Gaming of Metals and Energy

This excerpt describes the frustration of the regulators to regulate as metals and energy are gamed away.

Statement on Position Limits, “Keeping Promises”

Commissioner Bart Chilton

December 2, 2010
Yesterday the Commission held the sixth in a series of open meetings to address rules implementing the Wall Street Reform and Consumer Protection Act of 2010.  I commend the CFTC’s staff for working diligently on the myriad rules mandated by the Act, even now in the face of a pay freeze.  The staff of the CFTC truly exemplifies the meaning of “service” in the performance of their roles as dedicated public servants.
I am concerned, however, with regard to the potential derailment of what I consider to be one of the most important rules required by the Reform Act:  implementation of speculative position limits.  Congress put special emphasis on this provision, to protect markets and consumers from excessive speculation in commodities markets.  Indeed, we were given a specific implementation date for position limits on energy and metals contracts—January 17, 2011—well in advance of the majority of other Reform Act rules.  We have a commitment to enact this rule on time, a “promise to keep,” with the American consumer who is affected daily by the prices discovered on commodities markets.
The Commission had originally intended to discuss position limits at yesterday’s meeting; unfortunately, that did not occur.  Now, it appears that the Commission does not intend to address position limits at its next scheduled open meeting, on December 9, 2010.  This makes meeting the mandatory statutory deadline difficult, but certainly not impossible.
The Reform Act was passed over four months ago—this provision isn’t a “surprise” to anyone.  It didn’t fall out of the sky.  Of course there are issues surrounding its implementation, but none of those excuse us from meeting the statutory requirements Congress has given us.   This proposal should be discussed on December 9^th at the Commission’s next meeting; a proposal should be put out for public comment as soon as possible; and we should commit to meeting the statutory deadline.  We can always find excuses, justifications, or pretexts for inaction—this rule is too important to let any of those get in the way of fulfilling our statutory responsibilities, and keeping our promise.
Last Updated: December 3, 2010