Energy, Ag industries seek derivatives exemption

Energy and agriculture interests are lobbying the Senate for a broad exemption from new regulations of the multitrillion-dollar derivatives market.

In a draft letter, the Natural Gas Supply Association (NGSA) and National Corn Growers Association (NCGA) say $900 billion of capital could be drained from the economy if legislation forces clearing and margin requirements in the derivatives market.

"Without exempting commodity end-users and derivatives for hedging, this legislation would significantly impact the U.S. agricultural industry, natural gas jobs, government revenues and local economic value," the associations write in the letter.

The energy and agriculture interest say that without an exemption, they would be forced to divert capital away from their core businesses.

Senators are working towards a Memorial Day vote on a wideranging financial overhaul, and the derivatives regulation is one issue among many that lawmakers are still working to resolve. Senate Banking Committee Chairman Chris Dodd (D-Conn.) included placeholder derivatives legislation in a bill that passed his panel on a party-line vote before the recess.

The Senate Agriculture Committee, which has jurisdiction over the Commodity Futures Trading Commission (CFTC), has been working on derivatives regulations that could be meshed with the Dodd bill.