Washington, D.C. – Last week, leading Senate Democrats urged the Commodity Futures Trading Commission (CFTC) to finish a long-delayed rule to curb the number of futures contracts a trader can hold on certain commodities including oil, natural gas and gold. The CFTC, in 2013, revised its proposal to crack down on excessive speculation in a group of 28 commodities, but the agency has yet to issue a final rule.
In a letter to CFTC Chairman Timothy Massad, Sens. Maria Cantwell (D-Wash.), Sherrod Brown (D-Ohio), Dianne Feinstein (D-Calif.) and Joe Donnelly (D-Ind.) pressed the agency to complete the position limits rule without any further delay.
“The Commodity Futures Trading Commission rulemaking to establish position limits for futures, options and swaps must be finalized immediately. Although we were encouraged when the CFTC approved the re-proposed rule in November 2013, over two years have passed and the final rules are long overdue,” the senators wrote. “Excessive speculation in the commodity markets impacts consumers and the vital resources that consumers rely on. Commodity markets must be liquid and efficient, but also subject to effective rules that guard against manipulation, fraud and abuse.”
Earlier this month, the CFTC’s lone Republican commissioner withdrew a controversial report recommending the agency abandon its plan for the position limits rule. The CFTC’s Energy and Environmental Markets Advisory Committee, which issued the recommendation, is comprised almost entirely of representatives from the energy and trading industries.
“The withdrawal of the report last week confirmed its very serious flaws. Now that the distraction of the report is out of the way, we urge you to move forward and finalize CFTC’s rules for speculative position limits, including aggregation position limits,” the lawmakers wrote in their letter to Chairman Massad.
Congress required the CFTC to address the risk of excessive speculation in commodity markets as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In their letter, the senators called the provision “a critical tool for promoting market integrity.”
In 2012, a federal court rejected the agency’s first set of rules on position limits following a lawsuit by two Wall Street lobbying groups, the Securities Industry and Financial Markets Association, and the International Swaps and Derivatives Association. The CFTC proposed new rules in 2013.