House passes CFTC reauthorization

The House on Tuesday passed legislation to reauthorize the Commodity Futures Trading Commission through fiscal 2018.

The bill passed 265-144 over objections from some Democrats that certain provisions would impede the CFTC's authority to regulate futures and option markets.

ADVERTISEMENT
The measure includes provisions that would require electronic confirmation of customer fund account balances held at depository institutions. It would also prohibit firms from moving customer funds from one account to another without informing regulators.

Democrats objected to language in the bill that would require the CFTC to conduct cost-benefit analyses of its proposed regulations. They argued it would slow down implementation of the agency's rules.

"Under the guise of cost-benefit analysis, the bill imposes heavy administrative hurdles and new litigation risk on the CFTC, significantly impairing the commission's ability to do its job of regulating our derivatives markets," said Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee.

But Republicans said the changes to CFTC rulemaking were necessary to reduce burdens for firms that must comply with the regulations.

"Due to the consideration of the Dodd-Frank Act, Congress clearly intended to exempt end users from some of the most costly new regulations," said House Agriculture Committee Chairman Frank Lucas (R-Okla.). "However, the CFTC has narrowly interpreted the law, resulting in burdensome and often arbitrary compliance requirements which have negatively impacted end users by making it more difficult and costly to manage the risks associated with their businesses."

The House rejected, 168-242, a Waters amendment that would prohibit judicial review of the CFTC's review of the costs and benefits of its rules.

Additionally, an amendment offered by Rep. Gwen Moore (D-Wis.) that would eliminate the provision requiring cost-benefit analyses and replace it with "sense of Congress" language that the CFTC is already required to conduct such reviews of its regulations was defeated 173-239.

In a statement of administration policy, the White House said it "strongly opposes" the bill because "by imposing a number of organizational and procedural changes and offers no solution to address the persistent inadequacy of the agency's funding." But the administration stopped short of a veto threat.