The U.S. Commodity Futures Trading Commission said on Wednesday it will issue its first expanded trader reports on Friday as the regulator moves to provide more insight into who is doing business on futures exchanges.
Market watchers said the move was a small step in the right direction.
The Commodity Futures Trading Commission said in early July it would overhaul its weekly Commitments of Traders (COT) report to provide more information about exchange contract positions held by traders.
For the first time, we will break out managed money and swaps in our COT reports and release information on index investment to give the public a better of view of trading activity in the futures markets, CFTC Chairman Gary Gensler said in a statement.
The Commitments of Traders report is a crucial supply and demand indicator for traders buying and selling futures on energy, agricultural and other major commodity markets.
The CFTC said it will also begin providing quarterly information on index investment in the futures markets, with the goal of eventually releasing this data each month.
Big commodity players were anxious about the upcoming changes but some analysts said the new data will shed only limited new light on market positions.
You have to applaud the spirit, I think it's a baby step forward -- but the CFTC has been sliding backward for years so reversing that failed strategy is a very good thing, said William Black, a professor at the University of Missouri-Kansas City.
The four classifications in the new weekly reports are producer/merchant/processor/user, swaps dealers, managed money and other market participants.
The reports currently break traders into two broad categories: commercial and noncommercial. The expanded reports will provide data for 22 contract markets, including major agriculture, energy and metals markets.
As an example of how traders would fit in the categories, the CFTC said a company that has filed for an exemption from federal position limits on the basis of its corn processing requirements would likely be placed in the producer/merchant/processor/user category.
However, an investment bank that seeks an exemption on the basis of its swaps activity in corn would likely be placed in the swap dealer category, the agency said.
The CFTC said it will continue to release the traditional reports with the two trader categories through the end of 2009. The agency said it also plans to soon release three years of historical trader information based on the new reports.
The CFTC said it was working to create a new report that will cover financial futures contracts.
Supporters of the expanded reports say they will provide more balanced playing field for market participants -- from large hedge funds to small farmers.
The commercial, noncommercial breakdown wasn't that informative, and so the proposed breakdown will be somewhat more useful, said Craig Pirrong, a finance professor at the University of Houston.
The CFTC has said it wants to clamp down on excessive speculation in the markets it regulates. Some lawmakers have blamed an influx of hot money from institutional investors for the record run-up in commodity prices in 2008.
Since Gensler took over as CFTC chairman in May, the agency has held hearings to examine the need for position limits in energy markets, similar to those in agricultural markets.
Also in an effort to meet an Obama administration request to harmonize their rules, the Securities and Exchange Commission and the CFTC met on Wednesday for the first day of historic meetings to hear from exchanges, consumer groups, enforcement officials and other experts.
(Editing by Russell Blinch and David Gregorio)