Commodity Online
WASHINGTON: US Commodities regulator, Commodity Futures Trading Commission (CFTC) will hold public hearings on whether federal speculative limits should be set by the CFCT to all commodities of finite supply including energy commodities such as crude oil, heating oil, natural gas, gasoline and other energy products.

Chairman Gary Gensler in a statement said that a series of hearings would be held in July and August. At present position limits are set by CFTC for agri-commodities while such limits are set for energy futures by the exchanges themselves. The Commodity Exchange Act provides powers to CFTC to impose limits on trading and positions as necessary to prevent excessive speculation, Gensler stated.

For energy commodities, futures exchanges set position limits and accountability levels to protect against manipulation and congestion. The exchanges are not required to set and enforce position limits to prevent the burdens of excessive speculation.

This different regulatory approach to position limits for agriculture and other physically delivered commodities deserves thoughtful review. It is incumbent upon the CFTC to ensure a fair and transparent price discovery process for all commodities. The Commission will be seeking views on applying position limits consistently across all markets and participants, including index traders and managers of Exchange Traded Funds (ETFs); whether such limits would enhance market integrity and efficiency; whether the CFTC needs additional authority to fully accomplish these goals; and, how the Commission should determine appropriate levels for each market.

While the Commodity Exchange Act provides for exemptions from such limits for “bona fide hedging transactions or positions”, the CFTC is currently reviewing the manner in which this exemption has been implemented. Recently, the Commission completed a comment period on whether the bona fide hedge exemption should continue to apply to persons using the futures markets to hedge purely financial risks rather than risks arising from the actual use of a commodity. In addition to the comments received, these hearings will further inform the rulemaking process for the Commission on this issue.

CFTC will be making enhancements to their weekly commitments of traders report. It will continue to collect and report data from swap dealers and index investors. 


CFTC will be making enhancements to their weekly Commitments of Traders (COT) report. In addition, the Commission, through our special call authority, will continue to collect and report data from swaps dealers and index investors on a weekly basis.Enhancing the quality of information in these weekly reports will better inform market participants and the public about the positions of the various types of traders.

CFTC plans to improve COT report in four ways. First, it will disaggregate the current Commercial category separating out and categorizing swaps dealers. Second, it will disaggregate the current Noncommercial category by separating out and categorizing the professionally managed market positions, such as hedge funds. Third, it will incorporate data the CFTC receives for all foreign contracts linked to domestic contracts. Fourth, it will incorporate data of contracts determined to perform a significant price discovery function.

Last September, the CFTC published a Report on Swap Dealers and Index Traders based upon our special call authority. The Commission will continue this special call, enhance the information disseminated in this report and release it on a quarterly basis with a goal of moving it to monthly in the near term, Gary Gensler said.

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