Comment Text:
10-002
COMMENT
CL-08338
From:
Sent:
To:
Subject:
Attach:
Jachym, Jonathan
Monday, April 26, 2010 9:07 PM
secretary
Industry Filings: Comments on Industry Submissions
Position Limits Proposal_Joint Letter 4.26.10_.pdf
Please find attached a joint comment letter on the Proposed Federal Speculative Position Limits for Referenced
Energy Contracts and Associated Regulations submitted by:
American Petroleum Institute, Commodity Markets Council, Natural Gas Supply Association, and U.S.
Chamber of Commerce
Please feel free to contact me with any questions.
Regards,
Jonathan
Jonathan L. Jachym
Legal and Regulatory Counsel
Center for Capital Markets Competitiveness
U.S. Chamber of
Commerce
1615 H
Street,
NW
Washington,
DC 20062
www.uschamber.com/ccmc
[email protected]
Phone:
(202) 463-3119
Cell:
(202) 731-2434April 26, 2010
Mr. David Stawick
Secretary
Commodity Futures Trading Commission
Three Lafayette Center
1155 21 st Street, NW
Washington, DC 20581
Re:
Proposed Federal Speculative Position Limits for Referenced Energy Contracts and
Associated Regulations; RIN 3038 - AC85
Dear Mr. Stawick:
The undersigned organizations represent businesses from diverse sectors of the economy
that rely on U.S. commodities markets to hedge prices of energy commodities they produce or
consume in the course of their business. We appreciate the opportunity to provide comments to
the Commodity Futures Trading Commission (CFTC) on the proposal to set position limits on
four specific energy contracts in the U.S. futures markets and on related contracts on "Exempt
Commercial Markets" that have been determined by the CFTC to be "Significant Price
Discovery Contracts" (SPDCs).
We applaud the CFTC's efforts to strengthen U.S. futures markets and support
appropriate reforms that will ensure our markets are fair and transparent, reflect prevailing
prices, and are liquid enough to serve the diverse needs of their many users. Regulations should
support the confidence of all market participants, ensure competition among trading venues, and
preserve U.S.-based products as global energy price benchmarks.
We believe that setting position limits on regulated markets under the CFTC's current
jurisdiction while unnecessarily restricting the availability of exemptions for hedging financial
risk could drive healthy trading activity to unregulated or foreign markets, reduce liquidity,
distort competition, and impede price discovery. We believe the CFTC should not take actions
that would create strong incentives for regulatory arbitrage and hinder the performance of our
regulated markets.
We urge the CFTC to remain cognizant of three key principles in finalizing a decision on
the current proposal:
First, access to regulated and transparent U.S. energy futures by a diverse range of
investors provides liquidity that reduces costs for consumers and businesses. By
allowing commodity producers to transfer their inherent price risk exposure to investors
who are better suited to bear it, the participation of swap dealers and other investors in
the energy futures market lowers the cost of capital for commodity producers and lowers
the price of commodities over the long-run for consumers.Mr. David Stawick
April 26, 2010
Page 2
Second, healthy competition among trading venues benefits all market participants.
A comprehensive and coordinated approach to regulation will deter regulatory arbitrage
and will ensure trading venue options, competitive pricing, and other benefits for
commercial users and consumers. Market selection should be based on liquidity,
technology, clearing quality, price and customer service - and not regulatory arbitrage.
Third, preserving U.S. products as global energy price benchmarks is critical for
U.S.
consumers and businesses.
We have already seen several examples ofU.S.
commodity investment funds moving outside of the U.S. due to regulatory uncertainty.
These trends threaten U.S.-based global benchmarks and enhance the status of foreign
energy products which will only exacerbate the problems ofU. S. dependence on foreign
energy sources. The CFTC should coordinate with foreign regulatory bodies to the
greatest extent possible to ensure that the U.S. markets do not lose their leadership status.
We urge the CFTC to consider the need for greater global coordination and avoid taking
actions that could negatively impact all market participants. We would be happy to discuss this
matter with you or the appropriate CFTC staff.
Sincerely,
American Petroleum Institute
Commodity Markets Council
Natural Gas Supply Association
U.S. Chamber of Commerce
Honorable Gary Gensler, Chairman, Commodity Futures Trading Commission
Honorable Michael Dunn, Commissioner, Commodity Futures Trading Commission
Honorable Jill Sommers, Commissioner, Commodity Futures Trading Commission
Honorable Bart Chilton, Commissioner, Commodity Futures Trading Commission
Honorable Scott O'Malia, Commissioner, Commodity Futures Trading Commission
