The Commodity Futures Trading Commission (CFTC) said it will hold a public meeting Thursday (Jan. 14) to consider issuing a proposed rule on energy position limits and hedge exemptions on regulated futures exchanges, derivatives transaction execution facilities and electronic trading facilities.
The meeting will be held at CFTC headquarters in Washington, DC, at 1 p.m. EST, and will be webcast at www.cftc.gov.
Although he declined to divulge the content of the proposal, CFTC Commissioner Bart Chilton said he personally has called for mandatory hard caps on position limits on energy and metals, and the redefining of how any exemptions to those limits are obtained and implemented. Specifically, he believes that exemptions must be approved by the CFTC; targeted for business purposes, not speculation; verifiable; and transparent (see Daily GPI, Jan. 7).
“They’re [CFTC] indicating that they want something fairly strong” with respect to position limits on regulated exchanges, said Susan Ginsberg, vice president of crude oil and natural gas regulatory affairs for the Independent Petroleum Association of America. “We’re…very anxious to see what they come out with as a proposal.”
The much-anticipated proposal follows three hearings that the CFTC held last summer on the issue. There was near unanimity at the CFTC hearings on one point — that position limits were needed to to curb excessive speculation in energy commodity markets. But the consensus unraveled when it came to the details: who should set position limits, who should be exempted from the limits and at what level the position limits ought to be set (see Daily GPI, July 29, 2009).
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