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Good morning Chairman Harkin, Ranking Member Chambliss and members of the Committee. Thank you for inviting me to testify today regarding cap-and-trade legislation before Congress. My testimony will focus on the Commission’s experience regulating emissions trading markets and how we can apply that experience to trading in government-issued greenhouse gas allowances and offset credits. In the event that Congress passes cap-and-trade legislation, the Commodity Futures Trading Commission has the necessary expertise to regulate trading in the expanded carbon markets.
Before I turn to the carbon markets, I am pleased to report to you that the CFTC has been very active since the last time I testified before this Committee. Since then, we have held three hearings into whether or not to set position limits in the energy markets like we do in the agriculture markets. We have worked with the Treasury Department to deliver legislative language to the Congress that would regulate over-the-counter derivative markets. We have revised a no action letter and reached an agreement with the United Kingdom Financial Services Authority to enhance our oversight of a foreign board of trade. We have withdrawn two additional “no action” letters that permitted traders to exceed position limits in some of the agriculture markets. We have improved our transparency efforts by disaggregating the data in our weekly Commitments of Traders reports. And just last week, we held unprecedented meetings with the Securities and Exchange Commission on how we can better harmonize our regulatory structures to most benefit the American public.
Over the past year, we have witnessed the consequences that regulatory gaps and inconsistencies can have on our financial system, the economy and the American people. As Congress moves forward with potential cap-and-trade legislation, I believe it should ensure that there is a comprehensive regulatory framework over the expanded carbon markets – both the futures market and the cash market – without exception.
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