LONDON (Reuters) – In throwing out controversial new rules on position limits, just two weeks before they were due to go into effect, U.S. District Judge Robert Wilkins has delivered a stunning setback to the Commodity Futures Trading Commission (CFTC), and handed a significant victory to derivatives dealers and investors fiercely opposed to new restrictions.
The practical impact is to preserve the existing system. The CFTC will continue to enforce federal limits on speculation in agricultural products like corn, wheat and soy, while futures exchanges will continue to enforce spot-month limits and broader position accountability levels for energy items like crude oil, gasoline and natural gas.
LONDON, Sept 28 (Reuters) – Even before new position limits
on energy contracts like crude and natural gas come into force
on October 12, the U.S. Commodity Futures Trading Commission
(CFTC) has taken an increasingly aggressive approach to
enforcing the existing limits on agricultural items like cotton,
wheat and soybeans.
In the last week alone, the CFTC has imposed civil monetary
penalties and disgorgements totalling nearly $2.5 million on
JPMorgan, Australia and New Zealand Bank, and a China-based
individual, Weidong Ge, to settle accusations they breached
federal speculative limits on cotton (all three respondents),
wheat (ANZ) and soybean oil (Weidong Ge).
LONDON (Reuters) – Monday’s sudden dive in oil prices appears more and more unusual with hindsight, and poses questions for traders, regulators and exchanges alike about just who or what caused such a major turnaround in the market.
Explanations range from a “fat finger” trading error or a high-frequency computer trading program run amok to a concentration of stop-loss orders being triggered or a single large trade by a hedge fund selling up to 10 million barrels of crude in a single clip, though no one appears to know for certain.
LONDON (Reuters) – Whatever the precise trigger, the sudden plunge in Brent prices on Monday is a timely reminder that liquidity is discontinuous, even in a market as deep and heavily traded as crude oil.
Markets can switch from quiet calm to a raging storm with frightening speed for any reason, or no rational reason at all.
LONDON (Reuters) – Roll returns rather than spot price movements have been a much more significant source of profits and losses for commodity investors over almost any time horizon.
Yet most investors still formulate their strategy in terms of outright price moves rather than the spreads, missing out on the most important source of long-term performance.
LONDON, Sept 14 (Reuters) – Commodity prices could come
under severe pressure if the U.S. Internal Revenue Service (IRS)
decides to revoke previous rulings that have allowed mutual
funds to pour over $50 billion into commodity derivatives
through subsidiaries in the Cayman Islands and structured notes
while remaining exempt from corporate income tax.
“The controlled foreign corporations are corporate fictions,
offshore shams, paper exercises whose sole purpose is to make an
end run around the legal restrictions on commodity investments
by mutual funds,” Chairman Carl Levin complained at a hearing of
the Senate Permanent Subcommittee on Investigations in January.
LONDON (Reuters) – Concern about triggering another rise in oil prices is unlikely to deter the Federal Reserve from embarking on another round of quantitative easing.
Officials believe the stimulus from lower interest rates will outweigh the drag on growth from higher fuel costs, as my colleagues Jonathan Spicer and Matthew Robinson have explained (“Benefits of QE3 seen outweighing oil sting” Sep 12).
LONDON, Aug 3 (Reuters) – Blackouts across northern India
this week have highlighted the urgent need to improve grid
control by investing in more modern technology for measuring and
visualising power flows across the network to ensure corrective
actions can be taken more quickly.
India lags behind grid operators in advanced economies, as
well as emerging markets such as China, Russia, Brazil and South
Africa, in rolling out a new generation of technology based on
the global positioning system (GPS).
LONDON (Reuters) – The precise cause of widespread power failures that cut electricity supply on Tuesday to states where half of India’s 1.2 billion people live will take many months to establish, and may never be known for certain.
So any analysis at present must be speculative.
The most likely explanation is a small localised problem that rippled across the network as grid managers lost control of power flows and automatic relays shut down transmission lines and power plants to prevent further damage to equipment.
LONDON, Aug 1 (Reuters) – The precise cause of widespread
power failures that cut electricity supply on Tuesday to states
where half of India’s 1.2 billion people live will take many
months to establish, and may never be known for certain.
So any analysis at present must be speculative.
The most likely explanation is a small localised problem
that rippled across the network as grid managers lost control of
power flows and automatic relays shut down transmission lines
and power plants to prevent further damage to equipment.