Source: Dan Manternach, editor, Doane's FOCUS Report
Dubbed the Dodd-Frank Bill after its primary sponsors, Chris Dodd (D-Conn) and Barney Frank (D-Mass), the new financial reform legislation passed recently will have a few impacts on the agriculture industry.
Although hedge funds escaped major changes, smaller targets may be considered "collateral damage." University of Illinois economist Scott Irwin said he thinks the single biggest impact on farmers could be a provision that might cause a farmer (or his agribusiness suppliers or buyers) to lose their hedging exemption from position limits if they engage in a single trade deemed "speculative" under IRS rules. Just keeping your hedging account separate from a "speculative" account may not be enough.
With new regs, CFTC has only to prove "reckless" trading. They no longer have to show that artificial prices have been created. They don't even have to show that an individual or firm profited from their "recklessness." They don't have to prove "intent to manipulate."
In addition, the legislation named some "reckless" practices that include "spoofing," "smashing" or "banging the close" and "the Eddie Murphy Rule."