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

By John Kemp

LONDON, March 19 (Reuters) – By rejecting position limits on energy markets, and calling into question the Commodity Futures Trading Commission’s (CFTC) authority to regulate in this way, the Futures Industry Association (FIA) has dangerously escalated the conflict with its regulator and ultimately with Congress.

It is a sign of the industry’s renewed self-confidence after the crisis, as well as its visceral hostility to restrictions of any sort on position sizes, that the FIA is strenuously opposing limits most observers have described as extremely generous, and has made veiled threats that the position limits could be struck down in court.

This is a high-risk strategy. The FIA’s objections are statutory not constitutional. Even if it forces the Commission to back down, or prevails in court, it would be a relatively simple matter for Congress to amend the 1936 Commodity Exchange Act to give the CFTC more complete authority to impose and enforce the limits FIA has opposed.


If it blocks the CFTC’s current proposals, the FIA would almost certainly face the threat of new legislation. There is a groundswell of support in Congress for giving the CFTC more power, not less, to regulate energy markets: