CFTC Agricultural Advisory Subcommittee Adopts Recommendations on Supervision of Open Interest Futures Contracts – Finance and Banking

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United States: CFTC Agricultural Advisory Subcommittee Adopts Recommendations to Monitor Open Interest Futures Contracts

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A CFTC Advisory Subcommittee on Agriculture (the “Subcommittee”) made recommendations to the Advisory Committee on Agriculture (“AAC”) on “Efficient and effective oversight of changes in open interest agricultural futures contracts”.

In its report, the subcommittee looked at improvements in current procedures for monitoring changes to contracts with open interest. The subcommittee found that effective oversight cannot avoid the compromise between the need for necessary contract changes and the fact that such changes result in transfers of value. However, the subcommittee noted that it is possible for the CFTC to play a critical role in the treaty amendment process by “facilitating the flow of information and providing channels for public engagement and open dialogue”. [which
would] to meet the declared desire of market participants for information and information about the contract amendment process. “

The subcommittee recommended that the CFTC:

  • Providing improved information to the public on (i) markets subject to the CFTC approval process and (ii) the results of past rule changes;
  • create a reinforced system for public comment on tabled amendments, allowing all market participants to comment;
  • Improving risk awareness to clarify the possibility of changes to open interest contracts;
  • Focus on contract changes that are more likely to affect the value of the contract; and
  • Change personnel policies and guidelines to reflect current market conditions and contract specifications.

The subcommittee voted unanimously to accept the recommendations.

Commenting on the CFTC’s AAC meeting on June 9, 2021, Commissioner Dawn Stump praised the efforts of the subcommittee to develop “a consensus-based approach to managing the open interest of changes to agricultural commodity contracts”.

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