Rep Stupak,Exchange Executives To Appear At CFTC Hearings Next Week
July 21 2009 - 5:31PM
Dow Jones News
The U.S. Commodity Futures Trading Commission said Tuesday that
a key U.S. lawmaker, exchange executives and others will testify
next week at the agency's first hearing to discuss possible new
rules on speculative position limits and hedge exemptions.
The first hearing, slated for July 28 between 9 a.m. and 1 p.m.,
will include remarks from Congressman Bart Stupak, D-Mich., who has
been vocally concerned about excessive speculation.
Others who will appear include IntercontinentalExchange Inc's
(ICE) chief executive, Jeffrey Sprecher, and CME Group's (CME)
executive chairman, Terry Duffy.
Additionally, representatives from the Futures Industry
Association, Delta Airlines (DAL), the American Public Gas
Association and the Petroleum Marketers Association of America will
also appear.
The agency said it also plans to hold hearings on the topic on
July 29 and Aug. 5, both of which will also run from 9 a.m. to 1
p.m.
CFTC Chairman Gary Gensler said in a statement the agency
intends to be "critical" as it looks into "different approaches to
regulate the energy markets."
"Though we are initially focused on energy, the commission
intends to further review other commodities of finite supply in
future hearings," he added.
Earlier this month, Gensler made waves when he announced the
agency will consider imposing sweeping limits on trading in oil,
natural gas and other commodities.
Additionally, the agency is also exploring whether certain
traders - like swap dealers, index traders and exchange-traded fund
managers - should be allowed to get around position limits through
specially-granted exemptions.
The announcement represented an about-face for the CFTC, which
had a reputation for having a more hands-off approach to
regulation.
Currently, the CFTC only sets speculative trading limits in
certain agriculture markets and allows some traders to exceed those
limits if they receive special approvals from CFTC staffers. But
the CFTC defers to the exchanges to set limits, if appropriate, in
all other commodities, including oil.
The exchanges are not required to protect against excessive
speculation, and in energy they only usually impose speculative
position limits during the last few days of trading before a
contract's expiration.
The CFTC was heavily criticized last year by some, including
those in the airline and farming industries, and by lawmakers like
Stupak, for not doing enough to keep oil prices in check when they
reached record-highs.
Critics blamed excessive speculation, although the CFTC's own
economists said they believed the price spikes were due to supply
and demand factors. Still concerned about the issue, Stupak most
recently pushed to get language into the climate change bill to
crack down on speculative trading in the energy markets.
On Tuesday, the CFTC said the hearings will explore a range of
topics, including how to apply position limits to index traders,
the effect of the limits and what methodology the CFTC should use
to calculate position levels.
-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634;
sarah.lynch@dowjones.com