[Congressional Record Volume 151, Number 161 (Thursday, December 15, 2005)]
[Extensions of Remarks]
[Pages E2548-E2549]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    CFTC REAUTHORIZATION ACT OF 2005

                                 ______
                                 

                               speech of

                        HON. NYDIA M. VELAZQUEZ

                              of new york

                    in the house of representatives

                      Wednesday, December 14, 2005

  Ms. VELAZQUEZ. Mr. Speaker, I rise to express concerns with Title II 
of H.R. 4473, which reauthorizes the Commodity Exchange Act (CEA). When 
the CEA was previously reauthorized in 2000, changes were made that 
brought much needed legal clarity to over-the-counter derivatives and 
foreign currency markets. In the same legislation, the regulatory 
structure of U.S. futures exchanges was enhanced, providing a more 
flexible approach to the oversight of complex financial instruments. 
Together, these two developments provided a structure that has promoted 
the depth and breadth of U.S. capital markets throughout the world. 
Such vibrancy of U.S. capital markets is critical to creating new jobs, 
building wealth, and attracting investment.
  While the reauthorization of the CEA is essential to the efficient 
functioning of our Nation's capital markets, I am concerned that title 
II of H.R. 4473--while well intentioned--may disrupt the balance 
created through the reauthorization of the CEA in 2000. Title II of 
H.R. 4473 provides the Commodity Futures Trading Commission (CFTC) with 
expansive new powers that may be interpreted as applying the CEA to 
over-the-counter natural gas contracts. Doing so may jeopardize the 
legal certainty of certain natural gas contracts, potentially 
undermining the efficiency and robustness of the very markets that 
proponents of Title II are seeking to promote. The Federal Reserve and 
the Department of Treasury have raised similar concerns about this 
legislation.
  In addition, other concerns have been expressed about H.R. 4473. 
Section 201 provides the CFTC with new market surveillance powers, 
which require the CFTC to investigate any highly unusual price changes 
in futures contracts for natural gas. Such new powers may not be the 
most appropriate policy response to address widely fluctuating natural 
gas prices. The Federal Reserve has noted that wide swings in natural 
gas prices are not a result of weak regulation, but rather due to 
supply and demand imbalances related to insufficient infrastructure 
necessary to produce and transport the underlying commodity. Further, 
section 202 imposes new position reporting standards on holders of 
natural gas futures or options contracts, requiring that records of 
such contracts be maintained for five years and provided to the CFTC as 
their request. These new requirements are not without costs, which 
could be significant and may be

[[Page E2549]]

passed on to homeowners and businesses. As a result, this provision 
could have the unintended affect of increasing costs on energy 
consumers.
  By potentially expanding CFTC authority beyond that established in 
the 2000, serious questions have been raised about CEA's scope and 
construction and the potential impact these new changes may have on 
energy consumers, investors, and industry participants. As this 
legislation heads to conference, I urge my colleagues to thoroughly 
discuss and address these issues and concerns so that we can be 
confident that our Nation's capital markets remain strong and vibrant.

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