CFTC misses deadline on position limits decision

By Reuters Staff
December 21, 2009

WASHINGTON, Dec 21 (Reuters) – The U.S. futures market regulator on Monday missed a self-imposed end-of-fall deadline to decide whether to issue a proposal to limit the number of contracts investors can hold in “physical” commodities, such as crude oil.

The Commodity Futures Trading Commission said in July it was considering a clampdown on excessive speculation in energy and commodity trading by restricting holdings of big players, part of a broader move by the Obama administration to stabilize the financial markets.

CFTC Chairman Gary Gensler routinely has said the agency would make an announcement on the matter by the end of autumn, which occurred shortly after noon EST on Monday.

There is no timetable for when the CFTC will make a decision on position limits, according to sources.

If it does move forward, the CFTC would open up its plan to public comment. It would be Gensler’s first major regulatory reform since becoming chairman in May and parallels reforms pending in Congress and from the Obama administration.

The move to strengthen position limits comes more than a year after prices for oil and other essential commodities such as copper and platinum soared to record highs on what some analysts called excessive speculation and big money inflows.

But the impact from speculators has been debated, with some debunking the notion that they caused record prices.

Congress also is looking at legislation that would give the CFTC greater authority to set aggregate limits across markets for physically deliverable commodities like oil, putting increased pressure on the CFTC to act.

The House approved its bill this month, but the Senate is in the early stages of assembling its own regulatory reform plan. (Reporting by Christopher Doering; Editing by Walter Bagley0 ((christopher.doering@thomsonreuters.com ; +202 898 8394 Reuters Messaging: christopher.doering.reuters.com@reuters.net))

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