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Asian Petroleum Review : Jan-March 2011
31 The largest speculators in U.S. commodity mar- kets have little to fear from a new plan by their regulator for heightened surveillance - - a pre- cursor to position limits that won't likely force anyone to exit trades. Traders such as Goldman Sachs , JPMorgan and Mor- gan Stanley will likely get extra questions about their over-the-counter swaps from the Commodity Futures Trading Commission when they exceed certain com- plex thresholds in 28 energy, metals and agricultural futures markets. The added surveillance, known as the recently pro- posed "position points" , is an attempt to appease Bart Chilton, a CFTC commissioner who says the agency should act faster to make sure speculators cannot help drive up prices at a time when food and copper have hit records and oil nears $100 a barrel. It is an interim measure until the CFTC has the data needed to put in place speculative curbs required by a new Wall Street reform law. But barring an extreme price spike or market emer- gency, lawyers and analysts say the CFTC probably will not force speculators exceeding the "position point" thresholds to liquidate positions. Emergency powers are reserved for times when mar- kets are threatened by manipulation or during major disturbances, said Jill Sommers, a Republican com- missioner. "It's my opinion that our emergency authority does not extend to us being able to tell a market partici- pant to get down just because a position is large. There are other people who feel differently," Sommers told Reuters. CHILTON'S STOP-GAP Consumers and lawmakers have pushed the CFTC to clamp down as commodities became a hot new asset class, attracting investors in funds run by players such as Deutsche Bank , U.S. Commodity Funds and Centaurus Energy. Traders argue there is no evidence speculators inflate prices, and say curbs could make prices more volatile. The Dodd-Frank bank reform law in- structed the CFTC to have limits in place by next week - - a deadline it will miss. Thomson Reuters Asia Petroleum Review U.S. CFTC "position points" lack bite of hard limits By Roberta Rampton and Christopher Doering WASHINGTON Gary Gensler, Chairman, CFTC