Boca Raton, Florida (Platts)--15Mar2011/1207 pm EDT/1607 GMT
US Commodity Futures Trading Commission Chairman Bart Chilton said Tuesday that while speculators are needed in commodity markets, the record level of speculative positions in these markets is skewing prices and shows the need for the CFTC to implement stringent position limits immediately. In his prepared remarks before a Structured Trade and Finance in the Americas conference in Boca Raton, Florida, Chilton said there is "no market" without speculators, but said the sheer size of their positions "has the potential of moving markets, of influencing true price discovery." Chilton pointed to CFTC data that showed that between June 2008 and January 2011 the number of futures equivalent contracts held by speculators increased by 64%, from 617,000 to more than 1 million. "There are now more speculative positions in commodity markets than ever before," Chilton said.Request a free trial of: Energy TraderEnergy Trader provides a unique daily perspective on the energy marketplace, including comprehensive coverage of both the natural gas and electricity markets in North America. It's an indispensable source of information and education for all market players - from the new entrant to the experienced practitioner. Chilton said the size of these positions demonstrates the need for the CFTC to impose position limits in derivatives markets, despite claims that such limits will compel traders to pursue foreign exchanges not subject to these limits. "Could traders go to other nations? Yes, if our limits are too restrictive, they could," Chilton said. "That is why I have suggested that we err on the high side at first and then re-calibrate as we go forward, and as other nations put rules and regulations in place." While Chilton said that he did not think speculators caused oil prices to reach historic levels shortly before the global economic crisis of 2008, he said speculators "were a part of the price rise." "Similarly, when they did get out of the markets, as the economy was melting down, prices decreased," Chilton said. The CFTC is considering a proposed rule that would be implemented in two phases and would impose limits on 28 core physical delivery futures contracts, including four energy and five metals contracts.--Brian Scheid, brian_scheid@platts.com
US Commodity Futures Trading Commission Chairman Bart Chilton said Tuesday that while speculators are needed in commodity markets, the record level of speculative positions in these markets is skewing prices and shows the need for the CFTC to implement stringent position limits immediately. In his prepared remarks before a Structured Trade and Finance in the Americas conference in Boca Raton, Florida, Chilton said there is "no market" without speculators, but said the sheer size of their positions "has the potential of moving markets, of influencing true price discovery." Chilton pointed to CFTC data that showed that between June 2008 and January 2011 the number of futures equivalent contracts held by speculators increased by 64%, from 617,000 to more than 1 million. "There are now more speculative positions in commodity markets than ever before," Chilton said.
Energy Trader provides a unique daily perspective on the energy marketplace, including comprehensive coverage of both the natural gas and electricity markets in North America. It's an indispensable source of information and education for all market players - from the new entrant to the experienced practitioner.