, NGFA has been discussing ways to make contracts more responsive to changing dynamics in the marketplace (i.e., reducing the time it takes to implement contract changes). What do you see as the commission’s role in facilitating more responsive futures contracts?
Tarbert: At the last Agriculture Advisory Committee meeting, members voted in support of a staff recommendation to form a subcommittee to examine how the commission can improve its practices with respect to requests for approval of changes to agricultural futures contracts with open interest. Such a subcommittee could help us better understand how cash market practices are incorporated into a contract’s design and how the CFTC can support that process to ensure risk-management tools evolve with the markets.
Q: Finally, has the CFTC settled on a date for the 2020 Agricultural Commodity Futures Conference?
Tarbert: Yes, it will be held April 1-2, 2020 in the Kansas City area. We are partnering again with Kansas State University’s Center for Risk Management Education and Research. The agenda is still being formed but I know that it is going to be a fantastic event. More to come!