The Commodity Futures Trading Commission is currently considering whether changes are needed in the regulatory regime that governs the application of speculative position limits to the energy futures markets. In mid-2009 the agency held several days of hearings to gather public input on potential changes to the position limit regime. On January 14, 2010, the CFTC held a public meeting to discuss a proposed rule establishing a new position limit regime for energy futures and options markets. To help FIA members and the public understand CFTC policy in this area, the FIA has listed below several information resources, including statements, testimony, position papers and current rules.
Washington Watch: Continued Focus on Speculative Position Limits (June 2010)
An update on CFTC initiatives related to speculative position limits, including the January 2010 proposal for a new federal scheme of position limits for energy commodities and the March 2010 public meeting on position limits in the metals markets, and a summary of the comments received from banks, brokers, airlines, utilities, natural gas companies, pension funds and other market participants.
Click here for the article
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Bubbles, Froth, and Facts: The Impact of Index Funds on Commodity Futures Prices (February 2010)
Dwight R. Sanders, Southern Illinois University, and Scott H. Irwin, University of Illinois at Urbana-Champaign February 2010
Two economics professors have published a paper analyzing commodity index trader position data from 2004 to 2009. The professors found that a large increase in commodity index positions occurred in select commodity markets. However, that increase took place well in advance of the 2007-2008 boom in commodity prices, the professors said. They also said that statistical tests on the data did not reveal any link between commodity index activity and commodity futures prices. Click Here for Full Text |
Futures Trading And Oil Price Movements (June 2010)
The fundamentals of supply and demand are the key components affecting oil prices and the positions taken by traders and speculators also reflect those economic factors, according to a study published in the latest issue of Kent State University and the Institute for Financial Market’s Review of Futures Markets. The study was written by Arjun Chatrath, a professor at the University of Portland, Rohan Christie-David, a professor at the University of Louisville, and two graduate students, Victoria Lugli and Cynthia Santoso. This article is re-printed by permission of Review of Futures Markets.
Click Here to Download Article
For more information about this publication, please see links below.
http://www.theifm.org/index.cfm?inc=rfm.inc
http://business.kent.edu/rfm
http://business.kent.edu/rfm/subscribe.asp
Click Here for Compliance Alert from ICE Futures U.S
CFTC Issues Statement on Intraday Position Limits
(May 7, 2010)
The Commodity Futures Trading Commission on May 7, 2010 issued an advisory reminding market participants of their obligations to comply with speculative position limits on an intraday basis, rather than only on an end-of-day basis. “A trader whose position exceeds the applicable speculative position limit at any time during the day is in violation of the Commodity Exchange Act and CFTC regulations, even if the position is subsequently reduced to a level within the applicable limit by the close of the market for that day,” the CFTC said. “Accordingly, intraday speculative position limit violations have been and continue to be subject to Commission enforcement action as violations of the Act.”
Click here for the statement
Statements from CFTC Meeting to Examine Futures and Options Trading in the Metals Markets (March 25, 2010)
| Speaker Presentations |
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Opening statements
Chairman Gensler Commissioner Michael Dunn Commissioner Jill E. Sommers Commissioner Bart Chilton Commissioner Scott D. O’Malia
Panel 1
Dan Berkovitz, General Counsel, CFTC Steve Sherrod, Division of Market Oversight, CFTC
Panel 2
Jeff Burghardt, Luvata Buffalo Jeremy Charles, HSBC Bank USA, NA Tom LaSala, CME Group Diarmuid O’Hegarty, London Metals Exchange, Presentation and LME Lending Guidance for Metals Mark Epstein, Individual Trader
Panel 3
Tom Callahan, NYSE Euronext Dr. Henry G. Jarecki, Gresham Investment Management Bill Murphy, Gold Antitrust Action Committee Kevin Norrish, Barclays Capital John Lothian, John Lothian & Co.
Panel 4
Richard Strait, Triland USA, a Division of Mitsubishi Corporation Simon Grenfell, Deutsche Bank Mike Masters, Masters Capital Harvey Organ, Individual Investor Jeffrey Christian, CPM Group |
FIA files a major comment letter in opposition to the adoption by the Commodity Futures Trading Commission of its proposed speculative position limits on energy commodities (March 18, 2010)
http://www.futuresindustry.org/downloads/FIA_Opposes_CFTC_Position_Limit_Proposal_3-10.pdf
Click Here for the Full Text of the FIA Comment Letter
FIA Responds to the CFTC’s Proposed Position Limits Rule (Jan. 14, 2010)
http://www.futuresindustry.org/?i=1489
Text of CFTC Proposed Rule on Position Limits (Jan. 14, 2010)
http://www.futuresindustry.org/files/Federal_Speculative_Position_Limits_for_Referenced_Energy_Contract_and_Associated_Regulations_011410.pdf
CFTC Position Limit Proposal Fact Sheet (January 14, 2010)
http://www.futuresindustry.org/downloads/CFTC_Position_Limit_Proposal_Fact_Sheet.pdf
CFTC Position Limit Proposal Q and A (January 14, 2010)
http://www.futuresindustry.org/downloads/CFTC_Position_Limit_Proposal_Q_and_A.pdf
CFTC Chairman Gary Gensler Closing Statement (Jan. 14, 2010)
http://www.cftc.gov/ucm/groups/public/@newsroom/documents/speechandtestimony/genlerstatement2_011410.pdf
CFTC Chairman Gary Gensler Opening Statement on Position Limit Proposal (Jan. 14, 2010)
http://www.futuresindustry.org/downloads/genslerstatement011410.pdf
Dunn, O'Malia and Sommers Statements (Jan. 14, 2010)
http://www.futuresindustry.org/downloads/dunnstatement011410.pdf
http://www.futuresindustry.org/downloads/omaliastatement011410.pdf
http://www.futuresindustry.org/downloads/sommersstatement011410.pdf
Statement of Steve Sherrod, CFTC Acting Director of Surveillance (Jan. 14, 2010)
http://www.futuresindustry.org/downloads/Tab_8b-Statement_of_Sherrod_Jan_14_2010.pdf
Tables and Graphs Showing Impact of CFTC Position Limit Proposal (Jan. 14, 2010)
http://www.futuresindustry.org/downloads/proposedrule011410_sherrod.pdf
CFTC Commissioner Bart Chilton Statement on Position Limit Proposal (Jan. 14, 2010)
http://www.futuresindustry.org/downloads/chitlonstatement011410.pdf
CFTC General Counsel Dan Berkovitz Statement (Jan. 14, 2010)
(Background on Position Limits and the Hedge Exemption)
http://www.futuresindustry.org/downloads/Statement_of_Dan_MBerkovitz_011410.pdf
UK Treasury and FSA Position Paper on OTC Derivatives Reform (Chapter 9 covers position limits) (Dec. 2009)http://www.fsa.gov.uk/pubs/other/reform_otc_derivatives.pdf
“Position Limits Start to Bite”, Futures Industry, (November 2009)
http://www.futuresindustry.org/downloads/Nov_09-Pos_Limits.pdf
“CFTC Examines Position Limits”, Futures Industry, (September 2009)
http://www.futuresindustry.org/downloads/Sep_09-Pos_Limits.pdf
CME White Paper on Excessive Speculation and Position Limits in Energy Derivatives Markets (Sept. 16, 2009)
http://www.cmegroup.com/company/files/PositionLimitsWhitePaper.pdf
CME Advisory Notice on Position Limits (Sept. 11, 2009)
http://www.cmegroup.com/rulebook/files/CME_Group_RA0909-5.pdf
Testimony and Statements from CFTC Hearings on Speculative Position Limits in Energy Futures, Day 3 (Aug. 5, 2009)
http://www.cftc.gov/newsroom/cftcevents/2009/oeaevent080509.html
FIA Testimony to CFTC on Price Discovery, Position Limits and Hedge Exemptions (Aug. 5, 2009)
http://www.futuresindustry.org/downloads/hearing080509_young.pdf
CFTC Chairman Gary Gensler Statement on Position Limits (July 29, 2009)
http://www.cftc.gov/ucm/groups/public/@newsroom/documents/speechandtestimony/genslerstatement072909.pdf
Testimony and Statements from CFTC Hearings on Speculative Position Limits in Energy Futures, Day 2 (July 29, 2009)
http://www.cftc.gov/newsroom/cftcevents/2009/oeaevent072909.html
Brief Legislative History of Position Limits and the Hedge Exemption (July 28, 2009)
(Testimony of CFTC General Counsel Dan Berkovitz)
http://www.cftc.gov/ucm/groups/public/@newsroom/documents/speechandtestimony/berkovitzstatement072809.pdf
Testimony and Statements from CFTC Hearings on Speculative Position Limits in Energy Futures, Day 1. (July 28, 2009)
http://www.cftc.gov/newsroom/cftcevents/2009/oeaevent072809.html
ICE Statement Regarding CFTC Position Limit Initiatives (July 9, 2009)
http://ir.theice.com/releasedetail.cfm?ReleaseID=395240
Current Position Limits and Position Accountability Levels at ICE Futures U.S. (Feb. 10, 2009)
https://www.theice.com/publicdocs/futures_us_reports/all/Futures_US_Position_Limits.pdf
Resources
IFM Position Limit Databank
http://www.theifm.org/index.cfm?inc=plimits/PLD.inc
CME Rules on Position Limits and Exemptions
http://www.cmegroup.com/rulebook/CME/I/5/59.html
CME Procedures for Position Limit Violations
http://www.cmegroup.com/rulebook/CME/I/4/43.html
Current Position Limits, Position Accountability Levels and Reportable Position Levels at CME Group Exchanges
http://www.cmegroup.com/market-regulation/position-limits/index.html