The U.S. Commodity Futures Trading Commission (CFTC) would facelimits on its ability to impose rules on derivatives tradedoverseas and on manufacturers that use swaps to hedge businessrisks under bipartisan congressional legislation setting the scopeof the agency's powers.

Republicans and Democrats on the House Agriculture Committee,which has jurisdiction over the CFTC, introduced a 48-page billthat would also force the agency to assess the costs of itsDodd-Frank Act regulations and conduct a new study of high-speedtrading. The legislation is typically approved once every fiveyears.

Representative Frank D. Lucas, the Republican chairman of thecommittee, said in a statement that the legislation “improves theefficiency and accountability of the CFTC, ensures regulations areimplemented in a sensible manner, maintains the integrity of themarketplace, and guarantees our global competitiveness.”

The committee scheduled a meeting in Washington on April 9 toconsider the legislation. The bill is co-sponsored by DemocraticRepresentatives Collin Peterson of Minnesota and David Scott ofGeorgia, and Republican Representative K. Michael Conaway ofTexas.

The legislation is the first step in a broad congressionaleffort to review commodity laws since the CFTC implemented morethan 60 regulations to increase oversight of swaps traded by firmsincluding Goldman Sachs Group Inc., JPMorgan Chase & Co. and BPPlc.

Reduce Risk

The 2010 Dodd-Frank Act financial-overhaul law gave the agencythe task of designing regulations to reduce risk and increasetransparency in the swaps market following the 2008 creditcrisis.

The measure would require the CFTC to release formal rulessetting the reach of its regulations on derivatives tradedoverseas. The agency wouldn't be allowed to set policy throughguidance documents as it did in July and November 2013.

Wall Street's largest lobbying groups—representing GoldmanSachs, JPMorgan, Deutsche Bank AG, and others—suedthe CFTC in December to curtail its scope abroad. Theassociations said the agency illegally set policy through guidancedocuments and staff advisories instead of formalcommission-approved rules.

The case is SIFMA v. U.S. CFTC, 13-cv-1916, U.S. District Court,District of Columbia (Washington).

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