The Financial Services Authority (FSA) has revealed that it is against proposals to place limits on commodities.

Authorities in the US and France - which is the current head of G20 - have submitted plans to impose tougher regulation on commodities to the European Commission (EC).

The prospect of general position limits fixed in advanced has increased after oil prices recently surged above $87 per barrel and gold prices reached a record above $1,400 per oz.

Regulators in the US are expected to launch trade caps in mid-January, while the EC is likely to launch a draft proposal on the issue in the Market in Financial Instruments Directive in Q1 2011.

However, the FSA has reaffirmed its commitment to 'position management', whereby a regulator can order the closing or reduction of the amount of commodity held by an investor in real time.

"It's not our job to control prices. We are not a price regulator," said FSA Manager for Derivatives David Bailey, who conveys the body's views to European authorities, in an interview with Reuters.

"The statutory objective we've been set is to let markets define prices but ensure those markets operate on a fair, efficient and orderly basis. From that perspective, position management is an appropriate tool."

Mr Bailey also noted that imposing different laws in each region would be a risky move as it may create the opportunity for "regulatory arbitrage".

Earlier this year, Chancellor George Osborne revealed plans to abolish the FSA and separate its responsibilities between the Bank of England and several new agencies.

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UK watchdog opposes EU trade caps for commodities-INTERVIEW (11/11/10)

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