On May 25th, the Commodity Futures Trading Commission staff held a roundtable to consider the implication of a non-intermediated direct clearing model for digital asset derivatives. See the summary below for more information.
On May 24th, PoliticoPro’s newsletter titled “Cypto concerns come to ag” highlighted some of the concerns raised by the American Cotton Shippers Association and other agricultural groups regarding the recently filed proposal filed by LedgerX LLC d.b.a. FTX US Derivatives (FTX).
On May 10, ACSA submitted its comments in response to the U.S. Commodity Futures Trading Commission’s request for public comments on LedgerX, LLC d.b.a. FTX U.S. Derivatives’ (“FTX”) request for amended Derivatives Clearing Organization (“DCO”) Registration Order.
On May 12, the House Transportation Committee Subcommittee on Railroads, Pipelines, and Hazardous Materials held a hearing entitled “Board Member Views on the Surface Transportation Board (STB) Reauthorization.”
On May 12th, the House Agriculture Committee held a hearing on “Changing Market Roles: The FTX Proposal and Trends in New Clearinghouse Models.” Committee Chairman David Scott (D-GA) said that he had serious concerns about the risks the FTX proposal would pose to derivatives markets’ primary functions of price discovery and risk hedging. Several members on both sides of the aisle voiced concerns that FTX’s proposal would lead to either FTX or other exchanges offering a similar model for traditional ag commodities such as cotton which would be problematic for commercial hedges. CME Group CEO Terry Duffy said that, if the Commodity Futures Trading Committee (CFTC) approves this proposal for FTX, he will have no choice but to begin offering similar lower-cost products with less risk controls for traditional markets to remain competitive. Duffy said that the CFTC should approach this issue through a CFTC rulemaking process, not through the approval of a single proposal.
On April 15th, China Cotton Association (CCA) held its 2022 Annual Council Meeting online, with over 120 participants made of CCA’s Council members, government officials and industry experts. The meeting mainly focused on CCA’s works and efforts in 2021 and industry outlook and work priorities for 2022, which is to put continued efforts to promote and drive high-quality and sustainable development of the cotton industry. Please refer to attached memo for key takeaways.
Last night, the Senate confirmed all four Commodity Futures Trading Commission (CFTC) Commissioner nominees by voice vote. Democrats Kristin Johnson and Christy Goldsmith Romero are confirmed for terms expiring April 2025 and April 2024 respectively. Republicans Caroline Pham and Summer Mersinger are confirmed for terms ending April 2027 and April 2023 respectively. This is the first time that there has been a full slate of Commissioners at the CFTC during the Biden presidency.
On the evening of March 21st, ACSA staff met with the China Cotton Association (CCA) to discuss the state of play for the cotton industry in both the U.S. and China. Yuan Associates stated that, “During the meeting, Vice President and Secretary General of CCA Mr. Wang Jianhong expressed the hope to work with ACSA closely to control the risks over cotton trade default issues, mainly because maintaining domestic and international cotton trade order is also one of CCA’s responsibilities. CCA will fully support the work of CICCA in safeguarding the rights and interests of CCA members and maintaining the trade order.”
From March 5th through 11th, China held its annual National People’s Congress (NPC), deliberated and approved the Report on the Work submitted by the Chinese government, determined the goals for 2022, analyzed the challenges facing China under the current domestic and international situation, and proposed corresponding tasks to tackle those challenges. In the analysis below, Yuan Associates describes the goals, tasks, challenges, and policy trends determined by the NPC, as well as the impact of the NPC’s tasks and policies on U.S. cotton industry.
Today, the House Ag Committee Subcommittee on Commodity Exchanges, Energy, and Credit held a hearing entitled “A 2022 Review of the Farm Bill: Rural Development.” The sole witness was USDA Under Secretary for Rural Development Xochitl Torres Small. Key takeaways from the hearing prepared by Delta Strategy Group below.