Terrence Duffy, Executive Chairman and President of the CME Group, was keen to highlight the differences between trades done in the securities markets and the Chicago Mercantile Exchange (CME).

After highlighting the importance of CME’s risk controls, Duffy was asked if the CFTC should require the same standards for all market participants. That would be difficult, he said. “When you look at small participants using the markets to hedge their crops, if you put the same restrictions on them as on a large participant the cost would be extraordinary. … That’s why we, as a designated contract market, do oversight for the smaller participants. That’s critically important.”

Duffy then countered one of Kirilenko’s points. “Futures markets are about risk transfer not capital formation. They’re completely different in what they do. Risk transfer is critically important to keep spreads in line so participants can execute at the cheapest possible price. … The people trading at high frequency are keeping the spreads very tight as a service to those doing risk transfer. High frequency traders, for the most part, are there trying to capture good offers.”

Are changes in underlying law needed, asked Mississippi Sen. Thad Cochran, ranking committee member, to allow, “the CFTC to address any kind of activity that should (require) discipline or supervision more closely to protect users of the market?”

Duffy said the, “most important thing is if anyone is acting nefariously in the market to the detriment of participants, they should be punished to the degree that the law provides for.”

Cochran: “Does the law provide sufficient (means) to provide that goal?”

Duffy: “It does.”

Georgia Sen. Saxby Chambliss then sought to protect the interests of farmers and ranchers. “There is a major difference between … driving from field to field and checking markets wanting to make a trade, and major integrated companies trading hundreds of millions of dollars on contracts.”

Chambliss announced his intention to propose a bill, “that seeks to collect the end-user exemption that needs to granted particularly to our farmers and ranchers.”