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Congress Presses CFTC to Curb Speculation in Energy Markets
Capitol Hill lawmakers are calling on the Commodity Futures Trading Commission (CFTC) to “immediately enact strong position limits” to curb excessive speculation in oil markets.
“As the cost for American people to fill their gas tanks continues to skyrocket, the CFTC continues to drag its feet on imposing strict speculation limits to eliminate, prevent or diminish excessive oil speculation as required by the Dodd-Frank Act,” wrote nearly 70 House and Senate lawmakers, led by Sen. Bernie Sanders (I-VT), in a letter to the FTC.
“Although the CFTC has adopted initial position limits, they are not strong enough and not yet in force owing to industry opposition, delays in swaps oversight and data collection. This is simply unacceptable and must change,” they said.
They called on the Commission to use its existing authorities to keep energy prices in check. “This would entail promulgation of rules only with regard to currently regulated exchange markets. Swaps rules would also be implemented immediately, but even so, waiting for swaps rules to trigger all position limits is simply not adequate to protect consumers. We urge you to develop alternative methods of moving forward and to do so as swiftly and expeditiously as possible.”
At the agency’s Feb. 26 meeting, Commissioner Bart Chilton similarly recommended that the agency use its existing authority to curb speculation in the futures and positions markets, while addressing the swaps market at a later date (see Daily GPI, Feb. 24).
“The Dodd-Frank Act mandated that your agency promulgate and enforce such limits no later than Jan. 17, 2011. We are disappointed that, more than a year later, the Commission has not fulfilled this important regulatory duty.
“It is one of your primary duties — indeed, perhaps your most important — to ensure that the prices Americans pay for gasoline and heating oil are fair, and that the markets in which prices are discovered operate free from fraud, abuse and manipulation,” the Democratic lawmakers said.
In another development, the CFTC declined to comment on a press report that said it may raise the threshold used to identify the biggest swaps market traders to $3 billion. “The proposal involving the threshold still is circulating among the Commissioners. [The threshold level] has not been nailed down yet,” a spokesman told NGI.
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