James A. Leach: “last year, after nearly two decades of work, the U.S. Congress passed the Financial Modernization Act to bring our…”

“last year, after nearly two decades of work, the U.S. Congress passed the Financial Modernization Act to bring our nation's banking and securities laws in line with the realities of the marketplace. Today, an analogous opportunity presents itself to modernize the Commodity Exchange Act (CEA) that governs the trading of futures and options. The important role of the over-the-counter derivatives industry in the historic economic expansion of the last decade is largely unchronicled. These contracts, which allow manufacturers, multi-national corporations, energy producers, governments and others to hedge themselves against the risk of financial calamity, ensure that unforeseen market movements do not bankrupt business and thus constrain economic productivity. Because of anachronistic constraints established under the CEA, however, legal uncertainty exists for trillions of dollars of existing contractual obligations. The issue facing the Congress has been whether an appropriate regulatory framework can be established to deal not only with certain problems that confront today's risk management markets, but new dilemmas that appear to be on the horizon.”