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Comment for Proposed Rule 75 FR 4143

  • From: David Mitchell
    Organization(s):

    Comment No: 15498
    Date: 4/13/2010

    Comment Text:

    10-002
    COMMENT
    CL-06498
    From:
    Sent:
    To:
    Subject:
    [email protected]
    Tuesday, April 13, 2010 1:39 PM
    secretary
    Comments on Proposed Speculative Position Limits for Energy
    (File
    # 10-002)
    DAVID MITCHELL
    860 810 9896
    110 BROOKFIELD ST
    SOUTH WINDSOR, CT 06074-1202
    April 13, 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-06498
    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,
    DAVID MITCHELL