Chicago, April 2010

I, along with many others, have been talking for some time about the CFTC’s position limits proposal and the issues that it raises for the energy market. On Monday, CME Group submitted our 45-page comment letter to the CFTC.

Some key points to think about:

There is no credible evidence that shows speculators are responsible for higher energy prices. They are much needed market participants if we’re to have a fully-functioning market environment.

• There’s already been signs of a shift in activity away from the regulated markets based on the mere threat of restrictive new position limits. If the CFTC proposal is enacted, it would exacerbate further the shift away from transparent CFTC-regulated markets to less restrictive venues.

• Exemption rules in the proposal are problematic because they could end up costing commercials more money to hedge their positions, injuring liquidity and penalizing market hedgers for having speculative positions.

It will take some time for the CFTC to sift through the comments and then vote on any rulemaking. Like you, I will continue to follow this issue closely.

Ends --

Tom LaSala is Chief Regulatory Officer and a managing director at CME Group

Attachments:

100426_CFTC_Comment_Letter.pdf

396 Kb