Comment Text:
Commissioners,
Advance Trading Inc. is an IB that has clients in grain warehousing, grain processing, grain production, livestock production, and bioenergy production industries. We wish to convey the following points with respect to bona fide hedges and speculative limits rulemaking CFTC has asked for comments on:
• Thousands of U.S. agribusiness firms rely on many types of hedging transactions to manage risk appropriately in their daily business operations.
• The CFTC-proposed rule unnecessarily and dramatically narrows the range of hedging transactions that would be considered bona fide hedges.
• Many hedging transactions employed for decades by the industry, and historically considered bona fide by the commission, would be outside the new proposed definition.
• In particular, anticipatory hedging is very important to our industry and must be maintained as bona fide hedging. Examples of hedging strategies that could be at risk include:
o Pre-hedging purchases of producer grain outside trading hours of a futures exchange.
o Pre-setting futures carrying charges to manage spread risk.
• Restricting the use of long-accepted strategies will increase costs of hedging for business risk management and ultimately will lead to lower bids to producers and higher consumer prices.
Thank you for the opportunity to comment on this important regulatory matter.
Jeffrey W. Hainline
Chairman
Advance Trading lnc.
Bloomington Illinois
