"Our first hearing will focus on whether federal speculative limits should be set by the CFTC to all commodities of finite supply, in particular energy commodities such as crude oil, heating oil, natural gas, gasoline and other energy products," CFTC Chairman Gary Gensler said.
The hearings will happen this July and August and will help determine how to continue with the commodity limits.
CFTC's current policy places limits of some agricultural products and permits the exchanges to impose limits on other resources such as energy in metal. While this policy protects against manipulation, it may not protect against excessive speculation.
The CFTC also plans to add in its weekly large trader report data about swap dealers, hedge funds, contracts that help establish market prices and foreign contracts connected to US futures contracts. The current presentation of the reports only groups big traders as speculators or hedgers, impeding the public's ability to understand the marketplace.
RELATED LINKS:
- Limits on Energy Futures to be Aired
- Excessive Speculation In Markets Target of CFTC
- CFTC Considering Tighter Controls on Commodity Trading
It is possible that many long derivative dealers claim to be hedgers despite the fact that their trading policies involve price risk management and speculation.
Last summer, oil and agricultural products reached record highs. Some legislators reprehended the CFTC for neglecting to act, arguing that price increases occurred in part due to excessive speculation by index traders and swap dealers. Under the Bush administration, the CFTC released two reports claiming it had no actual proof that excessive speculation resulted in the record-setting prices.
"The different regulatory approach to position limits for agriculture and other physical commodities deserves a thoughtful review," Gensler said. The CFTC will review how to impose position limits justly to all market participants.
