Futures, options and swaps markets are the hidden heartbeat of global commerce.
They reduce the friction of international exchange and enable businesses to compete in every market, on every continent, expanding opportunities for citizens to prosper. Consumers benefit, too, enjoying goods from around the world at low and predictable prices every day.
End users, businesses from farms to grain elevators to multinational companies, use these markets to protect themselves from the uncertainties of a fast-paced, globalized economy. They face risks they cannot control, such as changing interest rates, commodity prices and foreign exchange rates. Options, futures and swaps – derivatives contracts – allow those uncontrollable risks to be managed so businesses can focus on what they are good at: agricultural production, manufacturing and supplying energy.
Our economy, both here at home and around the world, depends on these robust financial markets to allow participants to effectively manage risk and better allocate resources. As members of the House Agriculture Committee, we have jurisdiction over derivatives markets and the regulator for these markets, the Commodities Futures Trading Commission. And as representatives of Illinois, we know how crucial our home state is in the daily operations and overall success of the markets.
Following the 2008 financial crisis, the commission was tasked with creating rules to strengthen the regulation of derivative markets, especially swaps markets, to protect against the conditions that produced the financial crisis. With its new Congressional mandate, the commission is changing how these markets operate. As it does so, it is important that the new rules carefully are balanced between preventing systemic risk and protecting the needs of end users.
Click here to read the full posting in the Springfield Journal-Register.
