[Senate Hearing 116-176]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 116-176

                THE STATE OF THE DERIVATIVES MARKET AND
                 PERSPECTIVES FOR CFTC REAUTHORIZATION

=======================================================================

                                 HEARING

                               BEFORE THE

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 25, 2019

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry


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       Available via the World Wide Web: http://www.govinfo.gov/
           
           
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
38-313 PDF                 WASHINGTON : 2020                     
          
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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY


                     PAT ROBERTS, Kansas, Chairman
MITCH McCONNELL, Kentucky            DEBBIE STABENOW, Michigan
JOHN BOOZMAN, Arkansas               PATRICK J. LEAHY, Vermont
JOHN HOEVEN, North Dakota            SHERROD BROWN, Ohio
JONI ERNST, Iowa                     AMY KLOBUCHAR, Minnesota
CINDY HYDE-SMITH, Mississippi        MICHAEL BENNET, Colorado
MIKE BRAUN, Indiana                  KIRSTEN GILLIBRAND, New York
DAVID PERDUE, Georgia                ROBERT P. CASEY, Jr., Pennsylvania
CHARLES GRASSLEY, Iowa               TINA SMITH, Minnesota
JOHN THUNE, South Dakota             RICHARD DURBIN, Illinois
DEB FISCHER, Nebraska

             James A. Glueck, Jr., Majority Staff Director
                DaNita M. Murray, Majority Chief Counsel
                    Jessica L. Williams, Chief Clerk
               Joseph A. Shultz, Minority Staff Director
               Mary Beth Schultz, Minority Chief Counsel
                            
                            
                            C O N T E N T S

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                         Tuesday, June 25, 2019

                                                                   Page

Hearing:

The State of the Derivatives Market and Perspectives for CFTC 
  Reauthorization................................................     1

                              ----------                              

                    STATEMENTS PRESENTED BY SENATORS

Roberts, Hon. Pat, U.S. Senator from the State of Kansas, 
  Chairman, Committee on Agriculture, Nutrition, and Forestry....     1
Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan...     3

                               WITNESSES

Sexton, Thomas W., President and Chief Executive Officer, 
  National Futures Association, Chicago, Illinois................     5
Lukken, Hon. Walter L., President and Chief Executive Officer, 
  Futures Industry Association, Washington, D.C..................     7
Barker, Joe, Director of Brokerage Services, CHS Hedging, St. 
  Paul, Minnesota................................................     8
Kelleher, Dennis M., President and Chief Executive Officer, 
  Better Markets, Washington, D.C................................    10
                              ----------                              

                                APPENDIX

Prepared Statements:
    Sexton, Thomas W.............................................    30
    Lukken, Hon. Walter L........................................    37
    Barker, Joe..................................................    43
    Kelleher, Dennis M...........................................    47

Document(s) Submitted for the Record:
Roberts, Hon. Pat:
    International Swaps and Derivatives Association..............    76
    Managed Funds Association....................................    89
    Church Alliance..............................................   101

Question and Answer:
Barker, Joe:
    Written response to questions from Hon. Amy Klobuchar........   106
Lukken, Hon. Walter L.:
    Written response to questions from Hon. Pat Roberts..........   107
    Written response to questions from Hon. Amy Klobuchar........   107
Sexton, Thomas W.:
    Written response to questions from Hon. Pat Roberts..........   109

 
      CERTAINTY IN GLOBAL MARKETS FOR THE U.S. AGRICULTURE SECTOR

                              ----------                              


                         TUESDAY, JUNE 25, 2019

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:49 a.m., in 
room 328A, Russell Senate Office Building, Hon. Pat Roberts, 
Chairman of the Committee, presiding.
    Present or submitting a statement: Senators Roberts, 
Boozman, Hoeven, Ernst, Braun, Grassley, Thune, Fischer, 
Stabenow, Brown, Bennet, Casey, Smith and Durbin.
    Chairman Roberts. I call this hearing of the Senate 
Agriculture, Nutrition, and Forestry Committee to order. Before 
delivering my opening statement I ask unanimous consent that 
written testimony from a large number of coalition groups and 
trade associations be submitted for the record. Without 
objection, so ordered.

    [The following information can be found on pages 76-104 in 
the appendix.]

 STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF 
KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND 
                            FORESTRY

    Chairman Roberts. The Senate Agriculture Committee has the 
responsibility of reauthorizing programs administered by 
multiple Federal agencies and commissions, notably the numerous 
programs of the U.S. Department of Agriculture. I would note, 
yet again, that as the Committee we authorized hundreds of 
programs worth billions of dollars last year, in the farm bill, 
and in doing so fulfilled its role by providing certainty and 
predictability to many stakeholders. I say thanks to the 
Committee, but more especially to our distinguished Ranking 
Member.
    This Committee also has distinct jurisdiction over the 
Commodity Futures Trading Commission and its role in 
implementing the law governing worldwide derivative markets as 
authorized in the Commodity Exchange Act. While the CFTC has 
continued to receive funding as it works to ensure that U.S. 
derivative markets function properly and in an open, safe, and 
transparent manner, it has done so without authorization since 
October 2013. That is almost six years ago.
    I think it is fair to say a lot has changed since the last 
time CFTC was reauthorized, alongside the 2008 Farm Bill. We 
have seen a rollout and adoption of a number of regulations as 
required under the Dodd-Frank Act.
    I am pausing if anybody wants to cough at that particular 
moment.
    They have created greater transparency in the over-the-
counter derivative markets while still ensuring non-financial 
end users are provided flexibility in the way they utilize 
derivatives to hedge their commercial risk.
    Recently we have seen legislative efforts in the European 
Union, which will have the unfortunate effect of undoing the 
agreed-upon mutual recognition of foreign-based clearinghouses, 
likely creating uncertainty, to say the least, for some of our 
most important global financial stakeholders.
    We have seen incredible advances in technology, including 
the emergence of blockchain technology. In addition to 
supporting the emergence of Bitcoin and other cryptocurrencies, 
it has the potential to revolutionize the way companies do 
business, including speeding up the time it takes to verify and 
execute international commodity trades.
    We have worked together in a bipartisan manner to confirm 
nominees and to ensure that the Commission is fully 
functioning. I think that is a star in the Committee's crown.
    As we move forward with reauthorization, it is important 
that Congress provide CFTC with certainty. We should do our job 
and not just for some of the Committee agencies and 
stakeholders but for all of those impacted by the laws within 
our purview.
    Within this process it is important we listen to 
stakeholders to better understand what is or is not currently 
working. We must explore what provisions may need a legislative 
update to reflect current and future market dynamics and what 
the CFTC already has the authority to accomplish through 
rulemakings.
    This hearing is designed to provide us with that 
opportunity. Our panel of distinguished witnesses today covers 
a broad spectrum of industry stakeholders and perspective. We 
will hear from the derivatives industry's self-regulatory 
organization with an update on safety and soundness of U.S. 
derivative markets and insight on legislative recommendations 
for further strengthening consumer protections.
    We will hear from a leading global trade association 
representing exchanges, clearing firms, swap dealers, asset 
managers, and other financial stakeholders about current market 
trends. We will hear testimony from one of our Nation's leading 
agriculture cooperatives about the vital role that derivatives 
play for stakeholders hedging their commercial risks in the 
production and marketing of our Nation's ag commodities. A 
tough job at this current time.
    Last we will hear from a consumer advocacy organization, 
formed after the 2008 financial crisis, about any additional 
reforms it believes may be necessary.
    I thank you all again for joining us. I look forward to our 
conversation today about the state of global derivatives 
markets and CFTC reauthorization, and now I will turn to my 
distinguished colleague, Ranking Member Stabenow, for her 
opening remarks.

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE 
                          OF MICHIGAN

    Senator Stabenow. Thank you, Mr. Chairman, and welcome to 
our witnesses today for this very important discussion. It is 
good to have the opportunity, since it has been over a decade 
since Congress reauthorized the CFTC, for this discussion about 
reauthorization. I am pleased we are working together on a 
bipartisan basis, as we always do in this Committee, to be able 
to get this done.
    The CFTC plays a critical role in providing certainty in 
our futures and swaps markets for Main Street businesses, 
consumers, and farmers.
    As we know, a lot has happened since the CFTC was last 
reauthorized in 2008. We witnessed firsthand the disastrous 
consequences of financial deregulation. The global financial 
system broke down. Housing markets collapsed nationwide. 
Millions of families lost their homes and their financial 
security. Over 8 million jobs disappeared, while farmers and 
small businesses faced financial ruin.
    The American people lost faith in the ability of banks to 
do what is right, and worse--the American people lost faith in 
the ability of our government to protect our economy.
    Next month will mark the 9-year anniversary of the Dodd-
Frank Act. Thanks to that legislation, we have a financial 
system that is stronger and more resilient. As we consider the 
reauthorization of the CFTC, we must not roll back the 
important reforms that have been implemented since the 
financial crisis.
    CFTC reauthorization also gives us a chance to be forward 
looking. It is critical that we consider the opportunities as 
well as the challenges of tomorrow.
    Cybersecurity is arguably the greatest systemic risk that 
our financial system faces today. Top executives in the global 
financial sector agree, and are devoting unprecedented 
resources to protect against cyberattacks. We cannot allow the 
American economy to be endangered by any shortcomings in the 
security of our financial system. Our financial system must 
take the necessary steps to protect against cyberattacks.
    The CFTC also must protect its own information systems, 
especially against cyberattacks by foreign adversaries and 
other bad actors. In 2016, the SEC was attacked by Ukrainians 
and Russians attempting to gain access to confidential earnings 
reports. More recently, the CFTC reported an increase in 
phishing attempts aimed at stealing sensitive agency 
information. It is critical that the American people and market 
participants have confidence that the CFTC's systems are 
secured at all times.
    As we look forward to CFTC reauthorization, we must 
prioritize certain key issues. Our futures and swaps markets 
help create American jobs and support economic stability for 
our farmers, manufacturers, and consumers. We need to do 
everything we can to ensure that the CFTC keeps our markets 
strong and free of fraud, manipulation, and disruptive 
practices.
    Customer protection needs to continue as a top priority.
    We must ensure that the CFTC has the enforcement tools it 
needs to bring wrongdoers to justice.
    Finally, I have long been an advocate for providing the 
CFTC with the resources it needs to fulfill its critical 
responsibilities. Yet the CFTC continues to be underfunded, 
which leaves our financial system at risk. It is our 
responsibility to solve this problem, and, Mr. Chairman, I look 
forward, as always, to working with you on this issue.
    Chairman Roberts. I thank the distinguished Ranking Member. 
I would like to welcome our panel of witnesses this morning.
    Our first witness is Thomas W. Sexton, who serves as 
President and Chief Executive Officer of the National Futures 
Association. Mr. Sexton joined the NFA in July 1991, and has 
held several positions, including serving as NFA's general 
counsel and secretary from September 2001 through February 
2017. In his role as general counsel, Mr. Sexton oversaw major 
regulatory initiatives affecting NFA's member firms and various 
enforcement matters.
    He holds a bachelor of arts degree in government from Notre 
Dame, an MBA degree from Loyola University Chicago, and a law 
degree from the University of Notre Dame Law School.
    Welcome, Mr. Secretary.
    [Laughter.]
    Mr. Sexton. That is Okay.
    Chairman Roberts. Just do not tell Sonny I said that, all 
right? I look forward to your testimony.
    Next we have the honorable Walt Lukken, who is President 
and Chief Executive Officer of the Futures Industry 
Association. Prior to joining the FIA, Mr. Lukken was the CEO 
of New York Portfolio Clearing. Before joining the private 
sector in 2009, he served as a CFTC commissioner beginning in 
2002, and then as acting Chairman of the Commission for 18 
months, a period that included the financial crisis of 2008. 
Tough waters back then.
    Mr. Lukken also spent time on Capitol Hill where he served 
five years as counsel on the staff of U.S. Senate Agriculture 
Committee under then--Chairman Dick Lugar, who is smiling right 
at you today.
    He received his bachelor of science degree with honors from 
the Kelley School of Business at Indiana University and his law 
degree from the Lewis & Clark School in Portland, Oregon.
    Thank you for being here today, Mr. Lukken, and I look 
forward to your testimony.
    Next we have Mr. Joe Barker, the Director of Brokerage 
Services for CHS Hedging, which is the commodity trading 
subsidiary of CHS, Inc. Mr. Barker has spent the last 19 years 
providing risk management services for agriculture clients. He 
started as a commodity broker in the Indianapolis office of CHS 
Hedging in 2000. From 2007 through 2014, he was the branch 
manager of the Kansas city office.
    Today, Mr. Barker works in Inver Grove Heights, Minnesota 
headquarters office where, in addition to directing the 
brokerage services is also the Chairman at CHS Hedging's senior 
management team.
    He grew up on a farm east of Noblesville, Indiana, and 
completed his bachelor's degree at Kansas State University, 
where he majored in animal science with a business option. He 
also earned an MBA from Indiana Wesleyan University. He began 
his career in agriculture in live hog production for Seaboard 
Farms in Kansas.
    Welcome, and thank you for being here today.
    Our final witness today is Mr. Dennis Kelleher. Mr. 
Kelleher is President, Chief Executive Officer, and Co-Founder 
of Better Markets. Prior to Better Markets, Mr. Kelleher held 
senior staff positions in the U.S. Senate, including General 
Counsel and Deputy Staff Director on the Health Committee, and 
Chief Counsel and Senior Leadership Advisor to the Chairman of 
the Senate Democratic Policy Committee.
    Mr. Kelleher has been a partner with the international law 
firm of Skadden, Arps, where he had a practice specializing in 
crisis management and complex corporate matters that focused on 
governance and securities and financial markets.
    Notably, Mr. Kelleher served four years of active duty, 
enlisted in the Air Force as a crash rescue firefighter medic. 
We thank you for your service, sir. He graduated from Brandeis 
University and from Harvard Law School.
    Welcome, Mr. Kelleher, and thank you for your service to 
our country, again. Mr. Sexton, why don't you kick things off.

 STATEMENT OF THOMAS W. SEXTON, PRESIDENT AND CHIEF EXECUTIVE 
    OFFICER, NATIONAL FUTURES ASSOCIATION, CHICAGO, ILLINOIS

    Mr. Sexton. Thank you, Mr. Chairman. Chairman Roberts, 
Ranking Member Stabenow, members of the Committee, thank you 
for the invitation to testify at this important hearing. I am 
President of the National Futures Association, which is the 
industry-wide self-regulatory organization for the derivatives 
industry.
    Our responsibilities include registering all firms and 
industry professionals on behalf of the CFTC, passing rules to 
ensure fair dealing with customers, monitoring our members for 
compliance with those rules, and taking enforcement actions 
against those members that violate those rules.
    The CFTC oversees every single aspect of our regulatory 
authority, and as the industry SRO for the derivatives market, 
we have one overriding objective, to help the CFTC. We and the 
CFTC act as strong partners in regulating the derivatives 
industry, and as partners I want to, at this time, take the 
opportunity to thank Chairman Giancarlo for his strong support 
of self-regulation during his time there, and we certainly look 
forward to working with Dr. Tarbert when he becomes chair of 
the CFTC in a few weeks.
    Reauthorization is always an important process for the 
industry as a whole, and for NFA in particular. NFA firmly 
believes that customer protection issues should be front and 
center with regard to reauthorization, and we certainly 
encourage this Committee to work to reauthorize the CFTC.
    The last few reauthorization bills voted out of this 
Committee and the House Agriculture Committee have included a 
key customer protection provision relating to FCM bankruptcies, 
which we continue to strongly support and believe any future 
reauthorization bill should contain. Over 30 years ago, the 
CFTC adopted rules regarding FCM bankruptcies. Among other 
things, those rules provided that if there was a shortfall in 
customer-segregated funds, the term ``customer funds'' would 
include all assets of the FCM until customers were made whole.
    Several years ago, a district court decision, the Griffin 
Trading Decision, cast doubt on the validity of the CFTC's 
rule. Although that decision was subsequently vacated, a cloud 
of doubt continues to linger over this issue. Congress should 
remove that doubt and ensure that customers have priority if 
there is a shortfall in customer funds, and can do so, we 
believe, by amending Section 20 of the Commodity Exchange Act, 
which gives the CFTC authority to adopt regulations regarding 
commodity brokers that are debtors in Chapter 7 of Title 11 of 
the United States Code.
    Our request is simple: please amend Section 20 to clarify 
that the CFTC has the authority to adopt the rule that it did. 
We believe there is a broad base of industry support for this 
approach, and we would be happy to work with Congress on 
specific proposed language.
    Other areas that I wanted to highlight, covered in our 
written testimony, the first is with regard to our swap 
dealers. I certainly want to thank Congress and this Committee 
for having confidence in the CFTC and NFA to regulate swap 
dealers. Our written testimony details, specifically, how, in 
light of Dodd-Frank, our responsibilities have increased 
significantly throughout the last few years.
    With regard to swap dealers, in partnership with the CFTC 
we have developed a regulatory oversight program that reviewed, 
in detail, their policies and procedures upon registration, 
performed regular examinations of U.S. and non-U.S. swap 
dealers, collected certain risk information from these firms, 
and approved and monitored these firms' initial margin models 
for uncleared swaps.
    We will continue to evaluate our program and enhance this 
program with the CFTC, as necessary, in the future.
    I appreciate Senator Stabenow's mention of cybersecurity. 
It is an issue that is of critical importance to all of us. I 
can assure you that NFA makes every effort possible to secure 
our data and the CFTC data that we hold. Our technology staff 
and budget have grown significantly throughout the past few 
years. We adopt best practice frameworks and standards, engage 
independent parties to conduct security testing, and 
continually assess the data that we hold and whether or not it 
is critical for our mission, and if it is not, we no longer 
collect that data.
    We have imposed specific cybersecurity requirements on our 
NFA members, requiring them to have written information systems 
security programs and to do a risk assessment of their 
particular cybersecurity risk. During our examinations we 
review these risks and work with our members to understand 
these requirements so that they can comply.
    Our testimony also highlights customer protection issues 
that we have partnered with the CFTC to resolve in the last few 
years. Detecting and combating fraud is central to our mission. 
These issues involve the oversight of firms and individuals, 
safeguarding of customer funds, swaps proficiency requirements, 
which we hope to launch in early 2020, virtual currencies, and 
coordination between the CFTC, SEC, and NFA, particularly with 
regard to commodity pools that are duly registered.
    In conclusion, we look forward to working with this 
Committee to reauthorize the CFTC, and will continue to work 
with the CFTC and Congress to tackle regulatory challenges 
posed by an industry that is constantly changing.
    I would be happy to answer any questions at the appropriate 
time.

    [The prepared statement of Mr. Sexton can be found on page 
30 in the appendix.]

    Chairman Roberts. We thank you for your testimony. Mr. 
Lukken.

  STATEMENT OF THE HONORABLE WALTER L. LUKKEN, PRESIDENT AND 
    CHIEF EXECUTIVE OFFICER, FUTURES INDUSTRY ASSOCIATION, 
                        WASHINGTON, D.C.

    Mr. Lukken. Thank you, Chairman Roberts, Ranking Member 
Stabenow, and members of the Committee. Thank you for the 
opportunity to testify on CFTC reauthorization and the state of 
the derivatives markets.
    I am the president of FIA, the leading trade association 
for the regulated futures options and centrally cleared 
derivatives markets. I have had the privilege of being 
significantly involved in the last two CFTC reauthorizations. 
In 2008, I was serving as Acting Chairman of the CFTC, and I 
worked with this Committee to ensure the agency had the proper 
regulatory and enforcement tools to oversee these markets. In 
2000, as mentioned, as part of the Commodity Futures 
Modernization Act, I worked as a staff member of this Committee 
under the leadership of the late Chairman Richard Lugar, to 
help modernize and reauthorize the CFTC.
    This experience has provided me a first-hand appreciation 
of the importance of the CFTC reauthorization process, because 
it provides an important congressional stamp of approval on 
this agency's mission and legal authority.
    Today I want to highlight certain market trends and 
recommendations to aid in your deliberations.
    To begin with, our markets have grown significantly in the 
decade since the last reauthorization. Global volume on futures 
and options transactions has increased 70 percent over that 
period of time. In 2018, our industry traded over 30 billion 
contracts for the first time in its history. There are more 
products and more participants in more locations, using these 
markets to hedge and manage risk than ever before.
    Second, post-crisis reforms have made the derivatives 
markets safer. With the implementation of Dodd-Frank, a large 
percentage of the over-the-counter derivatives are now 
submitted to central counterparties for clearing. According to 
CFTC data, 90 percent of interest rate swaps and 62 percent of 
credit derivatives are now cleared. This reduces the amount of 
risk in the financial system and provides greater transparency 
for both regulators and market participants alike.
    Third, our markets have become much more global. Today, all 
major global exchanges have anywhere from one-third to 90 
percent of their volume coming from outside their home 
location. Importantly, these transactions from foreign 
participants add vital liquidity to domestic markets that keeps 
costs affordable for customers hedging risk.
    Last, like most economic sectors, this industry has been 
transformed by technology, whether it is the way market 
participants trade futures, whether it is the way that trades 
are processed and cleared, or the way that regulators surveil 
the markets. Technology has provided our industry with greater 
efficiencies that enable more people to access these products 
globally, at significantly lower costs.
    To keep pace with these changing market dynamics, 
regulators must have flexible tools and authority. FIA supports 
the CFTC's principles-based approach to regulation, which has 
served the agency well for the past 20 years. The core 
principles of the CEA provide the CFTC with outcomes-based 
tools that can be tailored to the ever-changing global 
marketplace. I encourage the Committee to preserve this 
flexibility.
    Ensuring the protection of customers and their funds must 
also remain a priority for our industry. FIA joins the National 
Futures Association, as Tom, in his comments, mentioned, in 
recommending to this Committee clarifications around the 
definition of customer property, which was made uncertain by 
the Griffin Trading bankruptcy decision.
    Protecting customer data is another important priority 
worthy of this Committee's consideration. In June, the CFTC's 
Inspector General published a report that the agency has 
numerous weaknesses in the way that it stores data used to 
regulate the markets. FIA supports providing the CFTC with the 
resources, authority, and direction to enhance their data 
collection methods, given the sensitivity of the data collected 
from market participants.
    Last, it is imperative that the regulatory framework for 
this industry accommodates its global nature. FIA supports a 
deference approach to cross-border regulation that allows 
authorities to recognize and defer to foreign supervision when 
their rules are deemed comparable and comprehensive. Both the 
EU and the CFTC are considering proposals that will impact 
cross-border regulation of clearinghouses, and we encourage 
both authorities to recognize the home nation's oversight that 
avoids needless duplication of supervision and regulation.
    In closing, I hope these high-level trends and 
recommendations will help this Committee as it begins its 
reauthorization process, and I look forward to your questions.

    [The prepared statement of Mr. Lukken can be found on page 
37 in the appendix.]

    Chairman Roberts. We thank you for your testimony. Mr. 
Barker.

 STATEMENT OF JOE BARKER, DIRECTOR OF BROKERAGE SERVICES, CHS 
                  HEDGING, ST. PAUL, MINNESOTA

    Mr. Barker. Chairman Roberts, Ranking Member Stabenow, and 
members of the Committee, thank you for holding this hearing as 
you work on reauthorization of the Commodity Futures Trading 
Commission. In particular, I appreciate the opportunity to 
discuss the role of derivative markets in helping farmers and 
agribusiness manage commodity price risk.
    Currently, our agriculture markets are extremely volatile. 
This is being fueled by ongoing uncertainty in international 
markets and an extremely wet spring that has caused the slowest 
corn and soybean planting progress on record.
    Trade issues have led to dramatic price swings for grain, 
livestock, and dairy. In my written testimony, I gave an 
example of the volatility in the dairy market over the last 
year. To further highlight this point, I would like to draw 
your attention to the soybean market, where, from March 2, 2018 
to July 16, 2018, the price of soybeans at the Chicago 
Mercantile Exchange dropped from $10.71 to $8.10 per bushel. 
This is a price drop of over 24 percent of the notional value 
of the U.S. crop in less than five months.
    That is only the futures component of the price that a 
farmer receives. The dramatic drop in exports this past winter 
caused basic levels in the Midwest to new record lows. At one 
point this winter, the price of soybeans being bid to farmers 
in parts of North Dakota was under $7 per bushel. The extreme 
swings in price have meant the difference between producing 
their crop at a profit or a loss.
    Given the volatility, the agriculture industry must rely on 
exchange traded and over-the-counter derivatives to manage 
their price risk exposure. More producers are looking to their 
co-ops to provide tools to manage price risks at the farm level 
and assist in locking in margins. In fact, some NCFC members 
are seeing record levels of risk management usage among their 
producers. This includes structured contracts that give 
producers the pricing tools that meet their marketing 
objectives.
    Agriculture must have access to sound, well-functioning 
commodity derivatives markets. The CFTC ensures the integrity 
of those markets. The Commission's responsibility in that 
regard has expanded dramatically over the past decade. Yet 
until recently, adequate funding had not kept up. While not in 
the scope of this Committee, we encourage Congress to provide 
sufficient funding for the CFTC's important functions.
    In doing this, we caution against the imposition of any 
user fee on the industry to fund the CFTC. Agriculture is a 
high-volume, low-margin industry. Incremental costs, whether 
passed on or imposed directly upon market participants, trickle 
down to farmers. We fear a further increase in the cost would 
have an unintended consequence of discouraging prudent hedging 
practices. To be clear, a user fee would result in increased 
risk being absorbed by agriculture.
    Additionally, we would like to caution Congress from 
setting up a situation where the CFTC would see its budget 
directly impacted by the volume of trading in the products it 
is tasked with regulating.
    NCFC has supported elements of the Dodd-Frank Act that 
bring more transparency and oversight to markets. However, 
throughout its implementation, NCFC noted that the ag industry 
does not fit in a one-size-fits-all regulatory regime meant for 
Wall Street. We appreciate the work of the Commission in 
addressing our many concerns with the Dodd-Frank rules.
    This Committee's oversight of CFTC, as they have written 
those rules, has been instrumental in protecting farmers' and 
end users' access to needed risk management tools, and I would 
like to thank you for your work in this area.
    While most of Dodd-Frank has been implemented, the position 
limits rule is not yet finalized. Any Federal speculative 
position limit rule should not unduly burden the commercial end 
user of these markets. Specifically, we have continued to 
advocate that CFTC recognize common hedging practices such as 
anticipatory hedging and cross hedging as bona fide hedge 
activity. Given the nature of the various commodity markets, 
there should not be a one-size-fits-all approach to determining 
position limits.
    We understand that the Commission has committed to Congress 
to finalize that rule, and we will provide additional input 
when available, for comment. While we are confident the 
Commission will consider hedgers' concerns, I would like to 
encourage the Committee to continue to monitor this rulemaking.
    Thank you again for the opportunity to testify today before 
this Committee. We appreciate your role in ensuring our 
industry has the risk management tools needed to support our 
businesses and those of our farmer members.
    I look forward to answering any questions you may have.

    [The prepared statement of Mr. Barker can be found on page 
43 in the appendix.]

    Chairman Roberts. Thank you, Mr. Barker. Mr. Kelleher.

STATEMENT OF DENNIS M. KELLEHER, PRESIDENT AND CHIEF EXECUTIVE 
           OFFICER, BETTER MARKETS, WASHINGTON, D.C.

    Mr. Kelleher. Good morning, Chairman Roberts, Ranking 
Member Stabenow, members of the Committee. Thank you for the 
invitation to testify today. It is an honor to testify in the 
Senate and before this Committee.
    I am going to take a different approach to talking about 
these issues at somewhat of a macro level. I believe the best 
way to think about the CFTC, its reauthorization, its funding, 
and derivatives regulation more broadly is by thinking about 
what has become a dirty four-letter word--TARP.
    Those of you who were here in the Senate, or in the House 
at the time, had to take one of the most searing and 
consequential votes of your careers, with no time and little 
information. You had to decide to vote for or against sending 
700 billion taxpayer dollars to bail out the largest financial 
institutions in this country, including every one of the 
largest derivative dealers.
    I was on the Senate floor during those days of debates and 
votes in September and October 2008, with Senator Grassley and 
Senator Thune and Senator Casey, and actually most of you here, 
and I well remember the agony and anger of members being forced 
to make momentous decisions in a time of extremely limited 
information, where the facts were changing daily, sometimes 
hourly, on an hourly basis, and where the gravity of the 
situation grew more ominous by the moment.
    The entire financial system was going to collapse, you were 
told. The payment system was going to stop. Your constituents 
were not going to be able to cash their paychecks. Indeed, the 
country was likely to fall into an economic abyss that was so 
bad there was going to be a second Great Depression, you were 
told.
    Those were truly dark, dangerous, and downright scary days 
and weeks, as one unimaginable event after another happened. 
Financial giants were collapsing. Others were teetering on the 
brink of collapse, the stock market plummeting.
    This ignited the worst panic since 1929. That was because 
the markets, the financial giants that ruled the markets and 
their products, had been largely deregulated. As a result, no 
one--not market participants, not regulators, not policymakers, 
and not elected officials--knew what was happening, or worse, 
what was going to happen next.
    In the middle of all that, with events happening quickly, 
little information, widespread fear, you were asked to send 700 
billion taxpayer dollars, your constituents' money, to bail out 
the largest financial institutions in this country and prevent 
an economic catastrophe.
    Seventy-four U.S. Senators voted for TARP, and days later, 
125 billion of taxpayer dollars went out the door into the 
accounts of just nine of the largest financial institutions, 
including all the big derivatives dealers. That was just the 
tip of the bailout iceberg. Trillions more--with a T--trillions 
more were spent, lent, pledged, guaranteed, or otherwise used 
by the government to prop up and bail out the financial system. 
Most of that was done by the Federal Reserve, and it was kept 
secret from the public, including you, the elected officials, 
for many years.
    Those were not the only bailout costs. There were also 
widespread economic and human costs. Better Markets did a study 
showing that the cost of the crisis is going to exceed $20 
trillion in lost GDP, and counting.
    Now as you know, derivatives are at the core of causing and 
spreading the disaster, requiring the TARP vote and inflicting 
so much pain and misery. In fact, the central role derivatives 
played in that crisis is why I have suggested that derivatives 
should be thought of as a conveyor belt, distributing, as 
Warren Buffett said, the financial weapons of mass destruction 
throughout the U.S. and global financial systems.
    Without unregulated, nontransparent, over-the-counter 
derivatives, and the enormous risk they spread and amplified, 
the 2008 crash would have been very, very different, and almost 
assuredly would have been much less severe. That is why the 
Dodd-Frank Financial Reform Act spent so much time on 
regulating derivatives, ensuring transparency, trading, 
competition, oversight, accountability.
    While other agencies have roles to play, the primary agency 
standing between that derivatives nightmare from happening 
again is the CFTC. The primary people ensuring that the CFTC 
has the authority and resources to prevent that derivatives 
nightmare from happening again is you and your colleagues in 
the Senate and in the House.
    So in closing, when thinking about that, I would urge you 
to look at page 20 of our testimony--and I apologize, it is 
page 20 and not page 4 or 5--of my written testimony. There is 
a list of the 42 financial institutions that received more 
taxpayer money from TARP than the CFTC's entire budget in 2019. 
That is why reauthorization and properly funding the CFTC today 
are as important as your TARP vote in 2008, because only 
getting that right will reduce the likelihood of future votes 
where you again send taxpayer money to bail out Wall Street's 
derivatives dealers, and that should be uppermost in your mind. 
That is why we need authorization. That is why we need a CFTC 
with funding and resources and authority.
    Thank you. I look forward to your questions.

    [The prepared statement of Mr. Kelleher can be found on 
page 47 in the appendix.]

    Chairman Roberts. Thank you, Mr. Kelleher. That was unique 
testimony with 20/20 hindsight and a rear-view mirror. I voted 
no, just for the record. How did you vote? Oh, I am sorry. I 
should not----
    [Laughter.]
    Senator Stabenow. I also voted no.
    Chairman Roberts. She also voted no, so we had a very clear 
insight. I remember talking with her about it on the floor. 
Okay.
    I am going to start the questions and I beg the indulgence 
of my colleagues. I am going to try to go pretty quickly. 
Chairman Grassley, do you have any advice for us before we 
start the questions? Good morning to you.
    Senator Grassley. I hope I get to ask questions before 
10:45.
    [Laughter.]
    Chairman Roberts. We will try to make that happen. Thank 
you, sir.
    Mr. Barker, since the beginning of my chairmanship I have 
made it clear that the needs of end users are a priority for 
myself and this Committee. As you interact with those end users 
in the countryside do they have efficient, effective, and fair 
access to our futures markets? I would specifically like to 
hear about the effect that any fees have on this access, as 
well as another issue affecting access, that being position 
limits, including having a clear definition of a bona fide 
hedge.
    Is the issue of position limits a priority for end users? 
How important is that for our rural communities and ag 
producers? It is extremely important they have efficient, 
effective, and fair access. So my response would be it is very 
important. I think that is probably what you ought to say, but 
go ahead.
    Mr. Barker. Thank you for the question, Senator. I actually 
believe today we have access to efficient and well-functioning 
markets. I believe the markets are quite good today. The 
concern about access fees or user fees is that eventually this 
trickles down to the American farmer.
    I was recently at a CME event where they were discussing 
the volume of trading in different commodities, and I was 
struck by the fact we trade our corn crop 36 times. The funny 
thing is, if you enact a fee on every transaction, 36 times 
that fee will trickle down to the American farmer, because that 
is how this works. The farmer is the price taker.
    So eventually somewhere along the food chain someone might 
say, ``I am going to step out of this transaction,'' and 
liquidity might reduce, and that is the fear. Because with 
markets this volatile, our individual farmers who are running 
their own businesses and making independent decisions need the 
ability to properly manage their risk when they choose to, to 
manage their business. The reduction in volatility could impact 
the ability of our markets to function efficiently and have the 
liquidity needed in all of our different commodities. So that 
is why we are against user fees.
    Chairman Roberts. I thank you for your answer. I am sorry. 
Did I interrupt you?
    Mr. Barker. Well, you asked about position limits, and if 
it is important, and it is important. When you operate an 
agribusiness and your job is to buy grain by the truckload, 
move it by the trainload, and sell it by the shipload, you are 
not always trading something that is perfectly hedgeable.
    I like the example of durum wheat. There is no futures 
market for durum wheat. We have spring wheat in Minneapolis, we 
have hard red winter wheat in Kansas City, and we have soft 
wheat in Chicago. If I need to hedge the risk of durum wheat as 
I am going to load a shipload of wheat and ship it to Italy or 
anywhere else, I have to cross-hedge. I have to use some other 
futures market to do that, and we would like that to be defined 
as a bona fide hedge.
    Chairman Roberts. Final question. Are the Wildcats going to 
win six games?
    [Laughter.]
    Mr. Barker. I do believe we will be in a bowl game this 
year.
    Chairman Roberts. Thank you.
    Mr. Lukken, in your testimony you talk about what is going 
on with EMIR 2.2. As you may know, Senator Stabenow and I wrote 
Chairman Giancarlo last year raising serious concerns about the 
European Union's legislation to regulate our U.S. 
clearinghouses. Unfortunately, it has come to our attention in 
the past couple of months that this legislation is in the final 
stages, and as written, has not changed, but would still impose 
overly burdensome, subjective criteria on U.S.-based 
clearinghouses wishing to operate in the EU. This is, of 
course, in direct conflict with the equivalence agreement 
reached by the CFTC and the EU, the European Commission, in 
2016.
    As the Ranking Member and I alluded to in our letter, is 
there anything within the context of reauthorization that 
should be done to address these concerns?
    Mr. Lukken. Certainly, we support the EU coming out with 
the full deference approach within the EMIR 2.2 regulation. 
They do have the authority to defer to the CFTC and its 
regulation of clearinghouses. As you mentioned, CFTC regulation 
is, of course, equivalent. The clearinghouse regulation in the 
United States is very strong. That was recognized two years ago 
in this agreement between the EU and the CFTC.
    So we think it certainly should be ESMA's duty to find a 
United States equivalent and defer to U.S. regulation in this 
area. Congress can play an important role in encouraging ESMA 
to find that, and if not, there could be consequences, as you 
mentioned. We are pretty confident and we are hopeful that the 
EU would do the right thing and defer to U.S. regulation here.
    Chairman Roberts. I appreciate that response.
    Chairman Grassley, I am looking at several questions I may 
just submit for the record so we can get to your 10:45 deadline 
here.
    Hang on.
    For the entire panel, when you answer that just remember 
Chairman Grassley's situation here.
    With the recent announcement that Facebook has plans to 
offer its own cryptocurrency sometime in the near future, and 
Bitcoin's re-emergence as a valuable commodity, worth over 
$10,000 per coin, virtual currencies and the underlying 
technology of blockchain are once again grabbing headlines. As 
blockchain technology and its transformative potential 
continues to emerge, what role should regulators play, 
particularly in the realm of virtual currency. Mr. Sexton?
    Mr. Sexton. Mr. Chairman, thank you. The role that I 
believe regulators should play is to allow for innovation, but 
cautiously allow for innovation in this particular area. Over 
the past year, we have tackled some virtual currency issues 
with the CFTC, and mandated particular disclosures with regard 
to customer protection, which we are always very concerned 
about.
    We are focused on the derivatives markets, obviously, and 
the futures trading with regard to Bitcoin, but also focused on 
the fact that our members may be engaged in other types of 
underlying virtual currency transactions, and we know that is a 
relatively unregulated environment today.
    There has been talk about an SRO also, with regard to 
virtual currencies, and with regard to that, if Congress is 
going to look at that I think it is very important that that be 
done in legislation, that there be government oversight, 
mandatory membership, and strong enforcement powers. So thank 
you.
    Chairman Roberts. Mr. Lukken.
    Mr. Lukken. The CFTC has authority over any commodity and 
any derivative, so those cryptocurrencies that are considered 
commodities, the CFTC has adequate authority to regulate those 
derivatives and to make sure, and they have broad manipulation 
and enforcement authority over those products as well.
    I think the unique thing about cryptocurrencies is unlike 
agriculture or energy, which have regulators at the cash level, 
cryptocurrencies right now really have no regulatory structure 
at the cash level. New York has a bit license that you can 
apply for, but I think the CFTC, as it regulates these 
entities, has difficulty ensuring that these things cannot be 
manipulated at the cash level, which is something I think this 
committee should think about as it goes forward.
    Chairman Roberts. Thank you. Mr. Barker.
    Mr. Barker. Since I am in FCM the focus is on agriculture 
risk management. We have not allowed our customers to trade 
Bitcoin so I am not an expert in this, but I do agree with both 
Mr. Sexton and Mr. Lukken that it is important that this be 
regulated and it is inside the CFTC's scope.
    Chairman Roberts. Mr. Kelleher.
    Mr. Kelleher. I would first like to recognize that Chairman 
Giancarlo and Chairman Clayton have done a very good job of 
getting out in front on investor protection in this area, both 
on the enforcement side and on the policy pronouncement side, 
and they should be recognized for that and they should be 
encouraged to do more. In addition to that, they need resources 
to do more. They cannot possibly keep up with what is a 
technology arms race here, where we have private actors moving 
into the monetary space and the financial space across the 
board.
    So, yes, innovation, but there has to be a role for 
government. You look at what Facebook announces--28 
corporations, on a board, governing their new currency, and it 
is going to be run out of Switzerland and based out of 
Switzerland. We have money-laundering problems, tax evasion 
problems, terrorist financing problems, rogue state problems.
    These cannot be addressed by private-sector actors who are 
seeking to profit maximize. There is a role for the government 
and this committee needs to make sure that the CFTC continues 
to do its job on the customer protect side, but more 
importantly has the resources to comprehensively address the 
risks and realities that are going to be visited upon all of 
our neighbors and families and businesses in the not too 
distant future.
    You are either going to be responding to crises later on 
and overbudgeting to kind of address what did not happen or you 
are going to get in front of it now. It is not a matter of if 
you are going to address these, it is when, and the time is 
now.
    Chairman Roberts. Thank you all for your responses. I am 
going to recognize Chairman Grassley, our distinguished 
President Pro Tempore out of order. Chuck, why don't you 
proceed.
    Senator Grassley. Whoever I am offending by going ahead, 
get mad at the Chairman.
    Senator Stabenow. You are welcome, Senator Grassley.
    [Laughter.]
    Chairman Roberts. It is what it is. A Chairman has to do 
what he has got to do, Chuck.
    Senator Grassley. Okay. First of all, Mr. Barker, and then 
a short question for all the panel.
    You mentioned that current events like trade negotiations 
and wet spring have caused volatility of our markets and the 
need to rely on derivatives. The reason this hearing is in the 
Agriculture Committee rather than Banking is because the long 
history of derivatives being important tool of managing prices 
for agriculture. The role of the CFTC has grown over time to 
include many financial derivatives, and most recently because 
of Dodd-Frank.
    I note your comments that the one-size-fits-all regulatory 
regime that treats agriculture the same as Wall Street does not 
work, and you cited a couple of specific issues. Could you 
speak more about whether there are specific changes that need 
to be considered in the next CFTC reauthorization to make sure 
that the CFTC has the appropriate flexibility to fairly 
regulate transactions by everything from small farmers to Wall 
Street?
    Mr. Barker. Thank you, Senator. Like we talked about, the 
position limits rule and the definition of a bona fide hedge 
are key going forward. Hedgers get an exemption to manage the 
risk of the commodities of which they trade, so I will go back 
to durum wheat. If we are able to get a true definition that 
cross-hedging is a bona fide hedge, then we can work around the 
position limits rules that would allow a large trader of durum 
wheat, like I said, that may be exporting shiploads of it, can 
adequately manage its risk. So that is very important and that 
would trickle its way all the way down to the individual farmer 
and the acre of land in which they are harvesting. Because if 
the company they are selling their grain to cannot manage the 
risk, it becomes difficult for them to offer the proper tools 
for the farmer to market their crop.
    Now you talked about trade and wet spring, and, of course, 
I am not here to talk to you about trade policy. The impact of 
the trade policy has had a dramatic impact on our markets. I 
talked both about the dairy markets, and that goes to the USMCA 
mostly, and the soybean market, which goes quite a bit to the 
China situation, and how that impacts the individual grower. 
When we lose that liquidity in the marketplace, or when the 
farmer has to choose between raising their crop at a profit or 
a loss, we need to have the tools available, and so that is why 
we are in favor of reauthorizing the CFTC formally, in 
legislation.
    Senator Grassley. Thank you. Then to all the panelists, how 
has the speed and frequency of automatic trading affected the 
ag commodity markets? Does the CFTC need any additional tools 
to address the increasing use of automated trading by 
algorithms rather than real people?
    This was first brought to my attention two or three years 
ago by cattle feeders in Iowa, who felt that so much trading in 
the last half hour or few minutes of a day really impacted the 
market negatively to those people, the producer.
    Mr. Sexton. Senator Grassley, thank you for the question. I 
could tell you, from NFA's perspective, with our members who 
engage in automatic order-routing trading and also with regard 
to algorithms, we have the tools in place, we believe right 
now, if there was an issue with regard to what our members were 
doing in that area.
    As far as the CFTC, I know that Chairman Tarbert has, at 
least at his confirmation hearing, indicated that he may look 
at some form of reg, what they call Reg AT again, and NFA is 
looking forward to working with the Commission if that is one 
of his initiatives that he wants to undertake.
    Senator Grassley. Mr. Lukken?
    Mr. Lukken. Yes. Automated trading actually has provided a 
lot of liquidity in the markets which has lowered costs in 
general, but specifically there are times when they can abuse 
the markets, as you mentioned, especially at the time when 
price is being set in the last half hour. The CFTC does have 
adequate tools to enforce that. You gave them the authority in 
Dodd-Frank on spoofing and banging the close and a variety of 
different ways that people can manipulate the markets.
    The CFTC certainly should be looking out for that 
manipulative behavior at the end, for those automated traders. 
In general, I think automated trading has actually provided 
liquidity to the markets that have helped farmers.
    Senator Grassley. Mr. Barker.
    Mr. Barker. Well, as a former member of the Kansas City 
Board of Trade who used to trade open outcry I do miss those 
days. High-frequency trading has brought better liquidity. I do 
agree with Mr. Lukken on that. The hedger relies on the CFTC to 
play the referee and keep the playing field level and fair, and 
that is why it is so important that they have the resources 
they need, that we can trust that they are doing their role.
    Senator Grassley. Mr. Kelleher?
    Mr. Kelleher. Senator Grassley, you put your finger on 
another issue, not unlike cryptocurrency and other issues, 
where the technology is so far ahead of our regulators and 
their budget and their resource and their technological 
capacity. Everybody says, ``oh, this is great.'' The FTC has 
got the authority and the CFTC should do this, and they should 
do this. You would think they had a limited budget and they 
were full of technologists and enforcement lawyers.
    So, yes, I agree. They should do all of that and they 
cannot do any of that, and they are being set up for failure.
    The HFT, yes, it provides liquidity. It often provides 
liquidity during a flood, and nothing during a drought. Get 
liquidity when you do not need to more often. You also get all 
sorts of abusive and manipulative behavior. I agree with Walt, 
some of which is provided for specifically within the Dodd-
Frank. Our position is it is also amply covered under the anti-
manipulation authority that could be used. On the other hand, 
the technology is moving very fast, and the CFTC needs greater 
authority and, more importantly, additional resources so they 
can keep up with it, because high-frequency trading is, just as 
we have seen in the securities markets, and that is the future 
of the commodity and derivatives markets.
    You are going to see the high-frequency trading-ization of 
these markets, where they are going to take over the vast 
majority of the trading, and we are all going to be watching as 
the machines run over people, and run over our markets, and run 
over our farmers, and run over our physical purchases and 
producers, while they are cashing out and they are leaving a 
bunch of destruction in their way, and we are going to say, 
what happened?
    Well, what happened is we did not have the resources, we 
did not have the authority, and we were not able to keep up. 
That is our fault, and we need to get in front of that too.
    Senator Grassley. Thank you. Thank you, Mr. Chairman.
    Chairman Roberts. Senator Stabenow.
    Senator Stabenow. Thank you very much, Mr. Chairman. This 
is a very important discussion and thank you all for your 
testimony.
    Let me start with Mr. Sexton. As I mentioned, in my opening 
statement, the frequency and sophistication of cyberattacks 
really is staggering. I am deeply concerned that we are just 
not prepared for the catastrophic effects those attacks could 
have on our financial markets.
    Your organization is taking steps in securing your own 
systems, and I wonder if you could talk a little bit more about 
that, and about the fact that you are ensuring that swap 
dealers and other CFTC registrants have strong cyber 
protections. You indicated that you are devoting more resources 
to cybersecurity, but I am very concerned that we are not 
providing the resources that are needed. I think that is 
something that we really need to look at in reauthorization.
    Could you speak to what you are doing and what you think 
should be happening?
    Mr. Sexton. Thank you, Senator Stabenow. You are correct. 
Our testimony covered quite a bit of what we are doing in this 
area, and we view it similar to you, as an extremely high-risk 
area. When you think about it, one employee clicking on the 
wrong thing can essentially let a bad actor in that can steal 
data and do all kinds of nefarious things to your systems.
    Over the last few years--I am very fortunate to work for an 
organization who has a board that strongly supports our 
cybersecurity efforts and our technology efforts. Over the last 
few years, our head count in technology itself has gone up 90 
percent. Our budget in technology has gone up 140 percent. Just 
next year, we are adding five or six additional people just for 
security, because the patching is so critically important 
today, to patch your systems, and we have a very aggressive 
patching schedule to do so.
    We follow several types of national standards, various NIST 
standards and others, with regard to our security. As I 
indicated, we have independent third parties come in and test 
our systems annually. Last year we went through a SOC 2 audit 
and obtained an unqualified opinion with regard to 
certification there. We recognize the importance of data 
protection, for our own data and for the CFTC data that we 
hold.
    With regard to our members, we, several years ago, adopted 
guidelines with regard to our members, requiring them to have 
policies and procedures in place with what we call an 
information system security program. They have to do an 
assessment of the risks. They have to look at what tools they 
should have, protective measures, in light of those risks, do 
annual training with regard to their employees. Our 
examinations obviously have focused on that area. We largely 
took an approach, in the past few years, of educating our 
members about that risk.
    Our notice, I should note, covers the largest financial 
institutions but also the introducing brokers located in the 
Midwest, and so we want to make sure that they are aware of 
that risk and have tailored their particular protections 
according to their particular risks. So we are continuing to 
work with our members.
    Just recently we reviewed our cybersecurity requirements 
and put in place a requirement that member firms, if they have 
a breach with regard to their commodity interest business, have 
to notify NFA. We followup then and we see what kind of 
protective steps they are going to take.
    Senator Stabenow. Wonderful. Well, thank you very much. I 
noted with interest you were saying that you had increased your 
budget in this area by 140 percent--that is, NFA's budget for 
this, 140 percent.
    Which leads me to Mr. Kelleher and the question of CFTC 
funding, because CFTC funding certainly has not gone up 140 
percent as it relates to enforcement in these areas. We are 
lucky to stay even.
    All of these responsibilities--digital currency markets 
that are largely unregulated, as well as the other 
responsibilities--are so critical for the CFTC. Could you just 
take a moment to talk about the resources again? What should we 
be doing to improve the situation?
    Mr. Kelleher. Well, you know, we applaud the NFA and others 
who have the ability and had the wisdom to increase their 
resources dramatically and increase their capabilities 
dramatically, but they, too, are leaving the government and the 
public servants in the dust. They do not have the resources, 
and we know that. They are not even keeping up with inflation.
    If you look at--and we put this in our testimony, in my 
written testimony--if you look at the budget, the increases to 
the CFTC, they are barely above inflation, and yet if you 
compare them to the additional responsibilities, and quite 
grave responsibilities have been thrust upon the CFTC, in Dodd-
Frank, and as a direct result of the financial crash, and 
unregulated out-of-control derivatives market that they are now 
responsible for making sure that does not happen again. Both 
they are ensuring transparency, competition, enforcing the 
rules, the rules of the road that benefit everybody.
    Every NFA member benefits tremendously by the CFTC being on 
the job, doing their job effectively and consistent with all 
their requirements. That is why we advocate not just increasing 
their resources, we advocate for a user fee. That is the only 
financial regulator that is not funded by the industry, and it 
should be.
    I understand Mr. Barker's concerns, and I think that the 
assumption that a user fee is going to destroy markets and 
injure all sorts of market participants, I think, it has been 
historically proven to be false every time it has been raised. 
That does not mean it is not relevant. I agree it is relevant 
and it should be foremost in everybody's mind. A user fee that 
adequately funds the CFTC to do its job, like the SEC--which 
has been doing this since its creation in 1934, in the Exchange 
Act, when it was passed.
    I do not know if you have noticed but those markets are 
doing, you know, pretty okay, and if they are not doing okay it 
is not because of this de minimis user fee. Better Markets 
provided an analysis in 2013, when you were considering 
reauthorization then, that showed how de minimis a user fee 
would actually be to adequately fund the CFTC.
    So we would encourage you, in any reauthorization, to 
provide the resources, and we would suggest that you provide 
them according to a user fee. If not, then provide them 
directly. Because if you think about it, as I said in my 
opening statement, it is like paying for an insurance policy 
today. You pay for an insurance policy on your house. Your 
house is worth $300,000. You pay a couple hundred dollars for 
insurance. As we show on page 20, 42 financial institutions in 
this country received more TARP money in 2008 than the entire 
budget of the CFTC in 2019. I mean, that just goes to show the 
disparity in finding and the need.
    Senator Stabenow. Thank you. Mr. Chairman, I want to ask 
one other question for the record, to Mr. Lukken--he can 
respond in writing, but I would like to just ask the question.
    Mr. Lukken, I wanted to talk to you about customer 
protection. The CFTC recently announced that it plans to 
consider new rule amendments related to cross-border issues, 
including the treatment of clearinghouses located outside the 
United States. I find it very troubling that these rules may be 
pushed through before the CFTC's new Chairman takes office--
even though the current Chairman's term has already expired, 
and the Senate already confirmed the new Chairman with a 
strong, bipartisan vote of 84-9, earlier this month.
    I am deeply concerned about the policy implications of 
changes that may come in terms of consumer protection and other 
markets. I will be watching very closely to see who benefits 
from any last-minute rules changes, and I would appreciate it, 
in writing, if you would respond regarding the three proposals 
that the outgoing Chairman is potentially taking action on next 
month. Thank you.
    Chairman Roberts. I thank the Senator, and Senator Boozman.
    Senator Boozman. Thank you, Mr. Chairman. This is really an 
important hearing in regard to the benefit of our farmers, as 
we all know, so thank you all for being here.
    Mr. Kelleher, I do not understand your analogy in regard to 
the entities receiving TARP money. Did they pay it back?
    Mr. Kelleher. I believe most of TARP was paid back, 
although I would say that the analysis, in my view, and the 
point of view should be at the time of the vote, when you 
actually did not know whether it was going to work, whether it 
was going to be paid back, how much was going to be paid back. 
So we now know that with the benefit of hindsight.
    Similarly, we sit here today facing unseen risks that are 
not addressed because of lack of resources. So you are kind of 
in the same position. You will not know until 20 years from now 
whether or not inadequate funding caused the problems that 
people are concerned about.
    Senator Boozman. No, and I am not really arguing about 
that. I think when the law was passed, the safeguards were put 
in place, the interest rate, the whole bit.
    I used to be chair of the Financial Services and had 
jurisdiction over CFTC. I do not remember them ever giving 
anything back. That is not to say that they are not underfunded 
and work very, very hard and have a huge job, which is growing 
on a daily basis.
    Mr. Lukken, in your testimony you note that a number of 
firms providing clearing services has dropped considerably in 
the past few years. What is your take on why the consolidation 
is happening, and how should the Committee address this during 
the reauthorization process?
    Mr. Lukken. Well, my guess is it is several factors playing 
into why FCMs have been shrinking over time. I think in my 
testimony it is 84, I think, in 2008, and we are down to 55 
FCMs now.
    The critical issue to understand with that is that FCMs 
play a critical role in the safety net of clearing. The first 
absorption of losses are the FCMs, when a member defaults. So 
the fewer of them--it is just like insurance. If there are 
fewer people in the insurance pool, the insurance is not 
socializing that risk.
    So we have concerns that it is due to technology, to costs. 
It is becoming, as Joe mentioned, a low-margin business. Part 
of it is capital. Right now a lot of the banks that do the 
clearing are facing capital charges that hold capital against 
clearing. Our view, the G20 came out with two pillars of 
reform. One is to put more things in the clearing and one is to 
raise bank capital. Both are admirable goals. However, in one 
instance they are working against each other, where clearing 
actually is being--banks are being forced to hold capital 
against initial margin.
    The Basel Committee, last week, in fact, came out with a 
recommendation to have an offset of initial margin against that 
capital, and we are hopeful that prudential regulators 
implement that in the current proposal that is before them now.
    Senator Boozman. So again, we hear a lot from constituents 
about how harmonizing rules would lessen the paperwork and 
burden that firms face. Again, this is something that seems to 
be something that would be very doable.
    Mr. Sexton, I had a question about cybersecurity and I 
think it was asked and was answered well. In your testimony, 
though, you said that not holding unnecessary data in the first 
place is the best mitigation of risk, and I would agree with 
that totally.
    We have gone through a period--I think it has backed off a 
little bit, but there for a while there just seemed to be an 
insatiable gathering everything we could gather, and in asking 
what we were going to do with that data and this and that, not 
only with CFTC but with so many other agencies. There really 
were not any answers, just that we need to gather it. Can you 
comment about that?
    Mr. Sexton. Thank you, Senator, and as we indicated in our 
testimony that perhaps the best risk mitigation is not 
collecting data that we simply do not need. We certainly 
commend Commissioner Stump's efforts at the CFTC, recent 
efforts to look at the data that the CFTC is collecting and 
kind of undergo this process. We, ourselves, undergo this 
process. As I said, if we do not need the data we should not be 
collecting it. It has to serve the regulatory purpose that is 
smart.
    Senator Boozman. Thank you, Mr. Chairman.
    Chairman Roberts. Senator Smith.
    Senator Smith. Thank you, Chair Roberts, and also Ranking 
Member Stabenow for holding this hearing today, and thanks to 
all of you for being here. I appreciate. I would like to extend 
a special greeting to Mr. Barker, my fellow Minnesotan. I 
appreciate you being here.
    So we have experienced significant economic growth since 
the 2008 financial crisis. Many Minnesotans have felt this, yet 
many Minnesotans are still continuing to suffer from the 
consequences of that crisis. Better Markets, I think it is 
notable, has estimated that that crisis cost the economy $20 
trillion in economic productivity.
    I think, believe, and think the evidence is there, that the 
crisis was caused, in large part, by the fact that there was 
effectively no regulatory regime in place to oversee the swaps 
market, with hundreds of trillions of dollars of notional 
value.
    So in 2008 and 2010, this Committee authorized legislation 
to resolve this issue by finally giving the CFTC authority to 
oversee the swaps market. There are still lots of unanswered 
questions about what will happen in the inevitable future 
downturn.
    So Mr. Kelleher, let me ask you first. Do you think that 
the CFTC has the resources to effectively oversee this market 
and the tasks that we, Congress, have given it?
    Mr. Kelleher. I think any comparison of the duties and 
responsibilities, just narrowly speaking, the statutory duties 
and responsibilities from the CEA, as it has been amended 
through Dodd-Frank, that they are grossly, grossly underfunded 
and cannot possibly do it. I agree with Senator Boozman and Mr. 
Sexton about you do not want to collect any data that you do 
not need.
    One of the things that was needed desperately was data and 
information that regulators would have. I can tell you, I 
remember when Walt was acting Chairman during the crisis and 
came up to the U.S. Senate to brief members, and I think 
Senator Durbin will remember this. The CFTC and its leadership 
team, their answers were mostly, ``Well, we do not have that 
information. We do not have that information. We do not know 
what is happening. We do not have the information.''
    Senator Smith. Mm-hmm.
    Mr. Kelleher. The good news is you change the law. The law 
requires the gathering of that information, and its protection 
and its analysis and its use, so you can have data-driven 
rulemaking and decisionmaking, and yet you underfund the CFTC 
to be able to deal with the information and have the analysis 
and the technology to do it.
    So, I am sorry, it is a long answer, but the short answer--
--
    Senator Smith. We have the data----
    Mr. Kelleher [continuing]. is they just do not have the 
resources.
    Senator Smith [continuing]. so you are saying we have the 
data but we do not really have the resources to use that data.
    Mr. Kelleher. A lot of the data is flowing in, and I think 
you will agree the data is flowing in but it is not being 
optimized anywhere near, from an analytic point of view and 
from a decisionmaking point of view, that we all had hoped it 
would and that it should.
    Senator Smith. So--and this is the line of questioning that 
Senator Stabenow was on, but, you know, I am struck as I think 
about how this market works. You know, there is important self-
regulation, and then there is also the role of the public, the 
taxpayers, the consumers, that is expressed through the role of 
government, the government's role here.
    So I would be interested in just hearing whether you think 
that balance--do we have the right balance? Is the balance out 
of whack? What should it look like?
    Mr. Kelleher. Well, you are absolutely right. There should 
be a balance between self-regulatory organizations that are 
authorized and overseen by government entities that, 
importantly, are controlled by you, elected officials. The 
self-regulatory agencies are not, and they are profit-
maximizing private entities. God bless them. That is what they 
should do. That is what we want them to do.
    Senator Smith. That is the point, right.
    Mr. Kelleher. We want them to do it in agriculture. We want 
them to do it elsewhere. Those priorities are not necessarily 
the priorities of the government, and they may not be the 
priorities of elected officials overseeing the government.
    So it is important to get the balance right, and we do not 
have it right.
    Senator Smith. Is that primarily because of the resource 
imbalance or is it authority imbalances also, in your view?
    Mr. Kelleher. I would say it is both, but it is primarily 
driven by resource imbalance. You know, it is great that the 
NFA is increasing, as I said earlier, increasing its budget and 
its personnel, and, you know, even the trade groups, they are 
all increasing their budgets, their personnel, and 
technological savvy. Yet we are choking the CFTC.
    I want to say--just take a minute and say, you know, God 
bless the men and women working at the CFTC, not just today but 
over the years, all the way back through Walt's term and 
others, through the financial crisis and since, through Dodd-
Frank, doing rulemaking after rulemaking. Whether you agree or 
disagree with them, they have done an unbelievable job. They 
are public servants of the highest order and have done a 
terrific job, under circumstances that should not exist. They 
should get the support, the money and the authority they need 
to do the job that you have statutorily required them to do.
    Senator Smith. I have just a second or two left, but I just 
want to see if anybody else would like to have a comment on 
that overall question of what is the appropriate balance 
between self-regulation and the role of the public sector here.
    Mr. Sexton. Thank you, and as a self-regulator on the panel 
I think that the role of self-regulation is essential for these 
markets.
    Senator Smith. As do I.
    Mr. Sexton. We do not maximize profits. We are not a 
maximizing-profit entity. As I said, along with self-
regulation, I think what is also critically important is strong 
oversight of self-regulators, which we have in the CFTC.
    So I described our relationship as a partnership, Senator. 
It truly is a partnership, looking at all the various issues 
that we have tackled in the last six years, since Dodd-Frank, 
and we look forward to working with the Commission and this 
Committee in the future in doing so.
    Senator Smith. Thank you.
    Chair Roberts, I know I am out of time. I have a followup 
question on position limits which I will submit for the record.
    Chairman Roberts. Without objection.
    The distinguished Senator from Illinois.
    Senator Durbin. Mr. Chairman, I am trying to get use to 
where I am sitting here. I feel like I am part of a panel.
    [Laughter.]
    Senator Smith. I cannot get use to sitting on this side of 
you, Senator.
    Mr. Kelleher. I defer to let Senator Durbin answer for me.
    [Laughter.]
    Senator Durbin. I do not mean to block you.
    I would like to ask the panel, originally, the Commodity 
Futures Trading Commission focused on commodities. What 
percentage of the business in this industry now relates to 
agricultural commodities?
    Mr. Lukken. We collect that data. It is actually in my 
testimony. I think it is around seven to eight percent, around 
that area.
    Senator Durbin. Interesting that we are in the Ag Committee 
discussing the Commodity Futures Training Commission, where 92 
percent of their business does not have anything to do with 
agriculture commodities.
    So a few years ago, when I was in a position to do so, as 
the Chairman of the FSGG Subcommittee of Appropriations, I 
called my friend, Herb Kohl, and said, ``You have, in the Ag 
Subcommittee, the CFTC. I have the SEC. Would you mind if I had 
the CFTC too?'' He said, ``Be my guest.'' So now, from the 
appropriations viewpoint, they are married, in terms of where 
they are headed.
    To Mr. Kelleher's earlier point, when it came to funding it 
was a totally different story. There was plenty of money in the 
SEC, in fact, a surplus of money at some point, more money 
being collected than they were actually spending for inspection 
and regulation purposes.
    I found, as you have alluded in your testimony, there was 
resistance to funding the CFTC. I think that is a mistake. If 
we want to maintain the integrity of our Commodity Futures 
Trading Commission and the industry that it regulates, we 
certainly want enough cops on the beat to be credible, and I do 
not think we are keeping up with that demand.
    So we can argue about the source of it, but I certainly 
think the bottom line is CFTC needs more resources in order to 
deal with the volume of work that they are undertaking, 92 
percent of which has nothing to do with agriculture.
    I would like to ask question, and I do not know who would 
be the right person, so I will just give it to the panel, about 
Brexit. As this Brexit dynamic continues and as the remaining 
EU member states look to draw business away from the UK, 
creating new regulatory regimes for trading and clearing 
derivatives, that move away from the 2016 CFTC EU equivalence 
agreement, the U.S. exchanges and clearinghouses that have done 
business in the EU countries for decades could be harmed if an 
agreement to avoid disruption is not reached. The Chicago 
Mercantile Exchange estimates it could stand to lose up to 30 
percent of its current business without this agreement.
    So maybe Mr. Lukken, since you appear to be knowledgeable 
on this topic, what is under consideration to ensure the 
contours of an equivalence deal are maintained.
    Mr. Lukken. Let me start by saying that this mutual 
recognition regulatory approach has been around a long time, 
and you probably remember, many years back, the Foreign Board 
of Trade Regime, which Congress gave the CFTC the ability to 
recognize foreign boards of trade to allow people and consumers 
in the United States to access foreign boards of trade where 
they might need to hedge or participate in those markets.
    So this has been an approach that has been largely accepted 
as an international standard, and the EU and the United States 
had entered into an equivalence agreement, as you mentioned, 
two years ago. As they are developing their regulatory 
structure in the EU, Brexit occurs, so now the financial center 
of Europe will be located outside of the EU's economy, and they 
do not want that to happen. So they are looking for ways to 
maintain control over that.
    Unfortunately, the United States is also located outside of 
the EU, and we are going to be subject to this same criteria 
that they are putting on the UK and their clearinghouses there.
    So we think there is a pragmatic approach here, that they 
should recognize the equivalence agreement that was agreed to 
in 2016. They have the authority, in the law, EMIR 2.2, to do 
so, and we have been encouraging the EU to do that.
    Now we do not know for certain whether they are going to do 
that. They have the tools and it is out for comment right now. 
Certainly the industry, the CME, ICE, and others are lobbying 
them very hard to make sure--and there is a House hearing 
tomorrow on this--to make sure that EU does the right thing.
    Senator Durbin. Give me, if you can, kind of snapshot. When 
it comes to futures derivatives and such, what percentage is 
actually flowing through the United States and what percentage 
in other parts of the world?
    Mr. Lukken. You know, it is a tough one to measure, but I 
would say two-thirds, one-third of the derivatives markets 
somehow touched the United States in some capacity, and it is 
significant.
    Senator Durbin. So if the UK--I am trying to sort this out 
in my mind--if the UK does withdraw from EU, Brexit, and at 
that point whatever trading took place in the UK, EU would like 
to have at home, in the EU countries, give me a snapshot of 
what that looks like.
    Mr. Lukken. Well, first off it is going to hurt the EU. I 
mean, that is the ironic part, is that their customers are 
going to lose access to global markets, and it is going to hurt 
EU businesses. So we have encouraged them to adopt this 
approach that allows EU customers to have access to the UK, the 
United States markets, through this recognition approach, which 
has largely been the standard for 20, 30 years.
    So, ironically, though the EU is trying to get business to 
come into the EU, they are hurting their own selves by doing 
so.
    Senator Durbin. Thank you.
    Chairman Roberts. I thank the Senator for a most pertinent 
observation.
    Senator Hoeven--well, as I speak, Senator Hoeven, you are 
recognized.
    Senator Hoeven. Mr. Chairman and Ranking Member, thanks, as 
always, for calling this hearing.
    I would just start out by asking the panel, and maybe each 
of you can respond, do you foresee improvement in crop prices, 
based on what is going on in the market, and if so, do you see 
a reaction in the futures market?
    Please be specific. You can round to the nearest dime.
    [Laughter.]
    Mr. Barker. We have seen extreme volatility in agriculture 
markets. We have already seen the price of corn rally close to 
$1. Soybeans are up more than $1 from the lows this spring, 
based on the really slow planting progress, really across the 
Grain Belt, I mean, South Dakota, Iowa, Missouri, Illinois, 
Indiana, and Ohio.
    Just two weeks ago I drove from St. Louis to Detroit, of 
all things, visiting clients out in the country, as we say, and 
there are some areas, specifically in northeast Indiana, 
northwest Ohio, that are looking quite rough, where the corn in 
that area, what did get planted, which, in some cases, is less 
than 25 percent of intentions, is less than four inches tall. 
There is an old saying, we would like our corn knee-high by the 
Fourth of July. It is unlikely we will actually get there.
    Depending on what happens with trade and some other 
factors, I can see a situation where the price of grain may go 
higher if the crop failure does come to fruition. Our markets 
are forward-looking, but our markets also like to see data as 
we go along. So most recently, in the last USDA report, when 
the USDA decreased the acres of corn and also do you see a 
reaction in the futures market?
    So to answer your question as best I can, not to the 
nearest dime, but there is potential for our ag markets to go 
higher in the grains. Then livestock, the hog market is quite 
focused on the disease situation in China and how that may 
impact the price of pork. The dairy markets could use some help 
from the USMCA, and we have seen dairy prices come up in the 
last couple of months, if that helps.
    Senator Hoeven. Both Mr. Sexton and Mr. Lukken are in the 
futures market, so you guys should have it diced. What is your 
forecast? The preventive plant program is going to have an 
impact too, is it not, in terms of supply and demand, or price, 
right?
    Mr. Sexton. Senator, as a regulator I learned a long time 
ago not to forecast crop prices, so I think I am going to take 
a pass on this particular question.
    Senator Hoeven. All right. Mr. Lukken?
    Mr. Lukken. I was just going to say, I think for us we are 
sort of agnostic to prices, but we want to make sure the 
markets are reflecting the proper supply and demand that are 
occurring in the marketplace, and certainly we are hopeful that 
farmers are getting high prices. Our main job is to make sure 
the markets are free of manipulation and that they are properly 
reflecting supply and demand.
    Senator Hoeven. Yes, I get that, but, you know, we have 
been in a tough cycle for quite a while on commodity prices, 
and I am just wondering if any of you see some improvement. Are 
you seeing some signs, some indications that we may get some 
strengthening in these markets?
    Thank you, Mr. Barker. You did a good job on it, and I hope 
you are right, but just any other thoughts? Mr. Kelleher?
    Mr. Kelleher. The only thing I would say is I think Mr. 
Barker has referred a number of times to the volatility in the 
markets, and there are a lot of factors going into the 
volatility and there are a lot of factors going into price, 
none of which am I an expert on.
    One thing we do know, there is excess speculation in these 
markets, and we need a strong, robust, effective position limit 
rule so that we can try and get these markets back to serving 
the constituency they were created for, which is the actual 
physical purchasers and producers of commodities. We have a 
financialization of these markets where there is excess 
speculation across the board.
    Better Markets did a study a couple of years ago that 
showed that if you go back a couple of decades, speculative 
interest in the markets were roughly 30 percent, and physical 
traders were roughly 70 percent. That has now flipped. 
Speculation is now--oh, this is a rule of thumb, roughly. If 
you look at different markets it is different, obviously. Rule 
of thumb, roughly 70 percent spec interest, 30 percent actual 
physical producers and purchasers in these markets.
    Any reasonable look at these and you can see there is 
excess speculation. That is affecting prices. That is harming 
the ability to hedge. That is driving up the cost to hedge, and 
it causing the loss of credibility and faith in some of these 
markets. I think the CFTC needs to get the position limit rule 
done, done right, and done robustly so that we can get these 
markets back to serving the people that they were created for, 
were intended to serve. Those are Mr. Barker's constituents.
    Senator Hoeven. Are the futures markets working well for 
our ag producers right now, or not?
    Mr. Barker. I believe they are functioning efficiently, and 
when the farmers make their independent decisions to market 
their crop I believe the markets are there for them today. The 
farmers do rely on the CFTC to be that referee, to make sure 
that our markets are fair and adequate. So we do encourage 
additional resources for the CFTC to ensure these markets are 
there and fair.
    Senator Hoeven. Are there changes that should be made that 
would improve it?
    Mr. Barker. Well, I would like a little bit of time to 
research that, specific changes that could be made to improve 
it. I do think resources are certainly needed, and I will just 
stop there.
    Senator Hoeven. Same question, Mr. Lukken?
    Mr. Lukken. We certainly support a well-funded CFTC, and I 
think that has been talked about quite a bit here. So that is 
something I think will help the agency oversee the marketplace.
    I do not think there is a need for specific changes to the 
law itself. As I mentioned in my opening statement, the CFTC 
has adequate authority. It has a principles-based regime that 
allows it to change its rules over time. So I do not think 
there are any specific changes the CFTC needs in order to make 
sure these markets are healthy and efficient.
    Senator Hoeven. Mr. Sexton or Mr. Kelleher?
    Mr. Sexton. I will go back to my written testimony, and one 
FCM bankruptcy is too many. Customers should be protected in 
FCM bankruptcies and we are strong supporters of the fix that 
is described with regard to the Griffin Trading matter, with 
regard to customer protection, and that is the change that I 
think is necessary to protect farmers and ranchers and other 
customers.
    Senator Hoeven. Say that again--specifically?
    Mr. Sexton. The Griffin Trading case. It is in our 
testimony, sir.
    Senator Hoeven. Yes, Okay. Mr. Kelleher?
    Mr. Kelleher. Well, I certainly agree. You know, I think 
people can argue whether or not the current authorities are 
adequate for customer protection. We think they are. We think 
the court case was an outlier, but we certainly agree with 
making it clear that that is the case.
    The one thing I would say is, you know, I think there is 
unanimity that the CFTC needs resources and some authorities, 
but certainly resources. What I would like to see is as much 
lobbying effort go into getting the CFTC the resources they 
need as they go into other aspects of the lobbying, from 
entities who are over at the CFTC looking to get them to do 
what they should do and do their job well and on time. Their 
ability to do that goes down day by day.
    So I would encourage everybody to put funding at the top of 
the list so that many of the things we all hope to happen here, 
we all agree on, happen.
    Senator Hoeven. Thank you. Thank you, Mr. Chairman, and 
again to the Ranking Member for the hearing today. I appreciate 
it.
    Chairman Roberts. Well, thank you, Senator Hoeven.
    I am going to hold the thought that I had in mind with 
regards to funding, and just leave it out there for people to 
wonder what the heck I was going to say.
    [Laughter.]
    Chairman Roberts. So with that, that will conclude our 
hearing today. To our panel of witnesses, thank you for sharing 
your views on an important topic. You all gave very pertinent 
testimony. Thank you. You have given this Committee much to 
think about as we continue to work toward CFTC reauthorization.
    For those in the audience and all of our stakeholders whose 
opinions we value, if you want to provide additional views on 
reauthorization we have set up an address on the Senate 
Agriculture Committee's website to collect your input. Please 
go to ag.senate.gov and click on the CFTC Reauthorization 
Hearing box on the left-hand side of the screen. I wonder why 
it is not on the right-hand side, but never mind.
    Please note that link will be open for five business days 
following today's hearing. To my fellow members, we would ask 
that any additional questions you may have for the record be 
submitted to the Committee clerk five business days from today, 
or by 5 p.m. next Tuesday, July 2nd.
    The Committee is adjourned.
    [Whereupon, at 11:16 a.m., the Committee was adjourned.]

      
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