by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Asian Petroleum Review : Jan-March 2011
It could take months for the CFTC to gather data on traders' positions in over-the-counter swaps, and plug that into limit formulas unveiled last month. Chilton, a Democratic commissioner and advocate for limits, was dismayed the CFTC failed to act more quickly, and initially withheld his support for the limit proposal. Until limits are in place, Chilton has pushed for "position points" so commissioners can determine whether to urge traders to reduce holdings - - or even vote to require that traders not exceed the "points" levels. "I have been convinced that the interim position point system is, unfortunately, the best the agency can do at this time," Chilton said in a statement this week. Chairman Gary Gensler last month directed his staff to ask the largest traders in futures markets about the size of their swaps holdings, and report monthly to a closed meeting of the CFTC's five commissioners. Staff would target those who exceed 10 percent of open interest in the first 25,000 contracts of a futures market, plus 2.5 percent of open interest above that level - - which corresponds with the position limit the agency has proposed. The insight would "help us identify potential con- cerns", Gensler said - - but he stopped short of ad- dressing what the CFTC could or would do if it found any issues. "Position points" will likely be a focus at the CFTC's Jan. 13 discussion on the long-term hard limits to get more clarity about what action the regulator could take before the new limits become effective. "There are questions as to what has been agreed to do in order to get Bart to vote for it," an industry source said. CAN LARGE POSITIONS TRIGGER EMERGENCY POW- ERS? The CFTC has the power to limit positions or require trad- ers to liquidate positions in a market emergency. But it would be "extreme" for the agency to declare an emergency simply because it found traders over the "position point" threshold, said Philip McBride Johnson, a retired derivatives lawyer and former CFTC chairman. If the plan results in ad hoc market intervention, the CFTC risks hurting liquidity and distorting prices, said Sharon Brown-Hruska, a vice president of NERA Economic Con- sulting and former CFTC commissioner. "While I have high regard for the commissioners, I do not know how they know the 'right' number or points," she said. GAS AT $4/GALLON COULD PUSH CFTC A spike in oil prices could push the CFTC to take quicker action on speculators if energy costs began to threaten the fragile U.S. economy, said Michael Greenberger, a law professor at the University of Maryland and former CFTC official. "What happens when gasoline gets up to around $4 is the American public starts complaining and pointing the complaints to Congress and the president," Greenberger said. The extra data acquired through the "position points" plan would help the CFTC be ready to move, he said. "I don't think it's reached the point of providing the pain to the American consumer where the political tsunami would dictate action," he said. (Editing by Dale Hudson)