Thank you for that, Mr. Braid. I know of the good work you've done on committee. I miss those days, and I look forward to future ones, particularly on this issue.
I think the starting point was what we agreed to at the G-20 in Pittsburgh and what I alluded to in my opening comments. I'm going to quote what we agreed to: that all standardized over-the-counter derivatives “should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties” by the end of 2012 at the latest.
What we're saying is that there should be global oversight. We want to know who is trading. We want to know if they should be trading.
We want to recognize something that's far more important here, and I think Mr. Greenberger has suggested this as well. The way it has always worked, certainly since 1936 and prior to the deregulation, has been that a hedger will minimize the risk between a producer of product who sells a product on commodities--and there are several of them--and a purchaser; let's call them a consumer. The hedging is to minimize the risk so that by the time you take delivery of that product it has the value you agreed to.
Unfortunately, with the rise of the index investor--the financialization of that process--the traditional hedger has been driven out and the cost of hedging has gone through the roof. Rather than simply buying and then selling and taking delivery of your oil or your wheat or your corn, what the index investors are doing is rolling over these contracts and providing a permanent floor that drives prices up.
Should they be able to do that? The recognition is that there has to be some degree of concern when you see prices going the way they are in many parts of the world and creating the kind of poverty and dislocation that is there.
Mr. Braid, I pointed out earlier that it does not serve the oil industry of Canada or the oil industry around the world to see that kind of volatility. They need predictability too, and that's why I think we need to concentrate on that. Canada has been very quiet on that point.