Idaho Senator Mike Crapo and Nebraska Senator Mike Johanns filed an amendment Monday aimed at fulfilling Congressional intent by providing an explicit exemption from margin requirements for non-financial end-users that qualify for the clearing exemption. Their amendment is identical to H.R. 2682 – which was approved on a 370 to 24 vote in the House. There has been debate over whether non-financial end-users are exempt from margin requirements ever since the Dodd-Frank conference took place. Crapo says non-financial end-users from manufacturing to energy to farming rely on financial risk management tools like derivatives to manage the unique business risks associated with their day to day operations. He says the economy benefits from this type of risk management activity. Johanns says the responsible business practice of using financial markets to guard against risk should be encouraged. Instead – he says the farmers and ranchers using this practice could be subject to far-reaching and unintended consequences.
According to Johanns – the amendment introduced Monday strives for much-needed clarity by allowing businesses to manage their risk and put their capital to good use – often creating more jobs in the process. Crapo says the Senate needs to pass this amendment to ensure regulators do not divert productive working capital from our economy into margin accounts that would impair economic growth.