Comment Text:
10-002
COIMMENT
CL-02696
MAIN OFFICE
1479 WILLIAMSBRIDGE ROAD
BRONX, N. Y. 10461
(718) 892-1500 ¯ (914) 668-9200
FAX (718) 828-7800
April 16, 20t0
David Stawick, Secretary
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155 21
st
Street, NW
Washington, D.C. 20581
CORP.
ESTABLISHED 1937
Subject: Comments on Proposed Speculative Position Limits for Energy (File #10-002)
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, ~rUde bill I]eatiffg oil and g~Soline: 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 fid~
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"~ecome excessively volatile or subject to extreme price shocks, as we saw with
the 2007-2008 energy bubble. In thepas
t
ten years, such events have become common and federal regulators failed
to take assertive action to address !~.elcauses 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 be 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, I strongly urge the technical improvements suggested by the comments I have
written to er~dorse.
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 we 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,
Lawrence T. Scuder
President, Combind Oil Corp.
