HENRICO, V.A. – U.S. Representative Abigail Spanberger—a Member of the U.S. House Agriculture Committee—introduced legislation that would help protect agribusinesses’ accounts following the bankruptcy of their commodities broker.
Spanberger’s legislation would bring clarity to an often overcomplicated and confusing agribusiness finance system, which is regulated by the Commodities and Futures Trading Commission (CFTC). Currently, judges determine which assets are included in bankruptcy proceedings—but the case-by-case nature of these proceedings can leave agribusinesses uncertain about their financial futures. To protect customers and provide them with greater certainty in cases of broker bankruptcy, this bill would allow futures customers to have a predetermined idea as to which commodity broker assets will be used to cover the costs of equity claims during bankruptcy proceedings.
“Right now, the American agriculture economy is stretched pencil-thin—and Central Virginia’s agribusinesses are rightfully concerned about heightened market volatility and the sweeping uncertainty that continues to disrupt the futures market. To make sure farm operations can keep making large-scale investments, we need to bring additional clarity to the CFTC’s rules regarding commodity broker bankruptcies,” said Spanberger. “This bill would require the CFTC to make a technical change to better identify which specific assets are included in bankruptcy proceedings. This provision would allow agribusinesses to invest in additional hiring, major capital improvements, and increased production—and it would give American consumers continued access to high-quality, American-made products. At a time of marked uncertainty in the farm economy, we need to pursue bills that can help bring additional capital to our agribusinesses and rural communities.”
The bill would amend the CFTC’s authority to establish certainty for futures customers and market participants in cases of Chapter 7 bankruptcy proceedings. Specifically, the bill would require that a commodity broker’s cash, securities, or other property be classified as customer property to help pay the net equity claims of a broker’s public customers following the broker’s bankruptcy.
Spanberger’s bill is endorsed by the National Futures Association.
Click here to read the full bill text.
Spanberger is a member of the House Agriculture Committee’s Commodity Exchanges, Energy, and Credit Subcommittee, which provides oversight related to the CFTC.