Comment Text:
10-002
COMMENT
CL-02635
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[email protected]
Thursday, April 15, 2010 7:53 PM
secretary
Comments on Proposed Speculative Position Limits for Energy (File # 10-002)
Robert Ougoorlian
Shreve Crump and Low
55 Melville ave.
Dorchester, MA 02124-2124
April 15, 2010
David Stawick
Secretary, U.S. CFTC
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
Dear Mr. Stawick:
I am writing today to endorse comments submitted by the Petroleum
Marketers Association of America and the New England Fuel Institute
submitted on April 9, 2010 on the proposed rule to implement speculative
position limits for futures and options contracts for natural gas, crude
oil, heating oil and gasoline. I am also writing to add my own thoughts
on this matter to the public record.
Futures markets were designed as a tool for bona fide commercial
businesses and end-users to manage risk and "discover" prices for energy
based on supply and demand economics. Businesses and consumers rely on
these markets and are harmed when they become excessively volatile or
subject to extreme price shocks, as we saw with the 2007-2008 energy
bubble. In the past ten years, such events have become common and federal
regulators failed to take assertive action to address the causes and to
restore confidence in the energy futures markets.
By strengthening and passing this proposed rulemaking, the Commission has
an opportunity to take an important step in this regard. It will begin
addressing the main cause of recent market instability - excessive
speculation. Financial investors, including banks, hedge funds and index
funds, speculate in the energy commodities markets for profit, rather than
commodity-related businesses and users, who do so to protect themselves
from volatility and risk. Speculators take on the risk that hedgers seek
to shed, however speculation should not dominate the markets. Moreover,
one speculator or class of speculator should not be allowed to take a
large, controlling position in any a single commodity.
The Commission has a statutory obligation, if not a compelling moral
obligation, to establish hard limits on the size of positions that
speculators can take in these markets, and to bar them from any
exemptions. The rule that has been proposed is not perfect, and again, I10-002
COMMENT
CL-02635
strongly urge the technical improvements suggested by the comments I have
~vritten to endorse.
In considering the rule, Commissioners must look past opposition by the
financial community and remember the affect that excessive speculation has
on businesses like mine, my consumers and the broader economy. It should
establish restrictive speculative position limits, and implement them
expeditiously, before ~ve see a repeat of the 2007-2008 energy bubble and
another major shock to a country still recovering from recession.
Thank you for your consideration.
Sincerely,
Robe~
Ougoorlian
6174362891
