Statement of Administration Policy: H.R. 2869 - The Commodity Futures Improvements Act of 1989

(House)
(English (D) Oklahoma and seven others)

The Administration supports House passage of H.R. 2869 but will seek various amendments in the Senate to: ensure that the efficiency and competitiveness of U.S. futures markets are preserved. The Administration will seek amendments to:

• authorize the CFTC to determine the threshold trading level at which the dual trading ban becomes effective. (The provision contained in H.R. 2869 may not provide the CFTC with adequate flexibility to consider market-specific factors in implementing the ban.);
• modify or clarify the bill's limitations concerning insider trading. (The Administration strongly supports efforts to ensure the integrity and security of the Nation's futures markets, but it is not clear that application of the concept of insider trading, as developed in securities markets, is appropriate for futures markets.); and
• delete the provision that would limit trading among members of broker associations to 25 percent of total trading. Further study on the role of broker associations is needed to determine whether such a restriction is warranted.

Upon further review, the Administration may seek additional amendments to address related issues not covered by the bill.

In addition, the Administration would oppose any amendment to enact criminal sanctions for an abuse arising from dual trading on futures exchanges (i.e., "front running"). The existing anti-fraud provisions of the Commodity Exchange Act, as well as the mail and wire fraud provisions of the United States Criminal Code, provide ample statutory authority to proceed against front running offenses.