Comment Text:
10-005
COMMENT
CL-02556
From:
Sent:
To:
Subject:
Juzenas, Eric
Wednesday, March 24, 2010 9:21 AM
Metals Meeting
FW: Proposed Position Limits on Speculative Metals Trades
From:
Mark Lewon [mailto:[email protected]]
Sent: Tuesday, March 23, 2010 7:07 PM
To:
Juzenas, Eric
Subject: Proposed Position Limits on Speculative Metals Trades
Mr. Juzenas-
I will be unable to attend the hearing on this matter in Washington, but would like to add my comments:
There is no sure way to determine who is a speculator and who has a legitimate reason to be trading
metals futures. Many of the trading companies, such as Goldman Sachs, can make a legitimate argument when they
say that they are buying metals futures as a hedge against something else that they have purchased in another
department. There will be no way to reasonably suggest otherwise. But it cannot be emphasized enough that
speculators provide liquidity to markets. If there were only companies involved in the production or consumption of
metals engaged in the futures markets, the prices would not reflect what would be a "true" price anymore than the
current metals prices reflect "truth." Rather than trying to find a difficult answer to this problem, the Federal
Government should use the power it already has to order traders, companies and individuals using the various metals
exchanges to immediately put up a higher "margin" percentage than is currently required. My suggestion would be
somewhere in the 30-40% range, although that can be changed with circumstances, and irrespective of the nature of
the trades being made. This would force anyone using metals exchanges to use less "leverage," and more of their own
funds, thus reducing the potential for rampant speculation. The best part of this solution is that it is already enshrined
in law-no further laws would be required. But most importantly, none of the bad, unintended consequences of a limit
on speculative trades would be introduced with this kind of program. Furthermore, this should not be limited to
metals. Energy markets and agricultural markets should be subject to the same rules. It makes enforcement so much
easier. I would submit that a practical solution would also more closely fit the original guidelines given to the CFTC to
assist the "efficiencies" in markets. Conversely, limiting speculative trades would decrease efficiencies in markets, and
therefore go against the CFTC guidelines. Thank you,
Mark Lewon
President
Utah Metal Works, Inc.
805 W. Everett Ave.
Salt Lake City, Utah 84116
Ph-801-364-5679
[email protected]
