CFTC’s position limit plan gains needed support
A top official at the U.S. futures regulator said on Tuesday he was now in favor of a stalled position limit plan, a key turnaround that would allow the controversial rules to advance to the public comment stage. Under the plan, the CFTC staff would implement a "position points" system proposed by Commissioner Bart Chilton until CFTC puts its position limit plan in place. Under this system, if traders' holdings in a commodity reaches a certain threshold, it triggers heightened regulatory scrutiny by the CFTC where commissioners could vote to require the traders to reduce their holdings.
The "position points" system for added review of positions is far preferable to the actual position limits plan, said Michael Cosgrove, a managing director with GFI Group, a major brokerage.
"Position limits are a dangerous cure for an imagined disease which even its proponents admit has never been diagnosed or detected," Cosgrove said. "Like trepanning, leaching and frontal lobotomies, I fear that this cure too will do lasting damage that we cannot begin to comprehend."
Publication
Reuters
Date
January 4, 2011
Cross References (links require a Cabinet subscription)
Dodd-Frank Act, Title VII, Sec. 737