– 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.