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program is going to go forwardnt from their point of view. obviously the administration doesn't control what abu republican house is going to do next year. i don'ts know. the senator in a way has given us the surges.to g senator feinstein has given her assurances.forward, t we shall make goheod-faith effot to guarantee there is knowledge of funding going forward, theeen 12th of june program which ahead lays out spending going forward has been made available way ahead of schedule. and the good-faith effort to covered, the obama ten administration proposed spending $80 billion over the next 10 years.ba that's a 15%se increase over thi baseline budget even after accounting for inflation and it would've been much, much more that amount and was factor in the bush administration notwithstanding that commitment, still last month some senators s expressed further concerns. sick athletic likes theut administration responded even te further and put up an additional $5 billion over the next 10the r years. and in response, the directsentr truth of our three nuclear i weapons laboratories sent me a th letter saying and i quote, they were very pleased with the new plan and they said quote, we pre believe that the proposed iadgets provide adequate supporl to sustain the safety, securitys reliability and affect good as america's nuclear deterrent within the limits of 1550stratei strategic warheads established by the dniester treaty without a quick and acceptable risk. >> lt in last week, the personrespon responsible for running our nuclear weapons complex, a man m who was originally pointed to that position by george w. bushc ourd "the wall street journal," i quote, i can say with certainty that their nuclear lev infrastructure has never received the level of support we have today. comple does the rating endorsement, any one that is completely i persuasive work to be within a reasonable plan with respect about issues. concerned, then i suggest they go see condition i of theaterian resolution of ratification. it's as if any of this funding doesn't materialize in the rort coming years, the president is required to reportco to congress as to how he or she will respond to that shortfall. every other issue that has beene idened is also addressed in thes resolution is slow, our ifli you're worried about modernizing our strategic delivery vehicles, declarations are team gets it that concern. conventional prompt global strike capability is comical look at condition six and seven. understanding three and declaration three. tactical nuclear weapons. likewise, covered in theso resolution, verify and russian also covered. even mobile missiles has been addressed in the revolution of ratification.one else not obviously there is room foro someone else to come in and say well, you need to do this or you need to that. remain not everything has been covered and we completely remain open td any reasonable and legitimate or efforts to improve on for it guarantee some safeguard that somehow is not included in a way that it can be without obviously trying to scuttle the treatys. we itself. i reached out to colleagues. i nt to we've had terrific conversation. i want to thank my colleagues on the other side of the isle who o have satf with us in a lot of effort and inquired and helped us to sort of navigate this process. m but make no mistake. were it not going to them in thl we're willing to accept resolutions that don't kill thep treaty, but we're not going toof get into some process after alla that is been said and done by all the different a person voices that infected this treaty and found out when we should ratify. signed mr. president, i've been through cera. all the folks who assign and hou endorsed the senator, so simply say i hope in the next hours too live a healthy debate on this. o i hope we can alsout work out, given that everybody knows the n holiday is ominous. i hope we can work a reasonable time periods on amendments. deb. we're certainly not going to m prolong the debate. i think most senators have a fel sense of where they feel on most wi our of these issues. so we look forward to workingvey with our colleagues in a great concert way to try to expeditewi the process work to oure as colleagues. we have other businesse cog americanus into that.oment this is truly a moment where wei can increase america's hand in several of the t greatest challenges we face on there t planet. first and foremost obviously, if we are truly committed to ao nonnuclear iran, the united states to turn away from producing weapons with russia in a way that sends a message to them about our bona fides and clean hands in this effort, it take this opportunity in order to strengthen the president and the west and united nations incy another's hands and trying toth deal with thisre increasingly threatening issue. so i hope our colleagues warmlyn rise to that challenge here in the senate and i think the chair can yield the floor. >> in a few moments, republican senator fort george voinovich of ohio gets his farewell remarks on the senate floor. >> each year we conducted video documentary competition college student cam. the competition asked the students in grades six to 12 to think critically about issues affecting our nation. this year's famous washington d.c. through my lens. we chose this topic because we thank you to explain how the federal government has affect the issue or event in your life for your community. select a topic that interests you. once you have your topic, you can do in your could close to you for to fully develop topic, provide different points of view and include c-span footage that supports your thing in a five to eight minute documentary. for more information visit our website student cam.org or e-mail any questions you have that educate@c-span.org. so go get started. we can't wait to see what you can do. >> one of the senate ratings retiring as george voinovich of ohio. his farewell speech and comments from his colleagues are half anv hour. >> mr. president, i rise today to say farewell to the senate y. after 12 years. heart i would like to take time to convey my heartfelt thanks toin all those who help me during my time in the senate and to reflect briefly on the work we were able to get done, work but i think many difference for theo people of my state and our few nation. i also wiioll share a few observations with my colleaguese both those who are seen as the 1 112th and his fellow senators yet to come.y at this stage in my life, i look back on a 44 years in public the service and i cannot help but thank god for the commensurable dressings he is bestowed uponeat me. each time i want the steps of the senate, i look up at the statue o of freedom on the top i half of our capitol dome and i o think of my grandparents whoit came to america with nothing but the clothes on their back.d or they couldn't read or write and spoke only a few words of mysela english. i have to pinch myself as a thas reminder that this is not then just a wonderful dream. on theandson of serbian and slovenian immigrants who grew up on the east side of cleveland is a united states senator. only in america, truly none of us should take for granted thewe economic and political freedoms we d have. mor my dad used to say that the bouy reason why we have more of the world's bounty is because we gee more out of our people because of our free enterprise and educational systems. mr. gooding 10 come my social studies teacher said, a is democracy is where everyone has an opportunity to becomeunited s filtering my final days in the united states senate, i think of the people in my life would've gotten me up the steps to this eallowed chamber. y she is god's greatest blessing on me. has she has never pulled or pushed me, but she's always been at myy side. my three children on earth, george, dates and peter andrandm angel in heaven, molly. and eight grandchildren, my siblings and theire extendedr oc families. in it's not easy to have a father, brother or uncle in this ohi business.ho to the people of ohio who facilitate md my election to see different offices, who are stuch with me even though on occasion they don't agree with me, my deep appreciation. i can never thank you enough.e i hope that you know every decision i've made, every police if crafted, although not always the easiest or most popular at the time had aimed to improve and make a positive difference in your lives. sve you i am very humbled to have been given the privilege to serve you through the years.h inhio here in the senate, my wonderful staff, both in ohio and in me washington. i'm so proud of what done for me and the people of ohio and i take fatherly pride . to touch their lives and seealsi them grow. oth i also think of their colleagues in the other senate offices witr hope and cooperated with them as we were together to solve our ae nation's problems in the callenge and seize opportunities. my colleagues and i should be, most humbled for all we are is a reflection of these wonderful,id loyal, hard-working individuals. i also thank all of you in this chamber for your courtesies you've extended to me. i really miss my first two years when i presided over the senatet first one to get their 100 hours to the chair. it was a wonderfulir time and he thank you all for what you have done for me over the years. the folks in the attending physicians office at taking care of me physically and are too great chaplain lloyd ogilvie any kerry platt, along with the wonderful priest at saint joseph's, but it helped me growu spiritually. and i have to mention jimofe inhofe, hosting our bible study each week. he honored me by inviting me tol a code out to africa t this yeao and there is no one in the senate with them or for public diplomacy for the united states and africa and inhofe. iofe. i've learned in my life that you cannot do anything alone. so of course they think of my si colleagues in the senate would learn to know and respect. blesd i've been blessed to call themtp friends.eo made the american people have made ia clear that they're not happy with partisanship in washington. but the factors and greatult i partnerships here in those partnerships and relationships sesult in action.ot get i'll think many people outsidebi washington understand that a lot gets done here on a bipartisanmy basis.n the sen many americans think the onlyat action in the senate is much ofe the action the senate is on the committees and meetings with other members of the floor asghs well as through unanimousht havw consent. once the delegates to a it committee, perhaps one or two might have a problem with it that you worko it off, call ther go see it. ng gets done, but is never worki reported in the paper about how we are man working together on f many pieces of legislation. i'm proud of the contribution ad i've made in human capital and government management. the fact is that without myher a brother dan akaka, and he is myc brother, the changes never would've occurred. there's nobody has done more to and were former federal workers and work harder and smarter and do e more with less than latina nitrate to do over the years.kig twelve years of working on it. it's an area that is neglectede by both legislators because they don't appreciate how important the people are the working government. i call themea the 18. organion any successful organization has to have good finances and goodlo people.elau i'm also proudnc of my work and hoping to relaunch the nuclearda renaissance, which will helphoue deliver base of energy for america, reduce their greenhouse gas emissions and reignite our i manufacturing base in ohio and c in our country. i couldn't have done this without senator tom carper, who has been both a friend and a colleague since her days asorgag governor. tom's leadership was key tot in organizing our recent successful nuclear summit in washington. cy and tom has taken the baton fors me and will carry nuclear energy to the finish line as part of wm the fuikture of america's energy supply, along with mike crapo, jim risch, lamar alexander and others. tealso recall the passage of tho landmark tour i.t. bill. a bill to protect intellectual property. either way, the last bastion of was our competitive -- globalhat competitiveness. it was a multiyear process theyy wouldn't have succeeded withoutn the work of the business community and my friend evan b bayh the who i first met when we were governors of neighboring states. as many of you know, i have been a hard and champion for my brothersal and sisters in easte. europe, baltic states and countries of the former t yugoslavia.d as such, and proud to have led the effort to expand nato and increase membership to the visa waiver program.an these do accomplish would not of have happened without the bipartisan leadership of dickios lugar and joe biden on the susan senate foreign relations committee and the help of joe lieberman and susan collins on theit homeland acuity and government affairs committee.ned i pray that the bipartisanship that i have witnessed and enjoyed them both foreigni must relations and homeland security will continue. sen i will also acknowledge senatort jeanne shaheen for her keen interest in southeast europe. we traveled together to the s region in februaryhe this year o a cartoon that she is picked up the mantle on our mission e totd ensure the door of nato and ates i european union membership remains open to all states in key, i believe, to our national security. i've also champion the cause of monitoring and combatingooperatn anti-semitism, making it aur priority within the organization for security and cooperation inr itrope and our stateess departmw the progress that's been made to the use could not have happened without the leadership of senator ben cardin, congressman chris smith and the lateongr congressman tom lantos. p of theas highlights of my careel with the passage of the globalhe anti-semitism bill, which created a special envoy that the state department to monitor and. combat global anti-semitism.ipai these are just a few examples ot great bipartisan work going on in the senate, but much of thesf time this is blurred because of the media's addiction to conflict.the bip even though i don't agree with the bipartisan resolution onushx extending the bush tax cut, inta compliment the president and leadersndgr in congress for seng down a working together to finds compromise. one of my frustrations that are working so hard to find, and growth -- ground on significant issues over the past 12 years has been it doesn't happen amer enough. the american people know that dt even when members of a family things don get along, it's difficult to get things done. focusedn they most certainly know that when we are laser focused oncons fighting, politicking and are messaging, their concerns and plate are forgotten and nothing controversial gets done. there's a growing frustration that congress is oblivious to their problems, anxieties and fairs. frankly, i think one action leaders could take at thes at beginning of each congress is ta assess the issues at hand. aee what are the items thenation mem republicans and democrats agree should get time to make the nation more competitive and really make a difference in people's lives and set the, by common agenda. by sending collective goals, by an agreement from leadership, it believe will set the environment for committee chairmen andent. ranking members.e think about it. what kind of planning do we do?. most successful corporations have five-year plans were we what our priorities?not or do things we we agree upon and let's not spend time ine those things we disagree. spe additionally an unacceptable amount of time is spent on fundraising. t's minus 10 to 2225% of comes senators time is spent on raising millions of dollars and with it comes to negative fallout in terms of the public interests.pent in addition to the state oppression, the time spent raising money to often interferes with the timely needs for families, our colleagues and most importantly doing the job that people like this to do. my last two years have been myut most project is an enjoyable because i have not had to chase money at home and around thenons country. none of us like it, but nothing seems to get done about it. nothing seems to get done abouto it. ideological differences aside, it is necessary for us to have good working relationships are u going to get anything done for the people who elected us.sible and i know it's possible for meg personally.ost as mayor cleve and i worked p side-by-side with church words, the most powerful democratic cityow c councilman in clevelanw history. my entire city council were our democrats.childr atten george and i first met when her children attended the majorblicl trks program in the cleveland public school system. who would've guessed that that we would become the tag team cio that turned cleveland around after it became the first major city to go into bankruptcy.edian i was pummeled by the media onay occasion in regard to who is actually running city hall. the corpse and i worked together as and partners. l one of the great satisfactions when i left the job of mayor wat that usaid today highlighted both of us.-american the tall african-american ort democrat nick george and the sure way republicans about george working together to bring about cleveland's renaissance. in columbus, and worthy adversary when i was governor and democratic were right to the speaker of the house for my first four years as ohioe w namd governor. office is on the 30th floor of the building named after right, while he was still alive and serving on press than it 22 years as speaker. while every day when i went over to the right tower, had to genuflect before this bus. we but somehow for tonight decided we were going to figure out how we could work together and move ohio forward and become goodheni friends. needless to say, folks, i was o dismayenld whenever this year te that president obama had held only a single one-on-one meeting with mitch mcconnell. one meeting. met when i was governor, i met with her in right who is president oe the senate every two weeks, devl developing good interpersonala w relationships and a trust which allowed us to move ohio forwardt from the rust belt to the jobsed bill. era i am hoping we have entered a betwee new air and the relationship betweenn the president and leadership in congress. our situation today is more critical -- more critical than i anytime in my 44 years ink ther how wdetee work together will determine the future of our country. we must also recognize that if we diminish the president in the eyes of the world, it is to thei detriment of our nation'sional international influence and will impact our national security. we are on thin ice and we need the help of our allies and theyt made our help as well.rt for example, the s.t.a.r.t. reservations about it, they been satisfied. it is vitally important to get done this year or alternatively please we must make it clear that the senate will ratify the treaty as soon as the 112 congress convenes. ur not do so would dostandingito irreparable harm to america's standing with our nato allies and would d be asked what if i s enemies, particularly those o factions in russia that would r like to breakoffev indication ad refer back to our cold warere ay relationship. and there are plenty of them over there who are still smarting from the fact the wall went down, nato expanded and wer encroach on their area of influence. w two weeks ago, janet and i attended a farewell dinner hosted by mitch mcconnell. mcc although it had differences with mitch, i have to credit with hih for keeping -- credit him with keeping the republican team together. there is no one more strategic than mitch, jon kyl and lamar se alexander.y still -- still, i share the concern of many of my colleagues that too often -- too often ther herd mentality has taken over our respective conferences. at the dinner that they chose today shared with her republicam colleagues what ohio state university coach jim tressel defined as success in this books come of the winner's manual. quote, success is the inner satisfaction iand peace of mins that comes from knowing they did the best i was capable b of doin for the group. success is a team sport. hopefully this will become the senate's definition of success.l because finding common ground cr and teamwork is what it will take to confront the problems te my colleague, senatoren chris d- hit the nail on the head when he said quote, it is whether each one of the 100 senators can wore together, living a to the awe incredibleso honor that comes wh the title and the awesome responsibility that comes at the office. you know, we do have a symbiotim relationship and i'm encouraged that more and more of mynderstad colleagues understand that. i was quite impressed that 60% of the senate representation ofm the national commission on hascal responsibility and reforc supported the recommendations of the chairman, and putting tom, coburn, mike crapo, judd gregg, kent conrad and dick durbin. as far as i'm concerned, they are true patriots. they are true patriots. as our colleague tom coburn said just before the commission voter the time for action is now. wai we cunan't afford to wait for te next election to begin this process. my before the skyrocketing cause our national debt to triple attacks or to double, our economy may collapse under this burden.we arer we are already near precipice. in the near future we could understand a collapse in value e per dollar, hyperinflation or dw other consequences that would force congress to face a setre t choices far more painful than those proposed in this plan, and the quote. so here we are in a situations where we are on an unsustainable fiscal quarters, caused byy explosive and unchecked growth in spending and entitlement obligations without funding. an we've got an outdated tax code that does not sufficiently encourage savings of economic growth. a skyrocketing national debt that puts our credit rating in serious jeopardy and should give all of us -- all of those great cost. paris took a rare post questions that should haunt all of us in the eighth post. quote, so when we all -- so when will we get serious about our fiscal mess? in 2020? 203 2030? diminutive spending cuts and tax paid is larger. if we cannot fight the low pay now, who will impose a lot of pain later? does anyone believe that washington will one day develop the political courage it now?hie someone if i were getting around to doar something countries geta nervoubos about -- [inaudible]ur at the holy holy spirit will inspire my colleagues to make the right decision for her country's future and work our together to tackle our fiscal crisis. you have the future of our a nation in the future of our children and grandchildren in your hands. on mr. president, i birdie spoken too long.r my weight generator she was scratching her head up a signal that she's always watching the television. i got your signal, dear. d but i'd like to finish with a reading from one quiet moment, the book is breeding from the former senate chaplain lloydr wt ogilvie qaeda which i read every day for inspiration and proper perspective. perhaps some of my colleagues be the immense responsibility psm and the vows they make when their knees with unprecedented use to you. save them from the production op power, the addiction ofstraight popularity and then grandison fe and took pride. lord, keep their priorities straight. you and their families first.es the good of the nation's second. consensus around truths third. party loyalty is worth and personal success last of all. may they never forget they have been the lack to serve and not to be served. [applause]floor. mr. president, i yield the [applause] >> senator from ohio is wicked nice. [applause] >> mr. president. >> senator from ohio is caner recognized.o t >> thank you,he mr. president. the highest unit or senator are they to addhe my remarks as welk as they can to remarks aftermom. that to the comments of senatorc voinovich. he has -- he didn't talk much about himself and his career. sa i would like to do that for a moment.udit serviceou he's always been his t man, but he was a state legislator, county auditor and cayuga county, county e,mmissioner when he wasstates t lieutenant governor, when he wa. mayor of cleveland, when he was governor of ohio and i was 12wha years as united states senate. u he has always been his own man.i he was rewarded in some sense oc in 1958 graduate of ohio university in athens, ohio. somt school creativere unavenged schl affairs. prest it is not often a statevoinovh , university or any public entity name something after someone still in office, particularly something as prestigious as the. voinovich school at ohio senator university come which i visited many times and is always stimulating discussions and he a always inspiring and always looking at the public diisscour. a that. no matter how high it george voinovich rose, he always lived with his wife janet and hisgettg children and then his from. grandchildren nearby collinwood ohio in the same house, same to neighborhood in cleveland, never forgetting where he came from and that tells me a whole lot about george voinovich as aus public official. he is so much more in cleveland. we're going to probably have thi place the nation inside ofn to have the field of wind turbines in fresh water in lake erie right near cleveland would be the first place in the world. clearly this city has turned around and it's a to the efforti of mayor voinovich, governorch. voinovich, senator pointed pinch. i will be brief. i know others want to speed.s and there are three things i particularly think of -- ishoule should make that four things i g particularly think of when they voinovich.orge janet is one. them i often s oee them on a flight - the bulk of the fights from cleveland to washington and aay, back. his janitors always been a decide whether it's as first lady or in so many other ways as his partner and loving life partner in the relationship that they my have is inspiring to connie andr yet so many others that we thank you most importantly for that, george. the other three things i think voinovich george about his career or how wetive, brought to this body thef a perspective of an executive of t governor end of the. and that's always some thing they look to us for senatorback, shaheen and soon-to-be governor brownback to an r end of pervere and it does help mental in a operations as someone has the experience of the big city mayoa in and challenging, challenging timecode mayor of cleveland and governor of ohio and perhaps a n less challenging time, but a challenging timegi nonetheless s the perspective that george voinovich has brought as chiefna executive coming to the senate, sharing the thoughts and ideas with legislators. second thing i think of as laken erie.hio if you live in northern ohio -- i. supigpose if you lived in the right places in wisconsin and minnesota and michigan, and livingpe in a new york and pennsylvania come to think about the great lake you live near. an thassociate there's no story --a group of 70 miles from the lake. there's something about people who have grown up within 10 miles of lake erie. you can ask where they are which way is north they always seem to know which direction the lake is, even though they can't see from that point. ofis much of his career has been driven, as you can see what is h done with asian carp and withrcx the importance of the greatest natural resource next-door ourot lakes. his commitment always toinprisuo maintaining that lake as a pristine quality of that lake ie terms of recreation, in terms of drinking water, in terms ofgs te industry and all the things to lake erie does for cleveland and nashville and everything in between. george voinovich gets a lot ofnf credit to die. the other thing i think of that georges voinovich is his push -- is always elevating discussion snout the quality of the federae workforce. the term public servants unfortunately doesn't mean thosd two words don't mean the used public's mind what they used toe partly due to read perhapsr because of some peoples misstepe or worse, but mostly because people run campaigns against the government or whatever the reasons they are.somporta but the term public servant is so important to george voinovich and he has done more than just mouth the words and complement the workers, which is done ofte. undeservedly and i applaud him sh for that. how he also has played a major role in shining the light on how to rkforce? we improve our federalportunitif workforce? cow do we give them thepeople ti opportunities for advancement? e had retreated training? have had we tried the right people to public service? and i still think we have aor terrific public workforce, ste whether it is the city or county or federal. and it is the high-quality in -d the great majority of cases thay it is because of the here -- here -- and i see very few public servants i george spo voinovich pettus kept the public spotlight on government service that as i know has rough regular, the congressman from canton who retired in 2008 have shared a lot of those thoughts and ideas and continues to his retirement was george voinovich and really has made as his works in lake erie, contributions to the expected here has made the e united states senate a better v, place. more important is that the united states of america better country and senator voinovich, a thank you for that as my seniorp senator. voivich a >> mr. president. g mr. president, lerecherous preacher reach my colleague george voinovich as well. what a great gentleman.it's a we the body isn't on us by becominr a wonderful place, delightful place to serving. it is great issuese before it, but then there are people that t are c gentlemen and generally descended as though they cannoth tlose with just one of theink oa highest regards enhanced abilities and it got that in george voinovich. just a really good guy doing a n great job. a real gentleman in the senate and a man who lives in spain,to. police said, which is tough. d i does it in the senate for fourst decades of public service to people in the state of ohio and he the united states and that is quite a tribute. i can see often in different places. and you know, talks about two know if i could describe any better than the point of which how to have become one. same, the smile is the same, the look is the same.ude. the attitude is just a wonderful them lived at a time when marriages have a lot ofies, i difficulties, it's great to seen an example of somebody in high office habits of their publiclys fervor for decades and has thisn oneness south america the relationship. i think they both have served io that capacity, whether it's for their families but for the people of ohio or the united states. and that both of them publicly privatelyff the right way are bh gst beautiful attributes and difficult is to be a lot to geti done and it's great to beiserful odysseus happen. emphatic a great tribute to a wonderful american, george voinovich. i yield the >> the time is allotted for morning business has exploded. >> in a few moments, he underpinned by the commodity futures trading commission >> the house judiciary committee holds a hearing tomorrow on the wiki links issue and whether or not it's possible to prosecute anyone. our coverage is life on the speed and three at 10 >> that his agency is looking to begin is in a new curbs on speculative trading in metals energy and agricultural commodities. the ctc meets thursday to continue a proposed rule on what is assume his position limit, essentially restrictions on the number of transactions that traders can make on a commodity. this is a little less than two and a half hours. >> hearing for the subcommittee on general farm commodities and risk management to review implementation of provisions that the dodd-frank consumer act on consumer issues will come to order. i'd like to thank everybody for joining us today as we review the state we were out on the implementation provisions of the dodd-frank relating to position limit. this hearing is very timely as just recently the ceo of sanderson farms says he was delaying forward purchase of feed until the cftc had issued position limit roles and that he doesn't like to buy grain with quote index funds under 25, 30% of the crop, and a quote. so i would say that is why we are here today, to have some daily, to know where her out on this. i see that chairman peterson has joined us. i'd like to take a moment if i could and divert from the hearing and recognize the outstanding work and dedication of chairman kyl peterson for leaving this committee for some of the most challenging times in the agricultural community is faced since the crisis of the 1980s. specifically as champion for an oversight and transparency to the driver disk market to. if anyone would indulge me, and like to take a moment and thank chairman peterson. thank you, chairman peterson. [applause] we have ones who will be leaving us for different reasons. we're going to give them a sad farewell as we go through this process to daytime show have an opportunity to recognize mr. moran as he is going on his new endeavors. i might at this moment just add them a very special assistant, alexis taylor from east iowa is going to be leaving our office and going over to the senate. she's going to be the act liaison for legislative assistant rutherford senator baucus. so we congratulate on her i guess we can say promotion. [laughter] shall be involved there for the next farm bill and that's good. so wish her well. congress required the establishment for enforcement of provisional limits to ensure that no single entity holds too much power over the marketplace. position limit their essential to the function of the effective and efficient virtue and to inject conference a market where providing reliable and transparent price signals. some argue the very existence of position limits operates contrary to the principles underlying for market or at however, limits ensure that they are not in control of the contract and making price signals a more accurate representation of the month prayers. as astronomy treasury market is not being manipulated by a few players and we are closely watching the pace of rulemaking on the dodd-frank consumer reflection i. the rule relating to limits. all of us on the subcommittee would agree the commission must take the time to get this way. however, the commission also must move quickly to ensure individual sees the markets for bona fide hedging purposes have the confidence that these market are fair markets. conference by hedges are critical to say nothing of the importance of the congress to implement all the regulation requirements act. back in march on the subcommittee held a hearing under making pertaining to limitation of the commodity exchange act provision contained in the 2008 farm bill. at the time to rule on provision limits was pending for several energy contracts. there will was withdrawn after the dodd-frank acne for the changes. there is time for discussion at first commission meeting, so i hope the hearing today will provide some viable input into the form along with the chance to preview what the commission's plans are on this topic. looking forward to hearing today from chairman kinsler, who has used his leadership by the commission to be a advocate and ensure the commissions on a speedy both challenging pastor towards full implementation of the law. i'm also pleased to welcome commissioner chilton to the subcommittee. mr. chilton has expressed concerns about the pace of the regulatory process and we look forward to discussing these concerns in more detail. actions from the witnesses from the second panel on the rulemaking and contempt content of the regulations on petition limits will be important to assessing needs to move this issue along in this commission's priority list. before i turned to my good friend and future senator from kansas, jerry moran for an opening statement, i just want to thank you or the knowledge and support and working together. you've been a good collie calmness and i appreciate the service you have given to us here in the house at committee and we look forward to having a friend in the senate and we wish you godspeed in your work over there and as much success. at this time i'd like to recognize you for anything you'd like to say. >> mr. chairman, thank you pretty much. i appreciate the friendship you have a card for a long time the house of representatives and the leadership he provided the subcommittee and powerful house agriculture committee per the house agriculture committee has really been my home during my time as a member of the house of representatives and this is a significant part of what i enjoy the most serving in congress. in regard to today's hearing, mr. chairman, a search of a search of the belief that congressional oversight is a good thing. and while i not be here in the new year to chair the subcommittee, i believe that my successor and the incoming full committee chairman mr. lucas will readily exercise the house agriculture committee over the commodities future trading commission. in regard to the topic of position limits under the dodd-frank act however, i believe it is premature to hold an oversight hearing is the cftc has yet to release a proposed rule. as we are left to hold a hearing based on hearsay. a few exchanges between cft's commissioners during a hearing on another issue in a speech and opinion editorial released to the press by commissioner chilton. having said that, and concerned about where the commission's position on position limits discussion is going. first, i'd like to note that early on in the legislative process, both as ranking member in the ranking member mr. lucas of the full committee and other members of the house agriculture committee introduced amendments to place limits on the authority of the cftc to oppose limits. during that debate, we require the commodity futures market may be greater transparency were in favor of creating mandatory reporting requirements. brass turned over to get the cftc potter power to impose position limits and so we had adequate information about the over-the-counter markets. we felt that congress needed to know who is trading on the otc market. the size of the otc market and whether the otc market was or was not having an adverse affect on exchange traded markert before bestowing greater on commission. a portion of cement did not pass and we are now having a situation where the regulator may be contemplating an opposing position limits without admin access to the information necessary to determine the appropriate position limits or chewing for such position limits when thayer said. despite what some believe is a mandate for the commission to set position limits within a definite period of time, the dodd-frank legislation actually qualified cftc's position limited authority. section 737 of the dodd-frank act amends the commodity exchange act southern section 4a, eight to a state of the commission shall be well established limits on the amount of positions as appropriate. the act then states in subparagraph e. for exempt commodities, the limit required under subparagraph a shall be established within 180 days after the enactment of this paragraph. when subparagraph knbr read in conjunction, the axes on position limits are required under subparagrapha, commission shall limit under paragraph b., subparagraph a set position them at will should be only prescribed when appropriate. therefore, the 180 day timetable is only triggered if position limits are appropriate. in regard to the word appropriate, the commission has three distinct problems. first, the commission is never made an affirmative finding that position limits are appropriate to curtail excessive speculation. in fact to date, the only reports issued by the commission or its data field to identify a connection between market trends and excessive speculation. this is not to say there is no connection, but it does say the commission does not have enough information to draw an affirmative conclusion. the second and third issues related to appropriateness of position limits are recruited to adequacy of information about otc markets. the summary, 2010, the commission published a proposed rule and swap data recordkeeping and reporting requirements. this proposed rule is open to comments and thoughts at 37, 2011 and there was not expected to be final and expected until summer at the earliest. furthermore, commission is set to issue a proposed rulemaking about swap data repositories into a spot that a repository set up inviting as difficult to see how it would be appropriate for the commission to set position limits. without additional information to adequacy determined that a perfect position limits or have the information necessary to enforce position limits, assuming the appropriate formula could be determined without full access to otc and market. i would question her marks on hearsay and not financial proposed rule. it is hard to be critical of something that does not yet exist. i hope chairman cancer in his testimony today want from the subcommittee of the commission is aware of challenges surrounding the current imposition of position limits and the commission hearing tomorrow will not enact position limits before adequate information is obtained. i would also caution the chairman and the other commissioners however that if the commission moves forward with the world before information from the otc markets are made available, they should be prepared for more hearings on this topic next year. mr. chairman, that's a longer opening statement than my usual, which suggests i am leaving house of representatives for someplace else, but i'm grateful for the opportunity to express that opinion today. delighted to be with you in a thank you mr. chairman for recognizing me and i look forward to a continued close working relationship. >> thank you pretty much. i appreciate that. we wish you well and were happy to have you with us today. at this time i'd like to recognize mr. peterson for any comments you might like to make. >> thank you, mr. chairman. good morning, everybody. thank you ranking member for holding this hearing today. the subcommittee. this committee started looking into excessive speculation the dramatist market more than two years ago before the evidence of the financial crisis started to appear. some people know us better, but before it became apparent. we passed bipartisan legislation to bring greater transparency and accountability to the today's market. and many of the committee passed a patients were included in the wall street firm and consumer protection act, which was signed into law this past summer. there are many important provisions within the fall, but the one we are addressing today is the speculative position limits. the limits. the loss of a deadline of june or 17, 2011 for the cftc to announce a proposed rule for this provision. recently, many have expressed concerns about the cftc meeting this deadline. while the cftc has helped seven up and meanies huevos for the law as many provisions, most recently in december 9th, speculative position limits have not yet been addressed in this plays little time for the commission to address this issue. it's important that the cftc may remain on attack and implement the wall street reform in a timely manner and that congress intended. i understand that there's another meeting being held tomorrow and that the position limits will be addressed at this time. i think that's good news. i question whether this could have happened earlier. i want to welcome chairman gensler and commissioner chilton to the committee today. we appreciate the good working relationship with hud and look forward to working with you as we go forward. as i say, we've worked closely together and i hope that we could help you in implementing this law. and so i look forward to hearing your testimony about what the rest of today's witnesses and again at the church for his leadership on this issue. >> thank you, mr. peterson. i like to recognize mr. lucas franco should like to make. >> thank you for calling this hearing today. i'm not sure i should call this the last in a long series of hearings this committee found on the regulation of truth in this congress or perhaps that are described as the first in a long series of intensive oversight. i promise this committee will engage in over the next several months. one thing i'm sure if it have to echo the comments of my colleagues are good friend from kansas is going to the other side of the building. i didn't see the other side of the world, will be missed indeed in this body. i can't use the other phrase, jerry. i'm sorry, just can't do that with some people describe you with the public in the future, but your efforts on behalf of campus at culture in this committee have been a much appreciated him one of the many legislative battles you and i thought for the integrity of our domestic futures markets. we've long been focused on making sure the markets provider farmers, ranchers and commercials and users the ability to manage their risk for discover market-driven prices in those efforts and the efforts of everyone on this committee resulted in legislation and ultimately became title vii of the sub to act. although there is so many issues and authorities contained in title vii, the imposition of position limits probably received the most attention about this committee. the imposition of position limits of various forms and fashions played a huge part in might and mr. peterson's legislative committees and mr. goodlatte before that. we've always don't the difference between liquid and the market and price discovery markets were and are imperative. in the end, the position limits regime in the dodd-frank isn't what i would've written, but the cautious approach that provides the commission that the appropriate discretion to address what i believe is the political problem and not necessarily a problem driven by artificial volatility or distorted supply and demand. the dodd-frank act committed a new level of gordian discretion to use that authority to the commodity futures trading commission. i've heard from several of the regulated community and i see myself how consumed the commission and the staff status of implementation. i do not envy you in the least. it's a huge task. perhaps too big to be done in the timelines provided. as its fragile economy attempts to get back on its feet, we are not to befriend regulatory hurdles hurdles in its way, costing even more jobs and higher prices. i feel that is what will happen if the most up in a the form for nations riveted markets is done hastily and without all due deliberation. i am not pressing for a perfect rule, but we have to have a good rule. by singling to consider easing a statutory deadline to ensure was don't end up further distorting markets and costing american jobs. it's a good look forward to hearing from witnesses today inappropriate for the informed decision as they work their way to the implementation of position limits. and i would note that the chairman indulges me for one moment, this may well be the last hearing for my first ad committee chairman continues to look down over her shoulder, mr. daley garza and let lord to having mr. goodlatte look over my shoulder and what will inevitably be that awesome portrait of mr. peterson to admire the other end of the room, such as the nation of the way these bodies before. again, chairman, thank you for calling this hearing. >> thank you very much. but which request the other members submit their statements for the witnesses to begin her testimony and ensure there is ample time for questions. i'd like to welcome our first panel, which of course is mr. gensler, chairman of the trading commission and accountable mark chilton, future trading committee chairman. chairman gensler. welcome, please begin when you're ready. >> good afternoon. thank you, chairman boswell, ranking member marin, the full committee, congressman lucas. i thank you for inviting me here to testify in behalf of the cftc and i'm pleased to be testified along with commissioner chilton. .. >> with the fcc, federal reserve, and other regulators. we also are soliciting broad public input. seven days of round table with the scc joined with us. individuals want to come in and see us, we post on the web site for transparency. as of monday, there's been 460 meetings from the public coming in to talk about to us about these things. thus far, the commission has moved forward with 30 proposals, and i think the total count is 37 that we've published. we look forward to comments from the public. no doubt we'll get tens of thousands of comments as we sort through this, and we look forward to that. we have the 8th public meeting tomorrow where we plan to have two additional meetings in january and in other key areas. with regard to position limits, the dodd-frank act did expand the scope of the position mandates to set position limits to include swaps. and i anticipate that will consider staff recommendations tomorrow to cover agriculture, energy, and metals. i also anticipate the staff's position limits will be for the spot month, when contracts are moving into delivery, as well as on the other hand, single month and all months combined. that's what congress has asked us to look at all three. we've asked staff to look at within one rule separate this. the spot month limits which are currently set are set in markets for energy, metals, and agriculture. we will be taking a look at 28 individual contracts, i think there are currently set in 26 of these contracts. in terms of the single month and all month combined, we currently have contract limits for most agriculture, in the all agriculture, but the staff will have some recommendation with regard to energy and metal as well. it's only with the implementation and passage of dodd-frank act, though, that the commission has brought authority to conduct information on the swaps market as many members have indicated. to this day, we've had very limited authority to collect data on the swaps market. we approved a rule in october on position reporting for physical commodity swaps that would allow us for the first time to collect data, for detailed data on the swap market. the comment period closed early december. staff is looking through all of those comments before we can finalize a rule on swaps data collection. this is different than the swap data repository we actually put out, you might be referring -- sometimes people call it large trader reporting. we did put that rule out, as i say. before i close, i want to thank everybody here for your support on resources. i know that the house of representatives did pass a continuing resolution, and the senate will still be taking up resources, the president's request of $261 million of resources for the fiscal year are very important. we think in estimate there will be 3 to 400 new applicants, swap dealers, execution facilities, data repositories and the like that will be knocking on our doors come next summer for us to move forward. we estimate overall, we will probably need about 400 more people. we are currently about 680 people. with that, i look forward to your questions, and i also look forward to your oversight. i think it's a very important part of the american system. it's a good way to get the rules done and i look forward to your advise and counsel. >> thank you very much. we will go ahead and hear the comments from mr. chilton, and then questions. >> thanks, mr. chairman. and thanks also to -- >> let me interrupt for a second. mr. baher with us. no objections? thank you for coming. please. >> thanks, mr. chairman. also, i can say this, i want to thank and congratulate senator elect moran. it's been a pleasure working and look toward to continue that. i look forward to the scrutiny that we will get from chairman lucas. i wanted to say a special thanks to chairman peterson. you guyed passed back in 2008 legislation dealing with speculation. you may have passed it twice in a bipartisan way. i know you brought it up on the floor twice in 2008. so i appreciate your foresight and your oversight of this agency over the years. i also want to thank my friend chairman gensler for being so heful. his expertise of the markets and of finance has really helped us. the other commissioners are pretty much folks that came from here. came from the hills. and we have ag backgrounds and some other backgrounds too. but having chairman gensler there has made us better commissioners and a better commission. i thank him. if you look back at just the last ten years, the futures industry around the world has increased threefold. yet in the u.s., it increased fivefold. so a lot was going on, between 2005 and 2008 we saw roughly $200 billion of speculative money. index money, hedge funds, pension funds, $200 billion came into these markets. now that happened to coincide with this commodity bubble. you know, we surround seven and a half, $8 now. gasoline is -- crude is like $87, $90 it went up to $147.27. as we know, constituents had concerns because gasoline was over $4. whether or not the increase in the speculative interest, that $200 billion caused that bubble is a point that obviously can be debated. some people say move along folks, nothing here. some people say it drove the prices. i come out sort of in the middle. and say that -- agree with m.i.t., oxford, rice, princeton, even the university of lincoln -- lincoln university in missouri. lincoln university in missouri. they all say it had some impact. how much? you can debate. the increase in speculative limits since that time, if it was a concern in 2008 with the amount of speculation in the market. if it was a concern when congress passed the law in july, it's even more of a concern now. now before i give you some new statistics, don't get me wrong. we don't have specklators, we don't have a market. they are critical. i mean full stock. we have to have them. but if you look at what's going on between june of '08 and where we were are today -- where we were in october, we see more speculative positions in the futures market than at any time in history. $400 billion. that's an increase in the energy complex of 47% since 2008. an increase in the metals complex of 20%, and an increase in the agriculture complex by 18%. so there's been this large -- there's large influx. now the chairman talked about all of the rules and the number of members talked about the rules. there's been a flurry of activity. we've been, you know, going gang busters. and the staff at the cftc has been really inspirational. we all sort of talk about it every time that we meet. at the same time, by and large by the rules have been -- sort of trains have been on time, position limits sort of derailed. and the reason is exactly what congressman moran alluded to. whether or not we have the data on swaps in order to meet the deadline of january. and there's a couple of points, one, i'm not sure we do have the authority to delay. and this as appropriate language, congressman moran, i think -- i appreciate your point. but if to say that as appropriate is expensive enough to render it meaningless begs the question a little bit. we are required to complement it. i see no authority for us to delay. no legal authority of why we would delay. second, it's needed more than ever because of the statistics i just sited and there are ways we can do this. there are things that we can do as chairman elect lucas said in a deliberate fashion that's not ad hoc and not hasty, sir, that we can do to start doing what congress set as our goal in january. it may not be the full kahuna. i agree there's something hasty. ways to go about markets. so far we have been talking about how we go ahead and wait. we are talking about a delay, we are talking about not getting the data until next september or october. so i'm just trying to do what congress told us to do. you can have different interpretations, i got mine. i'm trying to do the best. as i said, there's a meeting tomorrow. we are not quite back on the track. i think we can get there. thank you, mr. chairman. >> thank you, thank beth -- thank both of you. the purpose that we are here today is to get daylight on the process and how it's going and us to understand better as we talk to our constituents out there and try to fulfill our obligation. a couple of questions and down the line. first, mr. peterson, any questions? mr. lucas? mr. gensler, what impact, since we are talking what you've just said and, the delay of january metals position in january will limit on the rule expected in april? >> mr. chairman, i anticipate staff will make a recommendation tomorrow on all agricultural, energy, and metals, and anticipate that would be both for the spot month and for if i can just call it the all months combined. and i'm hopeful that we'll have the support tomorrow to public that rule, get comments, and then as you say consider those comments under the administrative procedures act and put out a final rule as soon as we can sort through all of those comments. i will note we have 8,200 comments on the energy -- reestablishing energy position limits in january of this year. we put that proposed rule out for 90-day public comment period at that time. i think staff tomorrow will be considering a 60-day public comment period. so with 8,000 comments that came in on that earlier, this is a very important topic. the public is going to weigh in. i look forward to that. >> i understand. are you saying you expect to be on surgery for the agriculture commodities in april? >> we are going to do everything that we can. it's certainly our goal. but i think you can being open here about the arithmetic, i don't see -- i think there's parts of this, the spot limit proposal that will be able to implement earlier. but i think on the all months combined, there's a very real data component to it. in january of this year, the propoa -- proposal that we put out was a formula. in january 2010 was a formula that would have been applied to data in january of 2011. and while we won't be proposing exactly the same thing tomorrow, it was staffed recommendation earlier this year. i think it will be staff's recommendation tomorrow that any formula ultimately be applied to the overall size of the market and that's an important component. as i said earlier, we have a rule that just closed it's comment period on collecting data. we look to move expeditiously to finalize the data collection rule. but data is an important component to this. >> thank you, mr. -- commissioner chilton, do you have any comment? >> you know, -- no. other than the chairman is right. if you do the math under sort of what the thinking is, i can't talk about the specific proposals yet, but none of them allay my concern that we are going to do this as instructed by congress. it maybe the best we can get, you know, certain number of votes for. the commission. but again i think, mr. chairman, more things we can do today, like implement things in january that won't cause consternation. won't have problems like congressman moran suggested. i think we should do that. congress is concerned about obsessive speculation, there are certainly ways to set sort of a price point, that is a level at which we have heightened regulatory oversight, and do what we call a special call. that is we go out and ask for swaps data, and then we see where the positions are netted, and if they are actually -- if these traders are above the certain position point. and if they are, use all of our authorities, our emergency authorities, trading authorities and work with the exchanges, i.c.e. and cme to get them down. i'm not saying necessarily get them off of the exchanges, to get the net position down. maybe in swaps, maybe in futures. i think there's things to do, on time, it may not be as expensive as we would like. but i hope we move forward on that. >> thank you very much. chair would recognize mr. moran. >> thank you. chairman gensler, do you agree with commissioner chilton in the lack of flexibility in the time constraints that he indicated are imposed by congress? my understanding was your general counsel at the commission hearing in october indicated that you do have flexibility in regard to that 180-day limitation. >> i think that you observed correctly that i had asked the general counsel at this commission hearing, you might know the date better than i. a month or two ago. as to the phased implementation schedule, in essence with regard to position limits. and the administrative procedure act and case law allows the leeway. it's what he told me subsequently, because he didn't use all of the words in the hearing in a manner of issuance and timing especially when an agency is called upon to adopt the rules. i'm also enforced that the commodity act permits the commission to adopt in phases. such as proposing a formula now, i note that's what we did the past january a formula now in imposing the actual numerical limits once we have more data. this would be on the all months combined. what he was asked specifically, because i asked him the question, could we do? propose the formula and finalize the formula and have the formula apply to data as it comes in maybe a number of months later. >> a number of months later. mr. chairman, what do you anticipate -- at what point in time you would have sufficient data to reach the conclusions that your perhaps being asked to reach now? >> well, it's -- it's dependent upon also the good work of the staff and this commission, the cftc in finalizing a rule on data collection. which fortunately we already have out there. i think that if we finalize that, and are able to collect data, somewhere in the time frame that commissioner chilton. we don't have difference on the time frame that he talked about there. >> has there yet been a -- one the conversations we've had in the committee for a long time is about the connection between obsessive speculation and price fluctuations. there's no -- sir, i understand this to be true. this way has the cft and the staff completed a report that caused unwarranted or unreasonable price fluctuation in commodity markets? >> let me -- if i can broaden the question. >> you may. although i have broadened questions for two and three as well. >> all right. i'm sure. i don't think that commodity exchange act or congress has said that the cftc is an agency to regulate prices. what we have is our commission to ensure fair and orderly markets, the price discovery and function is transparent, and the people that come into it, there's an integrity of the markets. the position limit regime that's been in place since the 1930s is to ensure that there's a diversity of points of view. it doesn't limit hedgers, it limits the number of contracts a specklator can hold. specklators and hedgers must meet in a marketplace. there maybe burdens that come from excessive speculation. when they limit a large number of somebody, extreme case, half of market and liquidate the market. what we did is put in place limits in the agriculture market first. there were limits working alongside with the exchanges in the metals and energy markets in the '80s and '90s, and, in fact, all the way through the summer of 2001. all of the months combined. it was to prevent prospectively, as much as anything, but to prevent prospectively the burdens that may come from large positions in the concentration of those positions in a marketplace. >> let me broaden my question by asking the same similar question but with a different conclusion. has the cftc or staff completed a report that found excessive speculation and commodity future markets were leading to market manipulation? which i think is the direction that you were telling me is more important. you are there to regulate market manipulation. >> well -- there's two components in the act. there's manipulation, or if i can broaden that a little bit corners and squeezes. but also congress has said not only in the 1930s, but in the dodd-frank act has reconfirmed that we shall set position limits to do something that -- not just limit it to protecting against manipulation. it's also to diminish any burdens, diminish or prevent any burdens that may come from excessive speculation. so there's -- there are not identical. and any burdens that may come from excessive speculation maybe actually far before someone corners or squeezes or manipulates a market. manipulation also includes intent. so i'm just trying to highlight. it's part of our challenge that they will -- they over lap but are somewhat distinct. >> i have run out of time. my question is have you found evidence of that happening? >> there's certainly cases on manipulation. an active case load on manipulation. i could have answered your question yes, but i was distinguished it. i was trying to be fair. >> i appreciate your fairness. mr. chilton, i appreciate the way you testify. i understand what you are telling me. i'm grateful for the words that you use. thank you. >> thank you. mr. marshall. >> thank you, mr. chairman. i want to associate myself with some remarks of mr. moran to open the hearing. i find myself largely completely in agreement with him. and to me at least the answer to the questions that mr. moran just posed has staff concluded based upon what evidence staff has been able to gather that these as mr. chilton refers to them, massive passive have skewed the market. the answer is no. staff has not done that. staff has not issued a report saying that the massive passives have skewed the market. all of our efforts thus far, for years now, two or three years have been focused on the massive passives. the influence of the index funds and whether or not the index funds are skewing prices too high. >> i think that from your testimony, mr. chairman, it's quite clear the cftc has gone the extra yard in so many different respects to try to comply with the deadlines. my conclusion is the deadlines are simply too aggressive. we simply weren't reasonable in trying to pick these periods of time. y'all don't have daily reports of large traders in the swaps market. there are all kinds of information that you'd like to have to, you know, further the analysis of the impact of the massive passives since that seems to be the focus here on the market. nobody wants to skew up -- screw up these markets by prematurely taking positions or literally imposing position limits across the market. and causing problems in any number of respects, diminishing liquidity, enhancing the problems if there are problems caused by the massive passives, driving people overseas. i understand that fsa has indicated at all they are going to move forward with position limits that mirror ours. lots of things. i completely agree with mr. moran observation that the qualification that we intentional tuck in there gives you the discretion to go ahead and wait until it is appropriate. seems to me you wait until you are convinced there's a problem and you've come up with a solution to that problem that isn't going to unnecessarily burden the rest of the market. >> mr. chilton, with regard to the massive passives, dodd-frank, after we wrestled with this a lot, gave additional discretion to the commission to distinguish among classes of traders and imposing position limits and also gave additional discretion of the commission with regard to exemptions. i kind of understand that y'all are now thinking about we're going to distinguish bona fide hedgers, and then call everybody else specklators. but within that everybody else class of specklators, there's the massive passives, and there are a bunch of other people. there are traditional large market traders that take both sides. there are market makers, hooks like that. have you given any thought, mr. chairman, mr. chilton, to using your new authority to distinguish among classes of traders within that class of specklators to distinguish these different groups of traders and impose limits or exemption limits on the classes of traders >> >> you are -- you raise a very good point. and congress did give us the authority to distinguish between the nonbona fide hedgers. i think the staff will recommend tomorrow is a more general approach that doesn't put necessarily you know distinguish or put additional -- but that congress also changes the definition of bona fide hedging a bit. built upon that all people who in essence have physical -- >> mr. chairman. i apologize for interrupting. we have five minutes. maybe there will be an extra round of questions. again, if y'all are going to start issues additional proposals, you shouldn't be attempting to stick by the timelines when you don't have all of the information that you'd like to have to give good narrowly-focused solutions. at least first, determine if there's a problem and then the narrowly-focused solutions. i don't think how you can generalize everybody. >> i don't think -- i'm agreeing with you on timelines. i think that what we are contemplating, what i believe staff will be recommending is some formula apply to data as been earlier discussed. i took your question on whether we were proposing a specific lower limit or manage on one class of party. and so it's actually -- when i said more generalized, there's not a lower limit on on >> please have interest in the commodity. just a normal farmer or independent petroleum. they should have exemptions. other than that, they shouldn't have exemptions. different levels, i think you might be right, sir. it maybe more appropriate to have agranular view of it. because if -- i think we can address this if you look at what their net position is. it's one thing if people have a large position, but the added benefit of what we are going to be doing in the future, we are going to look at the swaps data to find out what they really are. we can't based things on the percentage on i.c.e. or cma, you have to look at net and we'll be able to do that with the new rule, i think. >> i'll wait for the second round to continue. >> mr. johnson, please. >> back in the heartland, a lot of people believe believe -- wr- that prices don't always reflect supply and demand. you've expressed that too. i have a question and then kind of an unrelated comment. in your judgment -- either witnesses judgment, do you think the level of prices that egg commodities are at today as a result of the supply and demand factors and speculation and how would you allot each in terms of what impact do you think those representative forces are having in our market prices? >> congressman, i think by and large there are factor of the fundamentals. but i couldn't say, and i'm not an economist. neil tried to get me to say how much is specklators, how much is price demand? i wasn't going there. i'm not an economist. it would be irresponsible. to go about the need to document before we impose. the purpose in the commodity exchange we are to prevent and defer. prevent and defer fraud abuse and manipulation. all of the sudden we have been given for people that don't want the regulation the new hurdle you have to prove beyond a shadow of a doubt that this equals that. these are complicated markets. it's not always easy to put things together like that. to protect consumers, ensure the folks in your district are using the vehicles like they want to for adequate risk mitigation, that's why the limits are important. to put in place thoughtfully. i get letters every day, one right here from duncan donuts they are concerned about speculation. swift says they are thinking about getting out of the market in part because of speculation. delta airlines wrote the other day. these are real concerns, about the hedgers in these markets that are concerned they can't use them. look, nobody is talking about going crazy on this. we just -- i just want to do what congress intended and try to do it in a reasonable fashion. doesn't make any crazy, just does what we are told. >> i guess my comment would be this. as we all know, and almost tried to say that knowledge is power, terminology in some way is power. i would only surmise that certainly the average remember of congress, and i think probably the average member of this committee, i can only speak for myself has the -- maybe a general understanding but only a general understanding about a) terminology, and b), the mechanism by which all of this works. thank you for being here today, mr. chairman. calling this hearing is important. but i also think it's important to have a mechanism, your entity, have a mechanism have an entity by which the public and members of congress can understand very, very complex and very difficult concepts. i don't have the answer. but i think it's a lent -- legitimate question. and something that's important. to deal with constituents back home -- i speak for everybody in the room, i think -- constituents come to us every day. we represent rule areas. specklators doing this, if they know the commissions exist. having the ability for those people to understand public, and understand us, and for us to understand is real important. >> thank you very much. mr. jayer. >> thank you. following up on questions, seems like we are getting held up on terminology. like speculation. i would assume in the 20th century, the commissions primary role was to rule out actual fraud, fraudulent actors doing things on purpose. i guess i have to ask the question, given the 21st century where you have these hyper computer trades and massive investments and things flowing unbeknownst with no malintention, but mal results coming out of it. while we may disagree about whether or not the specklators are causing the problem, everybody agrees there's a distortion in the market. the question for me is is it the cftc's responsibility to protect american consumers, farmers, and industry by dealing with any distortion in the market, whether it was intentional or not? >> i think the answer is yes. specklators and hedgers meet in a marketplace and farmers and ranchers and producers need those specklators in a marketplace so that you can, you know, have an assured price at the end of the harvest, for instance. but at the same time, this commission was set up and it's predecessors were set up to make sure that -- that everybody can see the market. that's what's called transparency, and that it is free of fraud and abuses, and it's a whole list of abuses in the statute. but it has to ensure that it's orderly. and everybody has equal access, for instance, so there's ways to make sure that people meet in a marketplace that the hedger feels like i might be meeting a specklator. it's in a place that everybody can see it, access it, and it's free of ma lip nation -- manipulation and these other things. >> mr. sheldon. >> thank you. it's a great question and insightful. specklators aren't back. you need them. you don't have markets without them. the concern that some of us have is the concentration of them so much they can prudence -- >> if you look at the law right now, we don't have enough teeth in it. we're doing that as a result of the dodd-frank law. we're going to put some more meat on the bones. that's one area we need to do. >> thank you. last is a request. i would appreciate information for me and maybe the committee regarding areas in the swap arena that you do feel you have adequate data for and making timelines, as well as the timeline for rulemaking that you may want to phase in given the lack of data that you've referred to in some of the other areas. >> chairman wants to comment earlier. when we talk about, well, we need to get all of the data. mr. marshall, people talk about. let's get it all. i agree. the spot month, we could do right now. even in the swaps area. this is the currently unregulated area. this is the one that you've given us the authority to look at. the reason that we could set that limit now is base you based the limit on the deliverable supply of whatever the commodity is. so you don't need to see all monthing, you don't need to see the aggregate. we could do the spot month right now which would get us to where congress instructed us to go. i don't know if the chairman wanted to add. >> i con cure. -- concur. we have more flexibility and congress has given us a recommendation in what's called the spot month. we have the limits. this is just when somebody is about to deliver the corner into the contracts. we have the limits in energy, metals, and agriculture,, -- i shouldn't say we. the exchanges and we have them. i think those could be phased in sooner than the all months limit. >> thank you. mr. conaway. >> thank you, chairman jones. thanks for being here. not being the lack of data head horse, but if you go ahead and move forward without the data, how quickly will you know that you've gotten it wrong? are there things that you will watch for to pay that we have driven specklators off of that side of the deal? and that burdens on hedgers have increased? i'm assuming, mr. gensler, you mean increased cost of transactions and other things that you might expand on a burden a little bit. how quickly will you know that you've done some harm rather than just trying to ease into this thing without disrupting and creating crazy as mr. chilton said. what are your benchmarks to say this one was too far? >> well, it's my hope, and again we haven't had the commission meeting that we'll have tomorrow, it's my hope that we'll propose something and hear from the public that would allow us some time to get the data on the all months combined. maybe disclosing my bias here, but i think that -- you know, it is a challenge. there's 180-day and 270-day statutory date. commissioner chilton and i read that the same way. >> excuse me. with respect to that, do you feel you have any responsibility to your fiduciary job to tell congress those dates aren't good? that those were set arbitrarily, and capriciously by congress, and once we looked at the level of work, lawyers, and commitment that five of you have to read it and go through and understand what you are doing to the markets, do you have any kind of responsibility to say that those dates aren't good? >> well, i -- i think i'm saying here today and thank the chairman for having this oversight hearings is that we are going to take up a rule tomorrow, the staff recommendation. we'll see where the fellow commissioners are. i don't want to prejudge that. if we were to propose something tomorrow, it will have a healthy comment period from the public and that will advise my nature. i guess it will go past the january date. telling congress that, no, we will not finalize this by that statutory date. >> let's look at the broader body of work. you've got the full dodd-frank piece of legislation not just these limits and what we're talking about this morning, you have a broader body of work. have you looked at that and laid out the timelines that says, yeah, we can get it done responsibly in the time frame? >> i think we have the goal to get it done. i think we can get it done. i'll say that i think that congress laid out the 360-days, but july 15th of next year to put the proposals out and security and exchange commission helps lower regulatory uncertainty. and that that's a very important thing. of course, we also had a crisis in 2008. it's a very real crisis. >> speaking of the crisis, i have a short amount of time. i'll take that that you are fine with these dates. mr. chilton, you mentioned that during some time frame in the run up @ bubble in '08, there was $200 billion in few money. how much of that money has fled the system? what are levels today versus then? >> i can't give you that -- >> the question is if the money stayed in the market, i suspect it did, prices fluctuated, way off of the $147 on oil as an example. i guess i'm hard pressed to see that that was a -- you know, -- yeah, that money did have -- it had somebody on the other side. if there wasn't somebody on the other side, it raised a price to get somebody on the other side. i get that. i want to make sure we are not fighting the last war and that's necessary. because other comments that you've not -- staff has not documented where all of the bad things have not happened expect on the instances. get that number to us. >> well, it's actuallyly -- we know a lot of money went out. it went -- look, as the chairman said, we're not price setters. we're supposed to be commodity blind. and price gnaw -- neutral. we are not price setters. oil is $150. >> it hasn't been $150, expect for an hour and a half. >> $147. yeah, but it theyed high. we lost a lot of money. some of it left the market. prices went all the way down to, i believe, $35 a barrel in december. this can go up and down. gansler, one of your questions, we need to ere on the high side. i agree with you, we don't want to make any issues that we can tort markets or do something bad. some things are working well. >> do you have any triggers or matrixes that you will watch? >> absolutely. we are very -- we are very good at watching the markets, watching liquidity. we don't want to drive speculation and until we get to negotiate, we don't want to send it there or overseas. we have to do this in a responsible fashion. i think we can do it, sir. >> okay. i yield back. >> thank you. mr. kissell. >> thank you, mr. chairman. i welcome our witnesses today. if you would allow me a moment of reflection here, this is -- i'm finishing up my first term in congress. and the first hearing that i came to is -- in agriculture was about the derivatives and speculation. and the witnesses we had that day were split with some of them pretty much making the case that nothing went wrong. and that the market worked because the investors didn't lose any money and there was no figuratively train wreck at the end of the process like we saw in the banking system, financial system there. when i got a chance to ask the question, it was more of a statement. while investors may not have lost money, the affects were substantive in terms of how we had to deal with individuals and businesses and farmers and ranchers and everybody. how we had to deal with to whatever degree speculation caused these increases in prices. so i don't so much today have a question as i just want to remind the witnesses and appreciate their responsibility here of a very intricate task of trying to make sure the process that's important moves forward. also a reminder as mr. kayer said, the process works without creating the speculation and artificial prices. with that said, i'm going to yield my time, mr. chairman, to mr. marshall. >> thank you, mr. kissell. just sort of following up where i was when we stopped. i do think that y'all should move -- i think you clearly have the statutory authority not to move forward unless it's appropriate to do it so. that's why the language was stuck in there. if you move forward without understanding precisely what the problem is, it seems to me you are not moving forward appropriately. and if your staff has identified what the problem is, how do you actually come up with a regulation to solve that problem? you don't know what it is. sort of two broad brush. back to the classes of traders. we stuck the language to give you the discretion to distinguish among the specklators and if you chose to do so, you know, what -- i don't know if there's a massive passive problem here. i just don't have the expertise. there are, as mr. kissell points out, people on both sides of that. i leave it to you and your staff and economist and whatnot to figure it out. if it's massive passive that's the problem, it should focus on that. one size fits all doesn't do that. just use ratios. assume you have 20 traders in the market. five of them are passive. you put a position limit in. it's designed to maintain the percentage at no more than 25%. then let's say a whole bunch of additional passes show up. 20 additional, 40 traders and 60% of is passive money. you really do need to at least consider distinguishing among the classes of traders if you concluded that's a problem. >> i appreciate myself with the questioning of mr. conaway. and many different respects, he's observed there's a fiduciary responsibility here. i guess a final question, let's assume that you impose position limits and that there is a large market demand out there that is now sort of stymied. doesn't have the aggregate to come into the market. where does the money go? how do people that want to take positions and commodities to do whatever, hedge, because they want is in the portfolio, they can't do it, where do they go? go to europe? start hording commodities? what? >> if i can address the last question, this has been raised with us. if somebody wants to come into the market and hedge, if they are bona fide hedger and congress said not. if they are coming into a market, they are not a hedger, and there of any size that's normal in the markets, these numbers won't address. i mean the numbers that we currently have in the markets or even we proposed in january, the energy numbers that we proposed would have been only touched -- i think it was a handful of traders in the energy markets. the largest -- the specklators that you can. so it's truly just a very small group of people who are very large in the marketplace. to answer your question, traditionally, they went to the over-the-counter mark. congress has said bring that in. but potentially they could move on to contracts that were similar but not identical or they would possibly move overseas. we are very conscious of that and are looking at that. >> if they go elsewhere, you know, using those two devices they go overseas or into contract that is are similar but not identical. doesn't both of those things have the same affect on the market? as far as pricing is concerned? >> it may. it may. and so, i mean, that's part of why this is whatever we put out is going to be a proposal. we want the public comment to weigh in. i think that's a good process and a constructive process. but congress is directed us certainly to look at this and expand what we currently have in agriculture products to the over-the-counter market. as we are contemplating to also do it in the energy and metals. >> thank you, mr. chairman. >> thank you, mr. kissell. >> thank you, luetkemeyer. >> thank you. you said your markets, m.i.t. and university of lincoln in missouri. i have to be alumnus in the university of lincoln. glad to see that. appreciate your comment. i noticed yesterday in the wall street journal article with regards to our discussion this morning. with regards to how we are proceeding and the speed that we need to be proceeding at with regard to coming up with the rules. that's basically what the hearing is about today. one the comments made there's enough data accumulated. you can go ahead and make some of these rulings and not have to continue to research or come up with more data or surveying. this morning, it seems like the comments have been coming from both of you gentleman with regards to need more data, need more time, can you allay that concern of the article here? are they out in left field? where are we at with this? >> i would say i think there are many rules that congress has asked us to do. but position limits has a particular challenge because it's -- it really is related to the size of the market. if you are going to limit something, if congress is saying to limit something, you can pick whatever the percent is. it sort of relates to the size of the market. most of the other rules are about reporting, about how trading facilities will work, how transparency works, i think that we have enough knowledge to go forward to lower the risk of clearinghouses, many of the rules don't have this same challenge. i think the position limit rule to be quite direct with you has unique set of challenges because it's about the size of the market, the size of the crowd, and the interaction between hedgers and specklators. >> so what you are saying is you have a lot of data on most of the things that you need to be working on. but some of the issues, especially with regard to position limits, you need more results to be able to come up with any -- >> i think that's true to part of the position limits. i agree with commissioner chilton on the spot limits related to deliverable supply and how we've done that and exchanges have. we could possibly move in a more timely way. >> okay. what is the impact with the lack of a rule? if we keep putting this off, or we delay, what's the impact on the markets? what's the impact that we can expect our farmers and commodity folks who need -- >> even those who say that specklators aren't having an impact would like to have the rule in place. it would take the argument away they are having an impact, if you get me. >> certainly is always nice. >> right. >> that's the key to any sort of market and in today's world, they were debating the tax law. incertainty is a big part. i'm sorry. go ahead. >> we've seen in the gas 20%. we've seen concentration by one trader. we've seen what i consider accessive speculation on the short side in the silver market. there are issues that i think as the chairman said, the largest of the large that we need to be concerned about. we can do that right now through this thing that i talked about earlier. looking at a certain level at which we say that deserves escalated scrutiny that we can do this thing called a special call. this is we say chairman boswell, you are over say 10% of i.c.e. or nymex. then i say i want to know your other position. you provide them to me. your swaps position that we don't have the aggregate data on yet. once we get the information, i see if you are above the level. even though you might be above the position point, your swaps may say you are below. but also you could say your swaps are high. we use the authority, work with i.c.e. or ic, and we write you about and look at every week in our survey lens -- surveillance meetings and say we could look at it. it wouldn't be hasty. i agree we could do the spot month right now. >> thank you. as my time runs out, i have one comment. mr. chilton, you made this comment earlier. the intent is to protect the market. i hope that you continue to use that as your guiding thought in all of your deliberation. that's why we are here today, to protect the markets for the original intent to be able to use them to enhance their businesses and ability to do business. it's not a speculative forum that we are worried about here. it's the original folks that use these things to manage their business. that's my only comment, concern, and wish to you. thank you, mr. chairman. i yield back. >> if i might say, i think that does guide us. i really do think that does guide us. >> thank you, not a member of the committee, but he can join us. i would recognize him at this time. no questions. mr. neugebauer. >> thank you, chairman for holding the hearing. i think it's safe to say that part of the dodd-frank that called for a finding -- i think the question is does the exchange really -- y'all haven't done anything with a innocence of coming up with the specific finding. when you send the rule out, you are going to send the rule out that says we just think there needs to be limits out there. we don't have any finding that those limits are needed. am i understanding that correctly? >> well, certainly congress told us to put the limits in. we had the authority, actually before this, we didn't have sport to do -- support to do this. we were instructed to put limits. the original purpose in the commodity exchange act doesn't say you have to jump some hurdle that proves beyond a shadow of the doubt in the court of law that specklators moved gas prices ten cents. the law says that we are to prevent and defer fraud abuse and manipulation. that's the guiding rule that i look at. >> that's something we disagree on. i don't know if congress told you to impose limits. if you look at it, it says as the commission finds are necessary to diminish, eliminate, or prevent such burden. in other words, if what you've told the committee today, you don't have data that says that -- that there are abuses or accessive speculation going on. and so the -- i think the intent of dodd-frank was if you find it, you know, address it certainly and agree with the gentleman from missouri. the job for job is transparency and integrity. but what we haven't heard today, and in several of the people on the panel have asked this question, we haven't heard you say we have identified where there are accessive speculation going on that could manipulate the pricing in the marketplace. >> well, congressman, perhaps congress should have been a finding in before they did. but they didn't. >> i know the story. i agree with that. since we didn't, we kicked the ball to you. we said that you should go out and address that issue and conduct an economic analysis and look at that and make sure. and if you find that, then you should take action. and we would want you to take action. i think what you hear today is everybody agrees that we want to integrity and transparency in the marketplace. what we also don't want is -- y'all setting prices. i heard you said mr. chilton, it wasn't your job to set prices. by manipulating or changing some of these limits, you could be, in fact, effective pricing. you may have the undesired result. >> right. >> the question is what is oil worth? >> yeah. >> i don't know. >> yeah. >> it maybe worth $300 a barrel. it maybe worth $50 a barrel. we need to let the markets decide that. i want to got back to spot month. because there's so much to cover here. but since price discovery, i think most people would agree it happens in the cash months or on the spot month. then what would be the need then for having position limits in the outer months? : when you get these large who have a trading strategy. it's different than what they've been in the markets traditionally. they're good price insensitive because they've got a lot of view of it. they've all their positions in the contract expiration comes up in every other trader knows they're going to do it. in these massive passes can have 30, 40, 50% of the market. i think congress commercials question of what you should have limit is a great question. they've figured out how you do a quite rightly say. but it's important to look out. >> last question here. and so, mr. gensler, so one of the things in the bill says he can do is appropriate and i think that was again congress try to make sure that we were being too prescriptive. so in many positions, i mean, good finding -- we finally went out there and what can analyze those going to, could one of the findings be that the appropriate limit is zero? or unlimited? what are -- what is appropriate? >> i support the opposing position limits of january of this year and i'll be supporting what i believe staff will be recommending. it is changing a little this afternoon because i do think in all months combined, as we've done in the agricultural markets for decades, as we did in energy levels markets in the 80s and 90s along with the exchanges, then it ensures that there is a diversity of speculators in the market. one can debate how many and i think that's a very important debate. but i think the integrity of the market and the price of people come together, you have a diversity of points of view in the marketplace and it's not one or two or three large traders on the speculators like dominating the marketplace. i wanted to try to answer both of your questions together. >> thank you. >> thank you: mr. chairman. i waited till bnt or and i want to head a little bit different direction and sqa couple questions you may not want to answer. but you know, this story that was in the near times on sunday, i assume you got that? >> yes. >> and this has been product made by a by a number of members that's created a fair amount of interest, you know, on the hill here. so i want to know what your view is on a couple different things. this issue of trying to put these on the electronic market and thereby reducing the spread. i think that if some of which are trying to do through this whole process, that the more we can get this information out, the better the market will work in the end-users will have a more fair place in the marketplace. i think that's kind of where you're at. >> i think it's where congress was. i think transparency hopes tens of thousands of end-users. some of it is too real-time reporting after the transaction, but some of it also comes on the smaller traits, not debate locks even before the transactions. >> so this issue about the citadel that is trying to set up this electronic trading, which would make us give you real time for before the transaction reporting, that would -- if that was implemented would reduce the threat click >> i think it brings greater competition and the american system works best when there's more competition. >> and so, in packets to the issue of what actually went on here. apparently getting to the governments of these clearing houses, which became an issue some want in the conference committee and, you know, the frenchman and so forth. so it appears to me that these big guys are trying to keep a list very profitable part of their business to themselves. am i wrong about that? >> well come i think it's part of the american way to maximize profits and made shareholders. and so, i respect that. >> yet. >> and so, you don't disagree with some of the carrot or stations in this article? i mean, that night we made the deal, the last night on the trip is, you know i sent off a flurry of lobbying from midnight until five in the morning to undo what we at time. generally you can follow what's going on by following the money and obviously we hit a nerve because been 250 bank lobbyists running around trying to undo things. so -- >> they are still visiting us. >> so, this is still something you're looking into i assume in the process of this whole implementation of the dodd-frank bill? >> we anticipate tomorrow taking off for proposed rules, this position limits will. there's two other roles that are important with regard to clearing and proposals, but with regard to clearing it will include some of the participants eligibility and ensuring that futures commission merchant could get name. and that "new york times" article highlighted currently the clearing houses are close clubs. they are very exclusive and they have very high mandates they really are noninclusive. and they say it's because of risk management. we're also taking out these electronic facilities for technology hot-swap execution facilities. >> well, is very significant difference between making this available in real-time or right before the trade as opposed to making it available 30 seconds after the trade? >> here is what is so important. at the party wants to make a bid for an author, and i think this is absolutely bipartisan. i think every american should defend. if someone wants to make a bid or an offer they should be allowed to do it in right now that's very difficult in this marketplace. you have to be invited and basically. i think what congress said was spot execution facilities. the word you used was not participants have to have the ability to execute or trade with multiple participants. and to do that, then somebody should have the ability to make a bid and broadcast it and that's a very important part to be in a spot execution facility. that everybody who wants to make a market can make a market. obviously they have to have the resources to stand behind their trades. >> so, where is that in the -- where will the final decision be made are not? you know, when will you actually get that final last? >> we are taking up the proposal tomorrow. i think what congress did was historic. it's very important. it'll bring transparency and competition to the markets of end-users will benefit. i think it will narrow spreads over time and then we'll put that proposal out of the commission. so usually put these out for a 60 day comment -- >> of money will go to final rule. >> based upon public comment by next july in a certain implementation dates as well. give some time. >> so what should happen this year sometime yet? >> you're referring to the year -- >> next year. >> yes, yes. >> i will get out some of the criticisms that were in this article if we get this done. >> i would think there were three main criticisms in that article appeared covenants, was published the governments to october 1st is that the public comment. we got about 150 could tell it comments. we're trying to finalize that early next year. it goes to clearing houses in the eligibility for all valid features commission merchants to be part of those clearing houses. were going to try to propose something on that tomorrow. and i think certainly the article went to the openness and competition in trading venues that were going to try to do that purposing tomorrow. and i think that end-users and agricultural interests, energy interests will benefit greatly with more competition in more transparency is brought into these markets. and i believe the market for us when your competition and transparency i think that's what congress told us do. >> that's no question that most of us want. >> thank you. to complete their first round. i know that mr. marshall has another question. anybody else have further questions? mr. marshall. >> mr. chilton company mentioned one reason to impose limits history no pressure. but as a silver lining in this crowd opinion of the industry. it's hard to remove pressure that they don't do anything or do too much and some o-oscar the market. so i think the pressure remains that this phenomena is being driven by underlying market forces. congress for everything did not make findings that there must be position limits on all these different contracts. it's because i intentionally wanted to have the discretion to make that decision. it seems to me you have not made that except in a broad sense that you need to move forward and opposed position as congress has mandated that ignores the as appropriate language, the necessary language and so we actually intended. we didn't know what to do. we don't have the expertise. we differed to you to make the decision ultimately. what should be imposed? final thing to clarify what i said about ratios when i get those numbers earlier, i was talking about assuming all the bona fide hedgers if not defined are in there and in the market. if you look at the balance of the speculators, the ratio between the speculators unzipping fairly critical. if you conclude that passes money is a problem. i don't know whether it is. it may be good for on no. if you conclude that you like to set different position limits and that's why we set the amend the statute to give the to give the discretion to do that within that class of speculators. thank you, mr. chairman for your double chins. >> anybody else have a question? zenon comment thank you for your time and sharing with us and put a little daylight on the process. we appreciate it. >> thank you. happy holidays if i don't see until the first of the year. >> thank you. on seem to you. personnel is excusable late to call the second panel to the table as soon as possible. [inaudible conversations] [inaudible conversations] >> would like to welcome my second panel to the table in thank you are your patience in waiting and we're glad to have you here. we have with us today mr. jim collura. mr. terrence duffy, executive group. mr. joel newman, president chief executive officer american industry association. mr. jeffrey sprecher, international exchange atlanta. mr. robert jones, senior vice president and chicago. on behalf of the national grain and feed association. mr. collura, please began when you're ready. >> chairman boswell, ranking member of iran, thank you for the opportunity to testify in executive limits for my dependent business and consumers. the current service vice president of the new england field institute which represents about 1200 mostly small family owned and operated companies. in 2007 response was perceived as unpredictable concern of our possible speculation in these markets can we pardon with petroleum markers of america and other business and consumer groups to form the commodity market oversight coalition. i am delivering testimony today on behalf this coalition that submitted groups for the record. it is compressed vertebrae are businesses and industries phosphate-based organizations and groups represent average american consumers. we favor policies that promote stability and confidence the commodity markets and preserve bona fide hedgers and consumers. our coalition endorsed title vii dodd-frank act which includes the most substantial reforms occurred if markets and thing. they are to be commended for their years of hard work the result and passage enactment of his pieces registration. the dodd-frank act includes market transparency and to prevent fraud manipulation including our speculative positions currently on break at a commodity markets. the law requires the cftc establish by jane or 15, 2011. however, however, we are disappointed the commission is lately come under pressure to leading position limits by required by law. our coalition composes any such delay. some argue the cftc is not enough time to do a bit better potential effects of such limits. however the company should note that the dodd-frank act does not provide the cftc with authority to establish limits that actually expands existing authority. the clinics change act of 1936 requires the cftc two that limits from controlling precedents. the loss that for undue burden interstate commerce and as a consequence to cause sudden or lethal price fluctuation or an warranty change in of the commodity. whoever the u.s. exchanges have abandoned hard energy limits in soccer accountability limits. under the leadership of chairman gensler from the cftc acknowledged the economy limits were insufficient to prevent traders have taken controlling positions. many traders are failing with little or no action by the exchange. the cftc hobby round appearance in summer 2009 introduced her post: january. the four months between january and april 2010 the cpc received over 8000 comments on the proposed for the vast majority with meaningful limits of speculation. during that time comes argued against the cftc section under fear but drive market activity from regulated exchange of the so-called dark market. the report -- that report has little or no data subject to little or no oversight. the cpc should not be argued until it was granted authority over the otc and for marketing can implement markets across the board. the cftc under the dodd-frank act injuries this authority. once implemented the act will bring otc markets to a faerie queene exchange trading or clearing reader requires foreign boards of trade to seek u.s. access first prove they are subject to comparable oversight regulations come including position to position limits. in in addition, many of ever see speculator strathern plans to impose speculation limits. the ct works to delay implementation of these in the united states, deemed discriminatory from other jurisdictions overseas could be jeopardized. the cftc must type. excessive speculation as delimiters. when prices surged to unjustifiable levels, consumers are left with higher food castling costs. they will lose business including manufacturers and other transporters are as well. even though some continue to believe speculation can never be a blessing. despite ample evidence of excessive speculation is that the circuit to commodity markets, some continue to doubt, question or rates of the mind of speculation with other or could ever be excessive. make no mistake we believe in open, transparent and competitive market for new regulation must not burden market or unnecessarily impede market liquidity. speculators provide market with liquidity, but excessive speculation as commodity prices to levels unjustified by market forces and results in price levels that aren't commodity hedges and users in the broader economy. as we saw dramatic faction with commodity bubbles in 2007, 2008. establishing an opposing team a meaningful limit will send a signal of confidence and stability and help create more transparency orderly and functional commodities market. thank you again for the opportunity to test fire for attorney questions you might have. >> chairman boswell, ranking member moran to members of the subcommittee, thank you to buy domestic testify at the dodd-frank provisions relating to provision limits. i'm going to focus on the requirements of dodd-frank and briefly successive. the speculators are distorting future markets. dodd-frank requires the commission to make a finding that position limits are necessary to diminish, eliminate or prevent some excessive speculation before imposing such limits. the cftc is not permitted to act on the basis of assumptions or political demands. core principle five, section five of the cea also demonstrates that position limits are not required in every case since it permits exchanges to adapt accountability levels as an alternative to rigid position limits. dodd-frank also requires that cftc way to impose limited on future exchanges intelligence simultaneously imposed limit on economically equivalent swaps. the purpose of this provision is to prevent a fight of trading from regulated exchanges with no limits to un- break elated markets with limits. given these requirements, it is clear the cftc lack sufficient data to impose limits on swaps and therefore may not weekends the futures. the commodity exchange act allows limits to be opposed only on excessive speculation, not speculation generally. this is a clear recognition that futures markets cannot operate without the participation of speculators. arbitrary position limits distort markets, increase cost you hedgers and increase cost to consumers. position limits are unnecessary, or in some excessive speculation is present or is likely. academic literature and all the studies produced by the cftc's economist demonstrates the position limits in futures trading are not the means to deal with real supply demand issues. it is my firm belief that affairs to focus on position limits rather than the underlying issues are certain to divert attention from the real problems and do more harm than good. worse yet, position limits century but if markets said per click investors from seeking economic exposures to particular assets classes tried those investors to speculate in physical commodities. this in turn has a significant enough in dutch mental impact on a flow of commodities and commercial channels. the authorities in the beginning beginnings of such distortions and the models in energy markets in anticipation of the imposition of limits on derivatives. this is not a development that anyone should favor by one unfortunate result of position limits based on bad economics. cme group is not opposed to position limits and other similar measures used to correctly. for example, we employ limits on most of our physically deliver contracts. however, we've limits on accountability level as permitted by core principles to mitigate potential congestion during delivery. to help us respond in advance to offer to manipulate markets. cme groups the core purpose should be governed federal and exchange position limits to the extent such limits are necessary and appropriate should be to reduce the threat of price manipulation and other disruptions to the integrity of prices. such activity destroys public confidence in the integrity of our markets and harms the acknowledge public-interest and legitimate price discovery. cme group appreciates the opportunity to offer the foregoing comments regarding implementation of dodd-frank provisions for limits on certain contracts involving extension agricultural commodities. we hope the views expressed today are helpful and we look forward to answering any questions the committee will have. thank you, sir. >> thank you. mr. newman. >> chairman boswell, ranking member moran and members, thank you for the opportunity to testify before you today. the american feed industry association is the largest organization devoted visibly to representing the business, legislative and regulatory interest of the u.s. and will feed industry its suppliers. afi applauses such to many, its members in the full committee for calling today's hearing. if i members make more than 70% of the animal feed in the other states in which amounts to 100 x 2 million tons annually. it also represents roughly 70% of the cost of producing meat, milk and eggs. with the majority of our industry and for supplies price directly on or in reference to regulated commodity markets, we depend significantly on an efficient and well functioning futures market for both price discovery and osco risk management. agricultural commodity markets were established to provide efficient price discovery mechanism and managing risk management tool for producers and end users. while the system encourages and requires speculative participate in to provide liquidity, the significant increase in financial investors as well as the special exemptions from speculative position limits that have been granted over time to wall street banks and others who are not end-users has distorted the function of these markets. agricultural commodity markets function defect of late for 60 years after the 1936 commodity exchange act first implementing speculative position limits. however, this changed in 2000 when congress codified earlier cftc regulatory acts granting wall street banks and other financial institutions and exemption and speculative position limits for hedging over-the-counter swaps and index transactions. while there are several fact there's that have led to increased volatility and price swings in agricultural commodities, excess speculation that index funds is certainly one of these factors. as you're aware, the size and influence of these large financial players was never contemplated during the development of the original commodity exchange act. most of the index speculators tend to hold their positions rather than sell. this allows them to create artificial demand through their long holding positions and in essence really are on higher prices. the magnitude of the scenario is clear the numbers. in 2003, index speculator investment and 25 physical commodities was $13 billion. in 2008, these investments jump to $260 billion in 1800% increase in five years. in 2010, these investments remain at two under $65 billion with three index funds representing 94% of that amount in one fund representing 52% of other's investments. earlier this year we applauded the work by congress to include provisions in the act that would authorize the cftc to say recordable position limits on commodity contracts as those for aggregate and exchange specific provision limits. within this process, if i members support the following items. first, speculative position limits that enhance market performance and the appropriate narrowing of cash and futures market values of the contract -- as in your contract delivery period. the retention and declassification of the existing speculative position limits for agricultural commodities. retaining the current bona fide hedge definition, which is in place. the removal of speculative position in the mid-exemptions for financial and the two shins and other nontraditional participants in agricultural commodity markets. while cftc now has this authority without removing these exemptions from the speculative position limits would have been much more limited effect when they are put in place. given the strong relationship between crude oil and corn futures market, brought on by the germanic and rapid expansion of the ethanol industry, establishing and enforcing energy speculative position limits is also important to secure the reliability of the entire agricultural commodity complex. we support speculative position limits that work for both bona fide hedge your in the speculator. however, there is rarely a perfect solution to complex issues. and waiting for a perfect solution before sending speculative position limits are taking other actions will only delay the much-needed transparent -- transparency and controls required in these commodity markets. therefore, we support implementation of an term limits were data is available, which can also be adjusted by the cftc with further data to confirm it support those changes. i would be remiss if i didn't express afi's appreciation to chairman gensler, commissioner chilton and the other cftc commissioners for their extensive outreach during this entire process. thank you for inviting me to participate in today's hearing. afi units ever seen ready to assist you in a separate them and look forward to any questions. >> thank you, mr. newman. mr. sprecher. >> chairman boswell, ranking member moran, and jeff sprecher chairman and chief executive officer of internet intercontinental exchange which is oversized and i am grateful for the opportunity to provide comments on the rule-making pending before the commodity futures trading position. i saw supported the aggregate position limits across trading minis that administered in a fair and nondiscriminatory manner. in summary, basically position on the subject of the very clear. we believe the cftc should set aggregate position limits and economically equivalent market to avoid negatively impacting liquidity that's relied upon by commercial end-users to hedge their risk, aggregate position than it should be set at levels taken into account the volumes of both existing futures market and the broader over-the-counter market. and financially and physically subtle contract should be treated differently after expiration and and a revised position limit regimes. there've been exhausted. by congress and the commission over the last several years than they've concluded that economically equivalent contracts on separate exchanges operate as an active market. therefore, i disagrees with congress and believes the commission is the appropriate mutual authority to set and administer aggregate position limits for u.s. energy futures and was it can price discovery contracts. only the commission is in a position to be market participants positions across all venues to administer arbors position limits in a manner. however, we'll simply position than a pro-mccain should focus on implementing the core requirement of dodd-frank and that his family said in aggregate position limits across markets and they should avoid the consideration of experimental roles such as rules that would concentration limits for each and every exchange in every swap execution facility. inciting aggregate limits, commission should take into account both future market the broader over-the-counter swaps markets. going to take into account accurate data from each of these markets risk setting aggregate position limits at levels that could negatively impact liquidity that's actually relied upon by the commercial users to effectively hedge their price risk. this would certainly be an unintended consequence it would be inconsistent with the goals of dodd-frank. finally, in sitting position limits in the expiration or the spot month, the commission should treat financially and physically subtle contracts differently as market participants use financial and physical contracts differently for different purposes. the commission already recognizes there's a distinction between financial and physically subtle contracts. these rules promote contract convergence and they eliminate the need for significant numbers of hedge exemption that exist in the energy futures markets today. in conclusion, were strong proponent of open from literature but it arcades and appropriate regulatory oversight. into that and were pleased to work with congress to find solutions that promote the best marketplace as possible. after chairman, like to thank you for the opportunity to share her views with you here today. >> we thank you. mr. jones. >> good morning, mr. chairman and members of the subcommittee. robert schultz, senior vice president of abn amro buried in chicago. they serve in the risk management committee of the national feed association emerged they represent the views of the national grain association. we appreciate the opportunity to discuss position limits for the integrated agricultural commodities. federal position limits are owed in place for those commodities and we believe they are at appropriate levels. generally we have found the commission understands the impact of affection for commercial businesses and is responsive to our concerns. however, deadline set up inside in the locker very challenging. for industries, price discovery occurs in the futures market, so it's extremely important to get the rules right. given the choice, we prefer to go a little slower can make sure we get it right rather than rush rules through to meet a deadline and find out later about unforeseen consequences. the context for those that ask you think back to 2008. agriculture futures prices escalated rapidly results in a disconnected cache and futures values otherwise known as convergence. basic level for producers widens dramatically. the green purchasers and hunters cause extreme financial stress due to massive marching requirements. at the same time, marketing opportunities for producers were limited. we believe the expand participation by nontraditional participants like index funds and pension funds played a role in the two dozen new spate. not the only factor, but a factor. today conditions exist that could lead to a repeat of the situation. another investment field futures spike occurs, grain buyers may be forced to purchase from u.s. agricultural producers have occurred in 2008. search by buyers will be forced to consider tighter limits on for contract purchases at the same time many producers would like to take advantage of this favorable prices. they believe would be prudent for the cftc to provide limits for their cultural commodities. in particular come with a strong reservation about and approach the critic might position limit for over-the-counter estimates and futures based on open interest bubbles. the majority of risk management activities for the enumerated type when it involves futures traded on exchanges. practical impact of a combined otc and futures position limit likely would mean limits ratcheting steeply upward for futures. where are the result would be sort of perpetual motion machine leading to invest and enumerated at commodities in ever greater amounts of even wider basis things occurring. in addition, the commodity exchanges notably described it in the kansas city board of trade have worked diligently to reestablish convergence and there we contracts. getting that wrong position limits can undo progress that exchanges for making towards enhancing performance of their contracts. proper functioning of futures markets for traditional users and producers should be the cftc is overriding consideration and establishing limits. a resizable relationship between cash and futures must be maintained. convergence matters. not just sometimes, but consistently and predictably. the national grain and feed association does not favor excluding investment capital from agricultural futures markets as we believe it does provide liquidity to job markets. however, we believe the cftc must establish reasonable limits on investment and the enumerated at commodities of the relatively small markets are not overwhelmed by invest in command, ignoring the unique characteristics of these markets could have highly undesirable consequences for agricultural producers and traditional hunters use these markets for price discovery and risk management. thank you, mr. chairman for the opportunity to present the views today. we'll be happy to respond to any questions. >> thank you. we have votes coming up in 15 or so minutes were told. so we're not going to limit the discussion that took place here, but i'm going to go right to mr. johnson. >> thank you, mr. chairman. just a quick question. i'm obviously particularly proud to have two of my fellow illinoisans here and mr. jones and mr. duffy. i would ask you, it seems as though at least the commission is of the mind that if we hurry to regulate our domestic exchanges, our european counterparts will follow. it's my judgment, and i may be wrong, and i'm inquiring you specifically asked her what do you think that is the correct process or what do you think inside but that course would put our market come and see them in other ways as a competitive disadvantage. and do you think that if we -- if we do put the cart before the horse in my judgment that the europeans will impose similar position limits or do you think of simply like that and take advantage of her premature action? >> well, i think congressman johnson for the question. i think it's very interesting. i met with the gentleman from france. his name escapes me, but is that of the european commission. i asked him what he told me a lot with chairman gensler, when he came to visit us at the exchange that they would lockstep with the united states. i asked them when they passed dodd-frank in the u.k. and they said they did not pass up to. i asked them amid other provisions put in place such as the united states and they had no such provisions, not even anything on the table. they are making a lot of rhetoric in my opinion as it relates to regulatory conforming with the u.s. i do not see this to be a reality. the u.k. in london is very dominated by financial services industry. i think they will say many things to get a competitive advantage of the united states. i think would be a shame if that was allowed to happen. we want to keep this business in the u.s. we want to be the central place to discover price. i assure you our friends in europe would love to have the business the united states has today. so i personally don't believe they are going to follow suit with the united states. you may do certain things, but not to the extent that we've done in this country. the mac they appreciated. to my fellow members, u.n. panel and everybody here, merry christmas and happy holidays to all of you. >> merry christmas. >> thank you. mr. peterson. >> thank you, mr. chairman. mr. duffy, this article that was referenced earlier, as i understand it, i guess you didn't respond or i don't know if they call a or not about this article. but you were offering the citadel service. and is it true that they couldn't get people to sign up? >> we had in offering the citadel investment company roughly a year come year and half ago to bring to the market trading of credit default swaps initiative and we did not receive any traction on that initiative with citadel investment firm for a whole host of reasons. in outcome we've had a lot of businesses that we invest in and we try. somewhere, some don't. you know, we test products -- hundreds of them and maybe one could be successful at of hundreds or thousands, so this was another venture that did not succeed. >> you agree with the carrot or a station to reason it is because of the so-called secret committee of nine bankers frozen now? >> i don't know any facts to support that to be honest with you. i would not know that. but i would suggest a clearinghouse as a cme group is an open clearing house. i think chairman gensler referred to some of the pairs to entry to the clearinghouses in the united states. but it appears to enter into a clearinghouse for referring to come as there's on a commitment in declaring a cme group product today. they're risk management issues and otc projects. i'm not saying that some important, but in today's business, we don't have the barriers to entry the chairman gensler might've characterized incorrectly. >> to the risk change? did you have a risk committee? is a remake of that change? >> the risk of a remake of committee can change that time. obviously we have certain members that come and go, but we have a composition of people that interest in the marketplace that is reflective of the marketplace and we think that's the best thing for all the users. >> you would not agree that this risk committee is dominated by these so-called secret committee? >> i didn't give it that much credit. i don't believe that i don't think there's any collusion going on this committee. i think there's way to much at stake for that to be going on, whether it's any speculation. >> isn't made up of the big guys or is that more broad than not? >> we owned a five regulative clearinghouses, but one is specific for credit default swaps. the members of the clearinghouse are the 14 largest banks in each of those things has a representative on the risk committee. while we meet, the risk committee is overseeing an independent chairman in the issues that are discussed in our committee are risk issues, so i can't detail what the article suggests how wednesday's meeting downtown or other things. >> you're not aware of those? >> i'm not aware of those. >> thank you mr. chairman. >> thank you. mr. conaway. >> thank you. welcome. given that the state of play is that cftc and not in finance right now, what are you coming to congress here to ask us? are you coming to ask us to do anything with respect to rule-making that's going on at the congress actually needs to act toward you want us to continue to watch what is happening with the cftc? anybody asking for specific clerks >> i think as we identified in the positions for the american feed industry association, we appreciate your commute oversight and watching the process and ensuring it does go forward and get the result everyone intended. right now, we see our role as working more directly with the cftc in a comment process to make sure that our interest and so forth or take into account in the process. >> speaking of that question, of all of your organizations and/or individual members have the appropriate level of access to the rulemaking process? >> yes, we have. we've had very good cooperation on outreach to not only clarify with being considered, but also to be able to have input into the process. >> mr. collura come is your point of view being considered? >> yeah, we have had adequate access to the committee rulemaking process. and actually is a coalition, we submitted preliminary comments to the cftc on november 1. some with regard to its rulemaking were actually kind of thrown around a battle bit of discussion. some of those points made was very well taken about the importance for energy and agricultural groups that are concerned about index speculation. and i think that -- i hope tomorrow the proposed rulemaking will attempt to address the situation and maybe like commissioner chilton said to some of segregate the market and address them as appropriate. and if not, will be certain to -- >> what type of form speculation? >> i'm sorry. >> he said various forms speculation. help me understand what a form of speculation this? >> i'm thinking of traditional speculation such as hedge funds. >> so it's not the foremost speculating. >> right, versus index funds which have investment strategy when it comes to commodity investment. >> use a phrase that was interesting. he said basically the speculation as a pejorative war on higher prices. it's very different reason to speculate on higher prices? is that the side of the deal but buy low, sell high? >> right. i'm sorry? >> use the phrase in the pejorative that the phrases were betting on higher prices. and i was struck that as i'm unaware of suspect leaders. >> my comment was in respect to the earlier comments that marshall had raised about index speculation. these folks take passive cooling commissions and capacities interviewed perpetual situation in the market where month outside. >> other speculators who agree should be in the market? >> weekly speculators in general should be in the market and start lynyrd general as a a good healthy thing. it provides a solid risk management as has been discussed in this medication. >> yeah, the comments -- are your members willing to accept higher prices for transaction costs as a result of limiting the number of spec leaders in the market? does that happen, mr. david? and mr. sprecher, you mentioned higher transaction costs. that one of the burdens we talk about if mss market up in can you measure the higher transaction costs? >> i think you can, sir. purge going into management cme 2002, he spent 25 years of my career treated as products and providing liquidity for all different types of products. and i know when there's fewer participants in the marketplace, but did offer widens significantly. i don't care if you trade government securities report released, it will widen significantly with less participants. the answer to your question is not fully us an estimate for many, many years firsthand, whether it's electronically or in pain form. if i could clarify one other point, sir will have the microphone on this index funds. these index funds, so broke clear on this, and they do not come to exploration of the market. we've all decided over a lot of conversation the price discovery function have been during delivery. of the marketplace. index funds have long gone from the delivery. if any marketplace and dodge the next month. they are not affecting the price discovery of any one particular product. also, when you look at who takes or makes delivery of the products, there's one for every cycle when millions of contracts are being treated. it's a very small percentage being done in index funds are longtime in the marketplace. i apologize for answering two questions at once. the neck that's okay. thank you, mr. chairman. >> mr. marshall. >> thank you, mr. chairman. i guess is the influx of the index fund on it that some would say push prices higher and that she'd reach some sort of stable state, where they are getting mounts and they're not affecting price the way you describe. mr. duffy. >> could actually be selling the nearby contracts. so they would be putting pressure on the price discovery contract month if they are index funds, there's also funds that are sure to the market. the event was to get the stable state. i just don't think that we hear this committee or congress are competent to judge this. that's where we differ to cftc and specifically told the cftc, don't do it if it's not appropriate to do it. figure out whether you've got a problem and tailor the solution to that particular problem. but we did hear this test wanted that baby the influx of commodities money and of the market could put prices up for a period of time and then there'd be a stable state you describe, where they're just going to not really affecting prices. >> nature you anytime there's an influx of money in any particular product, whether it's a security of ibm stock, cme stock, i saw corporal crude oil, you could have a short-term impact on price. you can do that at the grocery store, gas pump come anywhere. probably the market will come back into fundamentals right away. our point is these people are not affecting the price when it comes into what is the delivery. >> the cftc used its special authority to gather large trader data. and it's been gathering large trader data i think since late 2007. i think first quarterly and now more frequently, maybe not the. the object it is to get it daily. i guess that's going to acquire late 2011. are any of you aware of any studies? and income with already talked by the tsc does look in our shader data to determine whether it's had an impact upon price. you know, whether not trading by these massive passes, whether they have had an impact on price. are any of you aware of a study done by anybody, lincoln, princeton, you name it, doesn't matter who it is, taking that vatican which is probably the best thing to do but cannot come in trying to figure out whether index trading has an appropriate impact. anybody looking that that is, but here's the problem and specifically here's what happened? anybody? >> we've looked at the data and we've seen no evidence to support that index funds are doing what you suggested. so we've looked at all the academic data and others coming out and even the own cftc's economist and their data, i've seen nothing to support the speculators are influencing the price. >> i believe we might have some data in some information, which i can't cite a fan, but i can certainly get in the near future. >> that would be great. and sure up the cftc as well. but the committee is heard by message is fairly consistent on both sides of the aisle is we don't think cftc needs to move forward. they are not mandated to move forward by congress to impose position limit. and so, if you can help them identify the problem because internally we are struggling with this. you're some commissioners if there's a problem but then they're not able to describe it in the steps of saint we can figure the problem is, so we don't know what the solution to suggest. mr. jones, you said your group was troubled by imposing position limit across all markets, so not just in the exchanges, but in the otc market spots generally. and because it was -- is that your language here. the practical impact of a combined otc and features position limit likely would mean limits affectionally ratcheting steeply upwards for futures. when you say the limit would ratchet up, what you mean by that is your members would have position limits that were gradually pushed down so that they really weren't able to take as much advantage of the exchange as in the past? >> i would say all or release numbers of our members are qualified in the category. what we're referring to their is as i said earlier on, the majority and particularly in the enumerated commodities of corn and soybeans, the majority of the trading that goes on is the price still recurs on exchange and most of it is hedged. and so, unlike the energy markets, which i'm not an expert and there's a much larger otc portion that occurs. so if we were combined with the otc come and actually would create a much larger position limit the effects could have if they combine combine the two and what exists right now. and if you were to flow into the futures market. >> shevlin have anything but affect it has on your ability to hatch. >> well, then that would follow for we said before if you were to get into this investment field higher-priced scenario like we had in 2008 because you have the success of oman investment money that it come to the market. >> you're suggesting the imposition of aggregate position limits would encourage additional investment market? >> i would say aloud, not encourage. >> is currently allowed without limit. >> you don't have an otc comparable otc? >> mr. duffy, it's not as mature for the futures. >> you are worried doing would encourage pasternak at this point in time. but it shouldn't happen, but were saying we shouldn't pursue that without rush to the otc. we've had ongoing discussion of the cftc and fun response to word it, we don't have to rush to make those changes in our contract at this time. >> thank you or indulgence, mr. chairman. appreciate your testimony. >> thank you. mr. murphy. >> yeah, i went to refer to something and if they would comment a little more. when we withdrew the dodd-frank process, worried about making sure we found the right balance that are clearing houses for out there allowing things to be clear that could be, but we didn't or regulatory pressure to take products you can price and therefore create additional risk. this "new york times" article is troubling because this was -- was talking about secrets in a way that i think is theatrical. but i think there's a fundamental underlying issue that i'm curious how you guys approach this, which is unique people that are clearing house members that are solid if there's a problem they can help solve that capital cost and other things. but at the same time, it seems like there's a possibility people could something so high that only a handful of people could participate in you do create anti-competitive place. how do you guys approach finding that balance? mr. duffy come he talked about being open, but i don't know what that means. it seems like a critical one to finally get the competition were looking for without creating additional risk. >> i'm happy to do for two mr. sprecher since he was mentioned in the article. but i'm happy to go ahead -- >> it's an issue for both of you obviously. >> let me steal the microphone away from mr. duffy. i think specific with credit default swaps, as you may know, we step forward at a moment in time when the market had collapsed and people were calling to remove the toxic assets of the books of the banks and builds a clearinghouse to do that and that is why we have 14 large bank members. and the only solution we could come up with on how to deal with a failed bank is to force the other 13 members to accept the forest allocation of the fill positions amongst them, that my company would mr. we want to open a clearinghouse up, but we have to recognize particularly in the case of these complicated riveted scum of the members -- the new members coming in have to be in a position to be able to accept an allocation of these derivatives and then they have to be able to do something with them in the marketplace. we do intend to open them up and we working on regimes to get their and certainly dodd-frank is an impetus to speed up that implementation. i think "the new york times" article was unfair and that it took the construction of a clearinghouse out of the context in which was built. >> to the same issues with other regulative clearinghouse this? >> no, not necessarily. as products get more liquid, more transparent, it's much more easy for them to come in and liquidate in a transparent market. as you specifically know because of your expertise, credit default submarket is incredibly to liquid and complicated market and their many people of the domain mark to do that by now. >> on our list of products obviously we don't have requirements that would potentially have if we were going to do the otc clearing because it is a different product. it's not illiquid, but it doesn't have a liquidity of the market today. in order to best manage it properly so we don't have a system, when he took after required to make sense. you need to set archer requirements different than listed in traditional features. so we have to do different types of risk management as it relates to over-the-counter swaps to clearing. so i would concur with my colleague, mr. sprecher. >> so let me just comment. i think for my discussions with colleagues, there was wide support for trying to open up markets to the degree possible. to think which are hearing from us and to continue to hear the gears is that desire for you in a prudent fashion because clearinghouses need to be prudent, but to try and make them open and accessible and have more transparency and that's really a big underlying piece of overall working on the course of dodd-frank. so i'll leave you with that is something to. >> thank you. >> thank you. >> gentlemen, thank you are a much worse than in this time with us. we appreciate it. in recognition of the fact and looking forward to good work, mr. conaway will be calling the next meeting of the subcommittee, whenever that's going to be. and so, i would like to offer him any closing remarks he might like to make. >> thank you, mr. chairman. i hope it's not speculating on something chairman elect focus to make the final decision. i footplate expressed an interest in sharing the subcommittee. the surge day to have all five released lease manager had that the cftc's process are open to you, that their input as you're trying on both sides of the issue to get your positions in front of the commission. and if the baseball analogy works, if an umpire scream screamed at by both benches, there must be something okay going on behind him play. so i was hard and you'll said the cftc's processes are working in the access as they move a lot in that. but that mr. chairman, i yield back. >> thank you very much. we appreciate you coming. purpose today was shed a little daylight on what's going on at this moment, the important of it is to our economy and all that goes on in the different markets and they think it's been a good day. we've learned and got the insight to the chairman and both the commissioners and some of the needs to happen we want to invite you to continue to be in contact with us and ensure you will. so with that, you thank you again. i wish you a great holiday and look forward to seeing you if not before, at least next year. thanks so much.
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