Reauthorizing the Commodity Futures Trading Commission (H.R. 4413)

What is H.R. 4413?

(Updated January 31, 2017)

This bill would authorize spending for the Commodity Futures Trading Commission (CFTC) through 2018 while altering some of the agency’s operational procedures. The CFTC is the government agency that regulates both futures and options markets, as opposed to the Securities and Exchange Commission (SEC), which regulates securities such as stocks. In brief, a person owns a stock, but contracts a future. With stocks, you are buying part of a company. With futures, you are contracting to be a buyer or seller of a commodity (be it oil, or gold, or potatoes). 

Since 2010, the agency has also overseen the derivatives market via the Dodd-Frank Wall Street Reform Act. The CFTC's stated mission is 

to protect market participants and the public from fraud, manipulation, abusive practices and systemic risk related to derivatives – both futures and swaps – and to foster transparent, open, competitive and financially sound markets.

 The last time the CFTC was reauthorized was in 2008, via the 2008 Farm Bill. That reauthorization expired on September 30, 2013.  

Argument in favor

The CFTC’s regulatory powers have hurt farmers, ranchers, and manufacturing. We need less government in business.

Argument opposed

Gives Wall Street broad, new powers to challenge and overturn rules they don’t like, or delay rulings indefinitely via litigation.

Impact

The impact of the bill is both broad and deep. The bill affects the Commodity Futures Trading Commission, farmers, ranchers, businesses, and financial markets.

Cost of H.R. 4413

The CBO estimates that the bill would cost $948 million over the 2015-19 period.

Additional Info

Media:

Futures Magazine

House Committee on Agriculture: Five-Page Summary

 Argument for the Bill:  U.S. Chamber of Commerce

Argument Against the Bill: Americans for Financial Reform

Of Note:

Here's a little bit more background on the difference between stocks and futures contracts.