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Global Commodities Trading Team Settles CME Group Charges for Position Limit Violations

bzwirb's picture
Commentary by Bob Zwirb

A global commodities trading team agreed to pay a fine of $75,000 to settle Chicago Mercantile Exchange Group charges for natural gas futures position limit violations.

Commentary

The position here exceeded the limits set for natural gas futures by the New York Mercantile Exchange ("NYMEX"). The CFTC's proposed position limits rule for energy derivatives, however, would impose federal limits, effectively supplanting those set by exchanges like NYMEX. This action is expected to occur later this year notwithstanding the view of the CFTC Energy & Environmental Markets Advisory Committee that exchanges, "by virtue of their decades of experience and interaction with market participants, are especially well positioned to . . . administer" such limits, and notwithstanding the views expressed by two CFTC commissioners in favor of allowing the exchanges in some cases to implement such limits. Why fix what's not broken, why not keep the status quo where exchanges that offer energy derivatives determine whether, and to what extent, position limits are necessary?

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