INDUSTRY STATEMENT ON LEGAL CERTAINTY PROVISIONS OF S. 2697

The undersigned industry groups released the following statement with respect to the legal certainty provisions of S. 2697, the "Commodity Futures Modernization Act of 2000," as introduced by Senator Richard Lugar, Chairman of the Senate Committee on Agriculture, Nutrition and Forestry, Senator Phil Gramm, Chairman of the Senate Committee on Banking, Housing and Urban Development, and Senator Peter Fitzgerald of Illinois.

We have for many years supported legislation to provide legal certainty for OTC derivatives transactions. The legal certainty portions of S. 2697 include provisions based on the unanimous recommendations of the President's Working Group on Financial Markets (the Secretary of the Treasury, the Chairman of the Board of Governors of the Federal Reserve, the Chairman of the Commodity Futures Trading Commission, and the Chairman of the Securities and Exchange Commission) that Congress pass legislation that generally would exclude OTC derivatives transactions based on financial commodities from the Commodity Exchange Act. Such action will ensure that these transactions will continue to be enforceable in accordance with their terms and the resulting legal certainty will both reduce systemic risk and promote financial innovation. We are also pleased that S. 2697 retains and clarifies the so-called Treasury Amendment to the Commodity Exchange Act, which provides legal certainty with respect OTC transactions in foreign currency, government securities and other enumerated financial commodities. Finally, we welcome the inclusion in S. 2697 of provisions to provide statutory legal certainty for other categories of OTC derivatives transactions involving non-financial commodities and for so-called "hybrid" transactions.

We welcome the opportunity to continue to work with Senator Lugar, Senator Gramm, and Senator Fitzgerald, their colleagues in the House and Senate, the various Committees of the Congress, the Administration, the regulatory agencies and interested parties in the private sector as the legislative process moves forward.

Ad Hoc Coalition of Commercial and Investment Banks; American Bankers Association; ABA Securities Association, Bond Market Association; Emerging Markets Trade Association; Foreign Exchange Committee; Futures Industry Association; Financial Services Roundtable; International Swaps and Derivatives Association; and Securities Industry Association.