The purpose of today’s hearing is two-fold.  First the Committee will consider two nominations.  We will hear from Paul Fiddick, the President’s nominee to serve as the Assistant Secretary of Agriculture for Administration.  We will also receive testimony from Andrew Fish, the President’s nominee to be Assistant Secretary of Agriculture for Congressional Relations.

 Both of the nominees before us today have a demonstrated record of achievement.  Mr. Fiddick currently serves as the Vice Chairman of RadioWave.com Incorporated and has worked in various capacities in the radio broadcast industry. Mr. Fish is familiar to us at the Committee.  He currently serves Senator Harkin as minority deputy chief counsel to the Committee.  Today’s hearing provides us with an opportunity to welcome Mr. Fiddick and Mr. Fish and we look forward to their testimony.

 We will then turn to a discussion regarding electronic trading in the futures and derivatives industry.  As part of our efforts to re-authorize the Commodity Exchange Act, the Committee has gathered before us a distinguished group of industry leaders to discuss the impact of electronic trading on the futures and derivatives marketplace.   Developments in technology are causing a seismic shift in the futures markets.  Since early in this century, futures exchanges have been treated like a regulated utility.  Exchanges agreed to be substantially regulated and in return, Congress enacted laws to require that all futures contracts be traded on those exchanges.  Over the years, this virtual monopoly has eroded.  Advancements in computers and communications have lowered the barriers to entry into this industry and have caused it to become fiercely competitive.  With minimal overhead and infrastructure, electronic exchanges are capable of competing head to head with traditional exchanges for a fraction of the cost.   And this competition is global in scope.  Customers from any location are able to trade on foreign or domestic exchanges with the click of a mouse.   Today end users have, or soon will have, several choices of where to buy and sell derivatives instruments.

 This technological revolution raises two important questions relating to re-authorization.  First, how has electronic trading affected the definition of what entities should be regulated under the Commodity Exchange Act?

  Our first panel, consisting of trading systems both on-exchange and over-the-counter, will help us delineate between those electronic trading systems that should have government oversight and those that should not.

 The second issue raised by electronic trading is what is the most appropriate level of regulation once it is determined to be within the scope of the Act.   In some ways, electronic exchanges may deserve a lighter regulatory structure than traditional exchanges due to their ability to match trades in a neutral manner and maintain audit trails that can pin-point trades to the second.   However, technology also has the potential to open these markets to anyone with a home computer and a phone line.  In recognizing this trend, Congress needs to be assured that adequate oversight exists to protect less sophisticated retail customers from internet fraud and abuse.

 Our second panel will help us visualize what this industry may look like in the future and provide comments on how these trends affect
reauthorization.

 The President’s Working Group is expected to release its report on over-the-counter derivatives in the coming weeks, with a section on how policy makers should approach electronic trading.  I look forward to studying this report and possibly asking the principals from the President’s Working Group to come before this Committee to discuss the Group’s finding