The US' Commodity Futures Trading Commissioner (CFTC), Bart Chilton, has urged the country's regulators to introduce position limits in energy and metals markets required by the Dodd-Frank financial regulation law as a matter of urgency.

So far, the CFTC has not made its proposals public, but it is required to set position limits to both markets by the middle of January, Bloomberg reports. However, position limits were not on the discussion table at a rulemaking meeting on December 9th.

"The law provides no such authority for regulators to delay the imposition of these limits," the news provider reports Mr Chilton as saying in remarks prepared for New York's High Frequency Trading USA 2010.

He went on to say that the commodities market has enjoyed a "blistering" inflow of cash since June 2008: futures equivalent contracts held by spectators have risen 47 per cent in energy contracts, 20 per cent in metals and 18 per cent in agricultural commodities.

In October, the CFTC looked to the public for ideas on limiting disruptive trading practices, such as "spoofing" - the practice of pulling a bid before a trade is carried out - and algorithmic trading, with the commissioner saying such traders "should be held accountable when they hurt other market participants".

Bloomberg reports him as suggesting the consideration of rules to limit high-frequency trading due to its potential for market disruption, adding: "It may surprise some, but mini flash crashes occur all too often.

"They don't cause as much of a disruption as that of May 6th, but more than once this year in futures markets and several times in individual stocks, runaway robotic programs have disrupted markets."

Mr Chilton has worked in government services for more than 25 years, including work on Capitol Hill in the House of Representatives, the Senate and the Executive Branch throughout the Clinton, Bush and Obama administrations.

Source:



Calls for position limits in energy, metals futures markets (13/12/10)

© Adfero Ltd