WINNIPEG – There have been numerous changes at the Winnipeg Commodity Exchange since 1939, yet the law dealing with supervision of grain futures contracts hasn’t been changed since the year it was passed.
The Canadian Grain Commission, with help from people involved in the exchange, wants the Grain Futures Act to be brought up to date.
Last week, the commission released proposals for change and it’s looking for comments from the WCE, security commissions, producers and the grain industry by March 15.
The proposals wouldn’t significantly change how the exchange works and how the grain commission oversees its operations, said the commission’s supervisor of grain futures trading.
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“Our duties, our oversight will be backed by law,” said Peter Clarke.
The WCE is a self-regulating organization. It sets standards and makes sure its members live up to them. Clarke acts as a watchdog, ensuring the compliance office of the WCE is doing its job.
“I can say that they’re doing an excellent job monitoring their own work, but I have to be watching as well,” Clarke said.
The proposed changes would formalize what Clarke does now. WCE president Fred Siemens said most observers would not notice a difference in how the exchange operates.
However, Siemens said the revisions would give the grain commission more power in the event the WCE did not respond to improper behavior in the market.
Stabilizing influence
“In times of crisis, the (Canadian Grain Commission) should be able to provide a more stabilizing influence in the markets because we will actually be able to formally go to the market participants directly as opposed to indirectly, as we do now, and … require more statistical and business detail from them,” Clarke said, adding participants haven’t held back information in the past.
The grain commission would have the authority to:
- Ask participants for information about cash grain transactions.
- Issue a cease-trading order to a participant.
- Freeze the funds of parties under formal investigation.
- Close the market.
“If the train is totally off the rails, then to protect the Canadian public, there should be some intervention available to the regulator and we’re asking for that sort of authority in the new act,” Clarke said. Regulators of other commodity exchanges have this kind of authority, he added.
