JPMorgan Chase & Co. (JPM) came out in favor of position limits both on and off exchanges in a hearing before the Commodity Futures Trading Commission on Wednesday.

But the bank wants exemptions maintained for swap dealers that help commodity end users buy and sell derivatives to reduce their exposure to price fluctuations. JPMorgan's views closely matched those of Goldman Sachs Group Inc. (GS), which also had a representative at the hearing.

"It makes sense to impose position limits across all markets, both over-the-counter and exchange-based," said Blythe Masters, head of global commodities at JPMorgan, adding that "exemptions (should be) maintained for those who act as aggregators."

JPMorgan, Goldman Sachs and other financial institutions are known as aggregators, as they offer complex financial products tailored to individual companies' commodity needs, then trade in large volumes using standard derivatives on exchanges to mitigate their own risk. The banks also facilitate trades for index funds, which buy a basket of commodity futures on behalf of individual investors.

The increasing role of swap dealers and their index fund clients has been tied by some lawmakers and regulators to last year's oil price spike, which saw crude futures rise above $145 a barrel in July before crashing down to just over $30 a barrel by the end of the year.

On Wednesday, CFTC Chairman Gary Gensler said he backed position limits as a means to limit speculative trading, though he acknowledged that the mechanism for setting limits, and who should be required to follow them, must still be worked out.

"No longer must we debate the issue of whether or not to set position limits," Gensler said during opening remarks before Masters spoke. "There are three important questions that do remain: who should set position limits? Who should be exempted from position limits? And at what level should position limits be set?"

-By Brian Baskin, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com