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Opening Statement, Agricultural Advisory Committee - CFTC Commissioner Scott O’Malia

Date 19/05/2011

Thank you Commissioner Dunn for hosting today’s meeting of the Agricultural Advisory Committee. I look forward to the staff presentations and I am interested in hearing from the committee members on the margin, swap dealer and position limit proposals. I look forward to a healthy discussion in each of these areas. I don’t think it’s ever a bad idea to take the time to stop and reassess where you are going in order to make sure you’re still moving in the right direction, especially when you lack a road map.

A few weeks ago, the CFTC and SEC held a joint staff roundtable to discuss the implementation process. We heard some very thoughtful comments. It was abundantly clear to me that the market participants are ready and willing to comply with the rules, but that their capacity to do so depends largely on the Commission sharing its implementation strategy. I heard the same message over and over at the roundtable. Market participants need an implementation strategy to make the necessary investments, hiring decisions, and organizational changes required to comply with the rules.

Despite the roundtable, the Commission has yet to commit to drafting a comprehensive schedule for the sequencing of final rulemakings or an implementation plan. I think it’s time we answered the call and let everyone know what we intend to do and how we intend to do it. I will continue to recommend that the Commission release a comprehensive schedule of the sequencing of final rulemakings and a proposed implementation plan in the Federal Register. After we receive public comment, then we should release a final schedule to the public. I believe this small effort on the Commission’s part will bring transparency to the rulemaking process.

I would also like to take this opportunity to ask the Chairman to hold a staff roundtable to discuss the swap dealer proposal. I have stated publicly that I believe that the definition is too broad and the exceptions are too narrow. The comment letters support this conclusion. This is an extremely important rulemaking and I believe a roundtable is necessary for the Commission to hear from the public, as well as, those commercial entities who believe they may be subject to regulation under our swap dealer rulemaking.

Commissioner Dunn, a year-and-a-half ago, I attended my first Agriculture Advisory Committee Meeting. It was my second or third week on the job. I was impressed with the body of work that this Advisory Committee produced to uncover fundamental flaws in the wheat contract and to offer a range of options for consideration. Again, I am pleased that you have chosen to focus on the needs of the agricultural community, a group that truly embodies end-users who pose the least amount of systemic risk but could pay a very high price as a result of the proposed reforms being mandated under Dodd-Frank. I appreciate your willingness to organize a forum for discussing these important topics.

I look forward to the staff presentations and the discussion of the Advisory Committee members regarding the Commission’s proposals.