The American Feed Industry Association (AFIA) commended the Commodity Futures Trading Commission (CFTC) and the Senate on a recent vote to approve an overhaul of the country's financial regulations regarding derivative trading. This new law affects trading of agricultural commodities, including many petfood ingredients, which fall under CFTC regulation.
Key provisions of the new law supported by AFIA give the authority for setting aggregate speculative position limits for market participants across various exchanges. It also requires mandatory clearing of nearly all swaps, including over-the-counter derivatives, which fall under mandatory trading rules. Any swaps not covered under this requirement must meet specific criteria and will be subject to regulatory oversight.
In addition, CFTC and the Securities and Exchange Commission were granted strengthened authority to determine whether certain market actions are disruptive or manipulative, allowing them to take enforcement actions if needed. The Federal Reserve Board was given authority to step in if large financial entities act in a disruptive or manipulative manner.