Position Limits Regulation - Hearings & Testimony - Senate Committee on Homeland Security & Governmental Affairs, Excessive Speculation and Compliance with the Dodd-Frank Act, November 3, 2011

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Dodd-Frank Timeline, Position Limits for Derivatives
Interim and Final Rule VACATED BY COURT ORDER Re-proposed Rule Issue Comment Deadline (reopen February 26, 2015)
November 18, 2011 September 28, 2012 November 5, 2013 March 28, 2015

On November 3, 2011, the U.S. Senate Committee of Homeland Security & Governmental Affairs Permanent Subcommittee on Investigations held a hearing on Excessive Speculation and Compliance with the Dodd-Frank Act.

View Archived Webcast

Panelists included:

Paul N. Cicio, President, Industrial Energy Consumers of America, whose statements included:

  • "As an asset class investment, the retail investor doesn’t really care about the supply or demand of the underlying commodity. Their priority is that they have made an investment in an area that diversifies their investment assets. And, when they invest in these passive index funds, the fund rolls the current month position to the next month without any regard to the price of the commodity. They are completely insensitive to price."
  • Regarding commodity ETFs, "Passive speculators should be banned from the futures market."

Tyson T. Slocum, Director - Energy Program, Public Citizen,
Wallace C. Turbeville, Derivatives Specialist, Better Markets, Inc., whose statements included:

  • "Speculation has increased dramatically in the commodity derivatives markets and is excessive. This has caused not only greater price volatility, but has also increased absolute commodities prices in both the futures and physical markets."
  • "The CFTC's Final Rule on position limits has several important features and is a good first step, but it must be strengthened in the future if the commodity markets are to serve their dual intended functions of price discovery based on actual supply and demand for the underlying commodities and providing a mechanism for correspondingly appropriate hedging by commercial producers and purchasers."
  • "Commonly used tactics and trading methodologies of high-frequency and algorithmic trading already disrupt and degrade the price discovery functions of the commodity markets."
  • "Commodity index funds have disrupted the commodities futures and physical markets in ways that distort price discovery and increase commodities markets."

Gary G. Gensler, Chairman, Commodity Futures Trading Commission, whose prepared statement offered a summary of Dodd-Frank-related rulemakings.

Related Documents: Prepared Statements; Exhibits




References

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