Financial Regulatory Forum

– John Kemp is a Reuters market analyst. The views expressed are his own –

By John Kemp

LONDON, May 10 (Reuters) – May or shall. Even one small word can make a big difference. Lobbyists for financial services firms and officials from the Commodity Futures Trading Commission (CFTC) and the U.S. Treasury are sparring over a single word in the derivatives reform legislation being considered by the U.S. Senate.

At issue is the Commission’s authority to impose position limits on major energy contracts.

The Commission believes it has all the authority it needs to impose limits on exchange-traded energy contracts under Section 4a of the Commodity Exchange Act. It is currently asking Congress to extend that authority to over-the-counter (OTC) markets and derivatives traded on foreign exchanges so it can impose aggregated limits.

By contrast, industry representatives insist the Commission cannot act because it has made no factual finding that limits are “necessary” to diminish, eliminate or prevent speculation — or even that excessive speculation is a real threat to big and liquid energy markets.

By Frank Tang and Christopher Doering

NEW YORK/WASHINGTON, March 23 (Reuters) – The top U.S. futures regulator, which has struggled to gain support for a plan to curb concentration in energy markets, could face even tougher resistance on Thursday as it considers whether similar provisions are needed for metals.

The Commodity Futures Trading Commission will hold a day-long hearing to determine whether it needs to write a rule to create speculative position limits for gold, silver and copper markets to prevent price manipulation.

Commissioners will hear from metals markets players who oppose position limits and are expected to argue that limits will drive trade to unregulated or overseas markets.

    BRUSSELS, March 16 (Reuters) – The derivatives market remains a “dark ocean” that needs more transparency but it was unclear if a ban on credit default swap trading would work in practice, a top U.S. regulator said on Tuesday. (more…)

By Roberta Rampton and Charles Abbott

WASHINGTON, March 3 (Reuters) – The top U.S. futures regulator wants Congress to include as part of its financial regulatory reform package new securities-style firewalls and insider trading bans for commodities, the chairman of the Commodity Futures Trading Commission said on Wednesday.

The CFTC and Securities and Exchange Commission proposed the harmonized rules in October, many of which require authority from Congress. This is the first time CFTC Chairman Gary Gensler has indicated how soon he wants to begin implementing the new measures.

The CFTC is calling its insider trading ban the “Eddie Murphy rule” after the actor’s role in the movie “Trading Places,” in which traders stole an Agriculture Department report on the U.S. orange crop and then placed positions on the market.

By Christopher Doering and Roberta Rampton

WASHINGTON, Feb 17 (Reuters) – Buried deep in the proposal to set position limits on oil and gas futures is a possible “landmine” that could force the industry’s biggest traders to make a stark choice: Keep your hedging exemptions, or keep your speculative book. But you can’t keep both.

Weeks after the Commodity Futures Trading Commission

unveiled its long-awaited proposal to prevent concentration in energy markets, industry executives have zeroed in on a little-noticed clause that would force big players to exit speculative trading positions if they wrest an exemption from

regulatory limits on their hedging operations.

That could be a big blow to traders at the likes of oil giant BP Plc or Swiss trading house Vitol,

By Ann Saphir

CHICAGO, Jan 26 (Reuters) – U.S. regulators rejected as “unpersuasive” CME Group Inc’s decision to bar traders from moving their Treasury futures positions to upstart exchange ELX Futures by using a block-trade mechanism offered by ELX.

Shares of the world’s largest derivatives exchange operator skidded 6.8 percent on Tuesday even as it defended its stance. CME said the Commodity Futures Trading Commission had not moved to require it to accept so-called exchange of futures for futures (EFF) trades from ELX or its members.

The CFTC has made a formal request to CME to defend its policy further, and the CME is expected to do so in coming weeks.

WASHINGTON, Jan 25 (Reuters) – The U.S. Commodity Futures Trading Commission’s proposal to impose position limits on four energy futures and options contracts will published in the Federal Register on Tuesday and be open for public comment for 90 days.

The proposal, which would limit the number of contracts speculative investors could control at any one time, applies to crude oil, gasoline, heating oil and natural gas futures and options traded on the New York Mercantile Exchange and the IntercontinentalExchange.

The CFTC will review the comment letters and may modify the proposal before it votes on whether to adopt any final regulations.

WASHINGTON, Jan 19 (Reuters) – The U.S. Commodity Futures Trading Commission last week released its long-awaited proposal to curb speculation in energy futures markets, but several of its top officials expressed reservations that could make it

harder for the regulatory agency to finalize its plan.

The measure is the first major regulatory reform for the top U.S. futures market regulator, led by Chairman Gary Gensler.

Gensler, a Democrat, is one of five CFTC commissioners appointed by the president.The commissioners have released the plan for public comment, but must vote again for the proposal to become final.

By Ayesha Rascoe and Tom Doggett

WASHINGTON, Jan 14 (Reuters) – The top U.S. futures market regulator on Thursday moved to limit the role of big traders in once high-flying energy markets, unveiling proposals to put a hard cap on the size of positions that dealers can hold but offering a limited exemption for big financial hedgers.

The long-awaited proposals, part of the Obama

administration’s push to overhaul financial markets, will apply to the four most-traded energy contracts on the two major exchanges, the New York Mercantile Exchange and the IntercontinentalExchange.

But it remains to be seen if the limits — which the Commodity Futures Trading Commision said would affect only the 10 biggest position holders if implemented today — are sufficient to satisfy lawmakers who have clamored for regulatory action since oil prices surged to a record $147 in 2008.

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.