Latest Derivatives Bill Still Poses Some Problems

While the legislation passed by the Senate Agriculture Committee last week would make some big changes in the derivatives market, it allows non-financial corporations that hedge their risks with derivatives to continue using customized over-the-counter instruments. Corporate end users still have problems with the Agriculture version of derivatives reform, though, including its cloudiness about the definition of an end user.

While the Agriculture Committee bill, sponsored by committee chairwoman Blanche Lincoln (D-Ark.), recognizes the needs of corporate users of derivatives, "the legislation still does fall short and picks some winners and losers in the corporate world," says Cady North, manager of government affairs for Financial Executives International (FEI).

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