The regulator of the U.S. futures markets is considering tough new rules to clamp down on speculative trading in energy and other commodities and will hold public hearings in the next few weeks to seek comment.
Commodity Futures Trading Commission Chairman Gary Gensler said in a statement on Tuesday that the agency will seek comments from consumers, businesses and market participants on whether to set position limits on all commodity futures contracts.
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, said Gensler, who took office on May 26.
The CFTC will also seek comment on who should qualify for exemptions from position limits. Some lawmakers say hedge exemptions should go only to people who plan to buy a commodity and not those who hedge financial risk.
Oil prices set a record in 2008 and grains contracts surged to historic levels as some market players complained that a investor funds distorted the futures markets.
Gensler said CFTC also would revise its weekly Commitments of Traders report to show the activities of swaps dealers and hedge funds. He said the enhancements would appear in the near term but did not set a date.
Anti-speculation bills pending in Congress would direct CFTC to set position limits on oil and other energy futures and spell out in its reports the role of swaps and hedge funds in futures markets.
He said the hearings during July and August would help determine how CFTC should use its powers to ensure fair trading. No hearing dates were announced.
Currently, CFTC does not set position limits on oil and other energy contracts although futures exchanges do. CFTC has position limits on some agricultural contracts.
The commission will be seeking views on applying position limits consistently across all markets and participants, including index funds and managers of exchange-traded funds; whether such limits would enhance market integrity and efficiency; whether CFTC needs additional authority to fully accomplish these goals; and how the commission should determine appropriate levels for each market, said the statement.
Besides showing hedge fund and swaps positions, the Commitments of Traders report will be modified to show data on foreign contracts linked to U.S. contracts and to show data on contracts that play a leading role in setting prices.
(Reporting by Charles Abbott; Editing by John Picinich)