Clearing capacity, margin adequacy and bank capital emerge as top concerns for agricultural end users

Members from farm states and industry witnesses told the committee they worry clearing capacity and margin practices increasingly threaten end-user access to derivatives that producers use to hedge price risk.

Alicia Crichton of the Futures Industry Association highlighted two pressures on capacity: margin adequacy and bank capital rules that may reduce intermediaries' willingness or ability to provide clearing services. "Clearing businesses over the course of the last five years have seen capital between 2020 and 2022 double," she said; witnesses said proposed Basel III changes could further reduce capacity.

Ed Prosser and other end-user advocates urged that regulatory changes not unintentionally push activity offshore or make market access unaffordable. Prosser said the markets provide vital liquidity and price discovery for agriculture and energy and recommended congressional oversight to ensure U.S. benchmarks remain anchored under U.S. oversight.

Members asked whether self-certification and other expedited listing processes still strike the right balance between innovation and market stability; witnesses largely defended self-certification but suggested closer scrutiny where retail or event-style products intersect with traditional end users.

The committee did not adopt policy during the hearing but members asked the incoming CFTC chair to prioritize margin-calibration work and interagency coordination on bank capital to preserve clearing capacity for end users.