CFTC Proposes Rule Aimed at Limiting Oil Speculation Among Traders
Oil traders would be limited in the number of positions they can hold under a proposed rule approved Nov. 5 by the Commodity Futures Trading Commission.
Truckers, airlines and manufacturing groups have said unlimited positions in oil and other commodities, such as wheat, foster speculation that drives up prices.
Congress mandated in the Dodd-Frank financial reform bill that CFTC write a rule to limit trader positions, although users, such as truckers, still would be allowed to hedge.
In 2011, CFTC approved a rule, but it was vacated in 2012 in federal court after Wall Street firms challenged it saying CFTC failed to show why position limits were needed.
According to Bloomberg News, the latest proposed rule “would limit traders to 25% of deliverable supply in the month when a futures contract matures.”
The Commodity Markets Oversight Coalition, which includes American Trucking Associations, hailed the CFTC’s 3-1 vote.
“We view position limits as necessary to combat extreme price volatility and to guard against potential manipulation of vital U.S. commodities, from oil to corn,” coalition spokesman Jim Collura said.
