April 23

The Senate Agriculture Committee begins its hearings on reauthorizing the Commodity Futures Trading Commission May 5 with a look at agricultural trade options, the committee's chairman said.  Sen. Richard Lugar (R-IN) also said the committee will consider the nomination of Tom Erickson as a CFTC commissioner the same day.

"Trade options" are offered over the counter rather than on an exchange and usually require that one of the parties be engaged in a business relevant to the option, rather than being a private investor or speculator.  Agricultural trade options had long been illegal but are permitted under a pilot program that the CFTC offered last year.  To date, there has been virtually no activity in the program, which grain firms have charged is overly burdensome and restrictive.  Some farmers remain suspicious of complex off-exchange products since hedge-to-arrive contracts caused losses for some farms and elevators in 1996.

Erickson, who now runs Congressional relations for CFTC, was nominated to fill a spot left vacant when former commissioner John Tull retired.  CFTC Chairperson Brooksley Born has announced she will leave, but no successor has been named.  Speculation has centered around William Rainer, who earlier held an appointive adminstration post and has experience in financial markets.  Many observers believe  Born will leave by early June whether or not a successor is in place.