Comment Text:
10-005
COMMENT
CL-02137
From:
Sent:
To:
Cc:
Subject:
Jason Yee
Thursday, April 8, 2010 1:34 AM
Metals Hearing
secretary ; Jason Yee
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
