KANSAS CITY, Mo., Feb. 4, 2009 (GLOBE NEWSWIRE) -- Agora-X, LLC, is an electronic communications network (ECN) that enables commercial institutions to negotiate over-the-counter (OTC) transactions in commodity and derivative contracts. Today Brent M. Weisenborn, Chief Executive Officer, will testify to Congress in favor of legislation to assure transparency and accountability in OTC commodity markets. The testimony is scheduled to begin at 10:30 a.m. Eastern time before the House Committee on Agriculture.
Mr. Weisenborn generally endorses a draft bill that the Committee is considering to reform the Commodities Exchange Act in light of the recent financial crisis. He calls on Congress to require reporting of over-the-counter transactions to the Commodity Futures Trading Commission (CFTC), noting that electronic negotiation and trading technologies will facilitate the increased transparency that enables regulators to monitor the OTC markets.
"I urge the Committee to preserve the OTC commodity markets, but to modify the existing law to derive improvements in them," Mr. Weisenborn says in his prepared testimony. "The present financial crisis demonstrated that there are inefficiencies in the regulation and functioning of the OTC commodities markets and that these markets can be improved by means of electronic audit trail and reporting, by clearing and by moving these markets to a transparent ECN or ECM (exempt commercial market) facilities, where possible."
The Agora-X CEO suggests some additions to the draft legislation before the Committee to improve liquidity in the OTC markets and enhance transparency and reporting to the CFTC:
* Permit clearing of all OTC commodity transactions, including agricultural contracts, which cannot be cleared under the current Commodity Exchange Act * Require electronic documentation of all OTC commodity transactions to facilitate transparency and reporting to the CFTC * Require all OTC commodity transactions to be negotiated, traded and executed electronically, or posted on an ECN or ECM * Update the Commodities Exchange Act to define ECNs and make their role explicit.
Well-organized OTC markets with electronic clearing will benefit the public by reducing systemic risk such as the counterparty issues in the recent financial crisis, Mr. Weisenborn says. In addition, efficient OTC markets will lower transaction costs and ultimately reduce the costs that consumers pay for commodities, he says. Increased openness including reporting of OTC transactions will improve liquidity for traders, reduce the possibility for manipulation and market bubbles, and contribute to the integrity of U.S. markets, he says.
The full text of Mr. Weisenborn's prepared testimony is available on the Agora-X website at www.agora-x.com.
About Agora-X
Agora-X, LLC has developed an electronic communications network for OTC commodities contracts in collaboration with major institutional participants in the commodities market. Based in Kansas City, Agora-X was founded with seed money from FCStone Group, Inc. (Nasdaq:FCSX), a commodity risk management firm. Agora-X has worked with NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) to create a best-in-class marketplace. For more information please visit www.agora-x.com.