Statement of Administration Policy: H.R. 4613 - Futures Trading Act of 1986

(House)
(de la Garza (D) Texas and 3 others)

The Administration would not object to House passage of H.R. 4613 if section 10 (concerning leverage contracts) is amended to:

Eliminate restrictions governing the commodities (other than agricultural commodities) for which regulated leverage contracts may be written. The Administration does not believe that there is any valid justification for provisions in section 10 which limit new regulated leverage contracts to gold, silver, and platinum. While Congress has precluded leverage contracts for agricultural commodities, no other limitation currently exists. Prohibiting such contracts among willing buyers and sellers would unnecessarily impair the operation of markets and would serve no public purpose.

Eliminate any bars to entry by new firms into the business of writing leverage contracts. In this regard, the Administration also believes that the Commodity Futures Trading Commission's (CFTC) "temporary" moratorium on entry into the leverage business, which has limited the industry to two firms since 1979, is highly anticompetitive and should be lifted at the earliest possible time.

Narrow the report requirement to consideration of appropriate changes in the regulatory scheme governing leverage transactions to ensure the continued financial solvency of such transactions and to prevent manipulation and fraud. Other provisions of the report currently required by H.R. 4613 would be unnecessary if the above amendments are adopted.

The Administration is continuing its review of this legislation to determine if additional amendments may be desirable.