CFTC aims for speculative commodity limits in Q1 2012
The CFTC hopes to fully implement its biggest crackdown on commodity market speculators by early 2012, a year after the deadline set by lawmakers, it said in a filing that gave the most detailed legal argument and timeline yet for the controversial plan. In the full text of its 100-page proposal, which must overcome significant internal skepticism before it can be finalized, the CFTC also clarified an interim plan demanding much more information about the positions held by big traders in energy and metals markets, saying it would affect some 140 entities on a monthly basis.
In the draft rule, the CFTC said it does not need to find that price-distorting speculation is happening -- an important comment given the large volume of both analyst research and academic work questioning the popular assumption that financial speculators caused the surge in commodity prices in 2008.
"The Commission may impose position limits prophylactically, based on its reasonable judgement that such limits are necessary," the agency said in its filing.
The CFTC said it hoped to quickly implement the first stage for its limits, which apply to the spot month of 28 exchange-traded futures markets. The CFTC has the ability to impose limits in swaps that play a "significant price discovery" function, but said it planned to look at those at a later date.
Publication
Reuters
Date
January 18, 2011
Cross References (links may require a Cabinet subscription)
Dodd-Frank Act, Title VII, Sec. 737