Comment Text:
10-002
COMMENT
CL-02681
April 22, 2010
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155 21 st Street, NW
Washington, DC 20581
COMMENT
Dear Chairman Gensler and Commissioners Dunn, Sommers, Chilton, and O'Malia:
We are writing you today to support the Commission's efforts to rid the futures market of
excessive speculation with its proposed rulemaldng to establish new speculative position limits
on energy contracts. We welcome the Commission's proposed rulemaldng as an important step
in the right direction toward reducing excessive speculation inthe energy futures markets. We
also urge the Commission to strengthen its proposal in order to effectively capture excessively
leveraged speculators who continue to wreak havoc on American businesses and consumers.
The Commission should maintain the strongest oversight of the futures and options markets in
their proposed rulemaking. Three specific areas of importance include a low threshold for
explicit and aggregate position limit levels to capture more excessively leveraged speculators;
limiting large, passive long positions, including those associated with commodity indexes such
as exchange traded funds, which will prevent market distortions and mitigate oil price volatility;
and maintaining a narrow exemption for bona-fide hedging that does notincorporate large swap
dealers and financial speculators under the exemption. By setting lower aggregate position limits
for index traders and all energy-related components of spread and index contracts across all
markets, the Commission can more efficiently stabilize futures markets and prevent volatility
that can result from large amounts of funds moving into and out of market positions. A narrow
bona-fide hedging exemption will also prevent speculators fromevading regulations and causing
increased market volatility
Wall Street banks continue to argue that the Commission does not have the authority to regulate
the over-the-counter (OTC) derivatives marketplace. We disagree with this argument. Until
CongreSs completes its work on comprehensive financial reform legislation this year, we believe
the Commission should use its existing authority to implement aggregate position limits across
all markets to take into account market participants' full trading positions in the OTC market,
exempt commercial markets (ECMs) and foreign boards of trade (FBOTs) offering direct access
to contracts in the U.S in order to prevent excessive speculation and manipulation.
We urge the Commission to not wait for Congressional action giving them the authority to
establish clearinghouses for non-commercial market participants to post margin/collateral, which
PRINTED ON RECYCLED PAPER10-002
COMMENT
CL-02681
will reduce highly leverage commodity bets. The Commission has the power to set position
limits now, so we Urge you to take these comments into consideration as you review the
thousands of comments that the Commission will receive over the next few weeks.
We appreciate the Commission's efforts to rid the market of excessive risk taking by Wall Street
investment banks at the expense of the American public. Bringing transparency and
accountability to the derivatives marketplace will continue to be the top priority of ours in
Congress, however, we urge you to impose aggregate position limits on non-commercial
speculators immediately to bring fairness to the marketplace - thus, restoring the fundamentals
of supply and demand.
Feel free to contact Mary Sprayregen (Welch) at 202-225-4115 or Justin Hagel (Stupak) at 202-
225-4735 with any questions.
Sincerely,
PETER WELCH
Member of Congress
HINCHEY
Member of Congress
Member of Congress
CHRIS VAN HOLLEN
Member of Congress
