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Boswell chairs subcommittee hearing on Commodity Exchange Act in 2008 farm billOn March 3, Congressman Leonard Boswell chaired a hearing of the Subcommittee on General Farm Commodities and Risk Management to review changes to the Commodity Exchange Act included in the 2008 farm bill and new proposed rules by the Commodity Futures Trading Commission. CFTC Chairman Gary Genseler provided witness testimony. "Our job in Congress and on this Subcommittee is to bring greater transparency and oversight to the future markets and ensure that we provide necessary oversight of these markets without hindering legitimate consumers from operating within them," said Boswell in his opening statement. "To the extent fraudulent activity is taking place and hard-working Americans are getting taken to the cleaners, we need to ensure that federal regulators have the tools necessary to protect consumers." In the 2008 farm bill, the House Agriculture Committee strengthened the CFTC's authority over retail foreign currency (forex) transactions and in January 2010, the CFTC published a proposed rule to implement that authority. This rule would put in place requirements for registration, disclosure, recordkeeping, financial reporting, and minimal capital standards for forex trading. However, this rule also would impose a new leverage requirement on retail foreign exchange customer accounts that many believe will force customers to take their business overseas. Boswell asked Genseler to explain how the CFTC developed this rule and if the changes in the 2008 farm bill have given the CFTC enough authority to effectively regulate the commodity markets. The hearing heavily focused on a 10-to-1 leverage requirement imposed on retail foreign exchange customer accounts included in the proposed rule. Retail foreign exchange dealers and their customers argue that putting in place such a low leverage limit will force foreign exchange transactions overseas where such limits are not enforced and where dealers are not subject to registration and disclosure requirements. "I am pleased that the CFTC Chairman acknowledged our concerns and appeared open to changes to the leverage requirement," Boswell said. "The CFTC has received over 5,600 comments on the foreign exchange proposed rule and I am hopeful that this input will help the Commission to find a common ground that won't chase business overseas, while still protecting consumer interests."
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