[Public Papers of the Presidents of the United States: George H. W. Bush (1992-1993, Book II)]
[October 28, 1992]
[Pages 2059-2060]
[From the U.S. Government Publishing Office www.gpo.gov]



Statement on Signing the Futures Trading Practices Act of 1992
October 28, 1992

    Today I am signing into law H.R. 707, the ``Futures Trading 
Practices Act of 1992.'' This forward-looking legislation is good for 
America's futures exchanges, good for farmers and ranchers who use 
futures, and good for U.S. financial markets. Indeed, this modernization 
of our financial laws will benefit everybody who works and invests in 
the American economy.
    The bill contains an important provision sought by the 
Administration to give the Federal Reserve Board authority to oversee 
margin levels on stock index futures. The margin provision 
is crucial to help avoid the kinds of major market disruptions that 
occurred in October 1987 and October 1989. It is part of my 
Administration's continuing effort to adapt financial laws to the ``one

[[Page 2060]]

market'' of stock and stock derivative products.
    The bill also gives the Commodity Futures Trading Commission (CFTC) 
exemptive authority to remove the cloud of legal uncertainty over the 
financial instruments known as swap agreements. This uncertainty has 
threatened to disrupt the huge, global market for these transactions. 
The bill also will permit exemptions from the Commodity Exchange Act for 
hybrid financial products that can compete with futures products without 
the need for futures-style regulation.
    The margin and exemptive authority reforms are critical for keeping 
U.S. financial markets strong and competitive. The Administration first 
requested them 2 years ago, and I am delighted that they now have been 
adopted.
    The bill strengthens the ability of the CFTC to police the futures 
markets, impose tougher penalties on wrongdoers, and obtain assistance 
from foreign futures regulators. These provisions will further enhance 
the reputation of the United States as the safest and best place in the 
world to conduct trading.
    Two provisions of the Act could be interpreted in a manner that 
would raise constitutional concerns and will, therefore, be construed so 
as to avoid those concerns.
    Section 215 purports to direct me to appoint persons to the CFTC who 
meet certain congressionally mandated criteria. This provision raises 
constitutional concerns by appearing to circumscribe my power under the 
Appointments Clause to nominate officers of the United States. I shall 
treat the provision as containing advisory, rather than mandatory, 
criteria for appointment.
    Section 213(a)(2) directs the CFTC to issue regulations specifying 
the circumstances under which the governing board of a contract market 
may issue, without prior CFTC approval but subject to CFTC suspension 
within 10 days, issue a temporary emergency market rule. To avoid any 
violation of the Appointments Clause of the Constitution, this section 
will be construed only to permit the CFTC to waive the usual statutory 
requirement that it approve such private market arrangements. So 
construed, the section does not vest exercise of significant 
governmental authority in the governing boards.

                                                             George Bush

The White House,
October 28, 1992.

                    Note: H.R. 707, approved October 28, was assigned 
                        Public Law No. 102-546. This statement was 
                        released by the Office of the Press Secretary on 
                        October 29.