Comment Text:
10-005
COMMENT
CL-02073
From:
Sent:
To:
Subject:
secretary
Thursday, April 8, 2010 7:54 AM
Metals Hearing
FW: Position Limits on Futures and Options Trading in the Metals Markets
From:
Jason Yee [mailto:[email protected]]
Sent:
Thursday, April 08, 2010 1:34 AM
To:
Metals Hearing
Cc: secretary; Jason Yee
Subject: Position Limits on Futures and Options Trading in the Metals Markets
Dear Sir,
Many thanks for allowing public opinion on this topic and publicizing the hearing of March 25, 2010.
I fully support adoption of position limits on all metal futures trading on the COMEX which includes
the trading of gold, silver, etc. so as to ensure proper and orderly efficient function of the markets
and pricing. I also support extension of these same limits for all players including
hedgers/custodians regardless and can not understand why exemptions would even be considered
since the intent is to price discovery without any manipulative distortions by any player.
While there may be debate about how and what these position limits should be, as a rule the CFTC
can adopt a 5% limit of total open contracts as a precursory maximum on both gross long contracts
and gross short contracts. All concentrated holdings in excess of the 5% gross contract limit rule
will warrant prompt investigation and/or liquidation per market practice. While debate will rage on
whether this limit should apply to net position instead, the intent of the 5% gross rule is to ensure no
manipulative concentrated position on both long and short sides to mitigate any market disturbance
and so-called black swan low probability events. No exception should be granted to any hedgers -
albeit true producers with metal productions expected in the future or those who are profiting from
arbitrage/trading. Again, the intent is to place a cap to circumvent any excessive concentrated
positions that may lead to high risky events eg., COMEX shutdown and unethical manipulative
practices that can arise from some of the more dominant players with larger exposure and
conflicting interest.
I understand that some major players hold excessive concentrated short positions in COMEX gold
and silver now and in the past that deserves immediate attention. I also understand that no recourse
has been made by the regulators for these companies to liquidate and reduce excessive
concentrations down to a safer non-manipulative size especially after the takeover of Bear Stearns.
I
also read about some London whistleblower with concrete proof of silver metal price manipulation in
the past [and ahead in the future] but no action had been taken to investigate.
I am hopeful that the CFTC will do the right thing by instigating non-manipulative position limits (of
about 5% on total open contracts) given their role as entrusted regulator or cop while bringing back
the public and international community's confidence with the US officials and markets. Damage to
the USA must be restored by the US officials in charge promptly without any long drawn process
(eg., Madoff, silver manipulation) to provoke no further mistrust with the government officials, US
companies and American people.
Regards,
J. Yee, CPA, FRM, CFE
