During this congressional session, Financial Executives International (FEI) has endorsed two bills that protect derivatives end-users. The first, H.R 634, the Business Risk Mitigation and Price Stabilization Act of 2013, would ensure that non-financial derivatives end-users are not subject to unnecessary margin requirements. This bill passed the House of Representatives last June with 411 votes. The second, of H.R. 677, the Inter-Affiliate Swap Clarification Act, would exempt swaps with centralized treasury units (“CTUs”) of non-financial end-users from clearing requirements.
Without a clear exemption from margin requirements, nonfinancial companies who use derivatives would have to divert billions of dollars away from much-needed investments, such as business expansion and job creation. Additionally, if the inter-affiliate legislation is not passed, non-financial end-users could be forced to dismantle their centralized treasury units and find a new way to manage risk, or to clear all of their inter-affiliate trades, denying the end-user clearing exception to those end-users who have chosen to hedge their risk in a different way.
FEI is pleased that on April 9, 2014, the House Agriculture Committee included H.R. 634 and key provisions of H.R. 677 in the reauthorization bill for the Commodity Futures Trading Commission (CFTC). CFTC reauthorization is a process that occurs every five years or so, and while its overall directive is to reauthorize the agency, it also can be used as a vehicle for lawmakers to pass legislation pertaining to the oversight of the derivatives industry.
The CFTC Reauthorization bill, H.R. 4413, passed the House Agriculture Committee by voice vote, and is expected to be voted on by the full House of Representatives early this week. Please follow the link  to our new grassroots system, FEI Grassroots, and contact your Member of Congress in support of these provisions of the CFTC reauthorization bill.
You can reach FEI Grassroots by clicking here.Â