Mon, May 22, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Futures Industry Association files major comment letter to oppose CFTC position limit proposal

Thursday, March 18, 2010
Opalesque Industry Updates - The Futures Industry Association filed a major comment letter in opposition to the adoption by the Commodity Futures Trading Commission of its proposed speculative position limits on energy commodities.

“The FIA strongly supports the CFTC’s ongoing efforts to prevent price manipulation and to conduct effective market surveillance to protect price discovery,” said FIA President John Damgard. “Based on our analysis, the proposed rules would harm these public interests and should not be adopted.”

The FIA’s analysis cites multiple grounds for its opposition.

Congress statutorily recognized that speculators provide essential liquidity to properly functioning futures markets. The Commodity Exchange Act therefore allows the CFTC to limit speculation only when the CFTC finds those limits to be “necessary” to prevent price distortions that burden commerce. The CFTC never indicated that it found the proposal to be “necessary,” as the law requires.

In fact, the CFTC cited no evidence that speculation caused energy price distortions. The FIA’s analysis cites multiple studies that reach the conclusion that speculation did not cause artificial prices.

Adopting the proposal would hurt the public interests in price discovery, efficient hedging and preventing market manipulation. By law, the CFTC’s limits could apply only to U.S. exchange-traded futures and options; OTC and foreign futures would not be covered. The proposed limits would therefore create twin deficiencies: they would rob U.S. exchange markets of liquidity that serves price discovery and efficient hedging and they would encourage more trading in non-transparent or overseas markets outside the CFTC’s market surveillance systems.

Consideration of the proposals is premature, at best. Congress is working on legislation to revamp the CFTC’s position limit powers. The CFTC should await that legislative outcome before considering whether to impose position limits.

The proposed exemptions for hedging and swap dealers are unworkable, unduly constricting and contrary to the statute. The proposed account aggregation standard unjustifiably departs from CFTC practice and precedent.

The FIA is the leading trade organization for the futures industry. Its membership includes the world’s largest futures brokers as well as derivatives exchanges from more than 20 countries.

Source

kb

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Time to invest in robotics? (part 1)[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: The London-based, Swiss-born manager of the RoboCap UCITS Fund, talks to Opalesque about investing

  2. Investing - Hedge funds have been selling big winners this year, Hedge funds are betting $1 billion that Snapchat shares are going to drop, Here are the biggest bets made by top hedge funds in the first quarter[more]

    Hedge funds have been selling big winners this year From CNBC.com: Hedge fund managers' most popular stock to start the year has been a familiar name that is falling short in terms of performance, while the least popular companies all have been crushing the market. Procter & Gamble

  3. Investing - Third Point's Loeb surfs on as hedge fund washout continues, George Soros has added to his losing bets against the stock market, Hedge funds, VCs and the CIA are throwing money at ex-Bridgewater data scientists' startup, Hedge funds shed retail amid fears of "apocalypse"[more]

    Third Point's Loeb surfs on as hedge fund washout continues From Reuters/Nasdaq.com: Billionaire investor Daniel Loeb said on Thursday that he is still making money even as the hedge fund industry struggles. Loeb, who oversees the $16 billion hedge fund firm Third Point LLC, sa

  4. Investing - Tudor Jones backs AI hedge funds, Massive hedge fund trades highlight insider buying: GE, Pentair, Tempur Sealy, Apollo Global and more, Hedge funds big wigs are buying consumer and selling tech, here's the stocks[more]

    Tudor Jones backs AI hedge funds From FT.com: Hedge fund magnate Paul Tudor Jones has invested in a brace of artificial-intelligence powered "quantitative" hedge funds, underscoring the increasing acceptance that the industry will need to turn more to technology and away from traditional

  5. Opalesque Roundtable: Rise of high-frequency trading in Europe a challenge for traditional asset managers[more]

    Komfie Manalo, Opalesque Asia: The rise of high-frequency trading in Europe, dominating over 80% of the market, has become a challenge for traditional asset managers especially when it comes to risk management, said Philippe Malaise, chairman of advisory firm