A renewed push in Washington to limit commodity futures trading runs counter to lawmakers' goal of bringing more over-the-counter trading onto exchange platforms, according to the top executive at CME Group Inc. (CME).

U.S. lawmakers have reignited the debate on "excessive speculation" in energy markets, calling for tighter regulation at a time when the Obama administration is also trying to push more over-the-counter derivatives trade onto exchange-run clearinghouses.

CME Chief Executive Craig Donohue said proposals to tighten oversight of the energy markets through increased position limits on trading could drive more trading off-exchange.

"They're working at cross-purposes," Donohue said in an interview with Dow Jones Newswires. "The word I would use is antithetical."

While exchanges stand to gain revenue from clearing more OTC products, this pales next to the potential loss in business if tighter regulations drive trading elsewhere.

Putting caps on trading activity in any market encourages participants to do business elsewhere, Donohue said, which could mean markets or jurisdictions with less oversight.

About 34% of CME's revenue comes from commodity futures markets, while rival IntercontinentalExchange Inc. (ICE) derives 41% from the segment.

"You very much run the risk of siphoning trading activity away from well-regulated, transparent markets where you have reporting of transactions and large positions, and effectively a front-line regulator in the form of the exchange," said Donohue.

Shares in CME and ICE have fallen heavily since the CFTC announced plans on July 7 to hold hearings on new oversight proposals, though both stocks made strong gains Wednesday.

CME is caught in the middle of the evolving debate, a year after the sector shrugged off similar efforts to tighten regulation of energy markets.

The Chicago-based company operates the world's biggest futures markets in energy and agricultural commodities, and also plans to clear trades in over-the-counter instruments such as credit derivatives and interest-rate swaps.

Atlanta-based ICE has voiced similar concerns.

"[P]osition and accountability limits can inadvertently result in the transfer of cleared, transparent positions back into bilateral markets where neither limits nor reporting exist," ICE officials said in a statement.

Donohue said CME will raise the issue at the CFTC hearings, which have yet to be scheduled, but he has indicated the focus of his comments to the CFTC will be on "education."

Derivatives exchanges and brokers are preparing for another debate around the issue of speculation in futures markets fueling price volatility in the underlying commodities.

The matter came to a head last summer as crude oil climbed to its historic $147-a-barrel high, but studies by the CFTC and other groups attributed price movements to supply-and-demand factors, and no new legislation was passed.

Regulators are taking another look at the issue after a report from Sen. Carl Levin, D-Mich., in June found that commodity index traders drove wheat prices beyond normal levels in the last three years.

CME shares were up about 4% at $279.63 in recent trading while ICE was 8% higher at $92.35.

However, recent losses trimmed most of the gains that exchange stocks saw after the U.S. Treasury announced in May that it would push clearing for standardized over-the-counter products, which could translate to big business for ICE and CME.

CME's Donohue said he expected the coming CFTC hearings would demonstrate, again, that commodity pricing reflects fundamental supply-and-demand factors, along with other economic factors such as the relative value of the U.S. dollar.

"Ultimately, people will want to be grounded by facts and strong economic analysis, versus just political rhetoric," he said.

"Nobody wants to see this business move offshore or into markets that the U.S. government can't see and can't regulate."

-By Jacob Bunge, Dow Jones Newswires; 312-750 4117; jacob.bunge@dowjones.com