Ewing Introduces Exchange Bill

May 30, 2000

Rep. Thomas Ewing (R-IL) has introduced legislation to reauthorize the Commodities Futures Trading Commission. "Legal certainty" for over-the-counter derivatives is included along with regulatory relief for the futures industry and an end to the current legal ban on single stock futures.

"I believe this bill substantively addresses the most important reforms discussed in my subcommittee hearings," said Ewing. Ewing is chairman of the House agriculture subcommittee with exchange jurisdiction. "The American financial industry is involved in a serious battle with its foreign counterparts. If we are to remain competitive with the new electronic exchanges such as EUREX, we must send a clear message that we are going to operate a fair regulatory system."

The bill incorporates ideas from the President’s Working Group on legal certainty for derivatives. Because of concerns over the possibility that products with a finite supply may be subject to manipulation, all agricultural products will remain under the purview of the Commodity Exchange Act under Ewing’s bill.

In February, the Commodity Futures Trading Commission issued a regulatory relief proposal to provide relief to futures exchanges and their customers. That would move the CFTC from a front-line regulatory role to more of an oversight role, says Ewing. The proposal creates three levels of regulation for exchanges based on whether the underlying commodities being traded are susceptible to manipulation, such as agricultural products.

The President’s Working Group agreed unanimously that the Shad-Johnson Accord should be repealed. Ewing’s bill would repeal the accord, and the CFTC and the Securities and Exchange Commission would share jurisdiction on regulating stock index futures and options. Dual trading would be banned, margins would be set equivalent to the options markets, and the SEC would enforce the insider trading laws on these products.