Bill clarifies margin requirements exemption

Published online: May 19, 2013
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Nebraska Sen. Mike Johanns is one of the co-sponsors of a bill that clarifies the exemption for farmers and ranchers from margin requirements in the Dodd-Frank financial reform law.

Johanns says the bill ensures that farmers can continue to use derivatives to manage their risks and ensure against extreme price fluctuations on commodities and inputs, "without facing costly margin requirements meant to cover day-traders who play the markets."

"Clearly, farmers and ranchers aren't using these tools to get rich quick.  What they're trying to do is to defend against unexpected market shifts," Johanns says. "This bill clarifies currently law by explicitly stating that these folks are not the same as speculators and should not be subject to the costly new rules and requirements.

Johanns says that, despite Congress' intent with Dodd-Frank, there has been a debate over how broadly the end-user exemption would apply.

An identical bill received unanimous approval from the House of Representatives Financial Services Committee earlier this week.