Comment Text:
As a citizen of the United Kingdom, where a lot of commodity trading by financial organisations takes place, I applaud the Commission’s efforts to implement the Dodd-Frank Act,especially reforms aimed at limiting speculation in food and energy commodities.
Many factors contribute to today’s highly volatile commodity prices, but it is clear that excessive speculation is partially responsible, as shown in dozens of studies by members of respected institutions such as Princeton, MIT, Citigroup, Petersen Institute, University of London, Yale, UNCTAD, FAO, and the U.S. Senate. It is also clear that the financial sector is in complete denial about its significant role in creating market instability.
I urge the Commission to implement the proposed rules regarding aggregate speculative position limits to prevent excessive speculation. A strong US bill will strengthen the arm of British regulators faced with the same problems, the repercussions of which hit hardest the poorest and most vulnerable people in the world. In the 2008 food price bubble, at least 500 million people in the developing world were forced into poverty (data due to UN FAO), principally owing to the actions of financial speculators.
I support the call by your Congress for exemptions from these limits for bona fide hedgers but ask that the Commission define that term in the strictest sense possible, limiting exemptions to businesses that deal in physical commodities and use markets to hedge commercial risk in those commodities. Banks, hedge funds, private equity and all passive investors in commodities should not be deemed bona fide hedgers. Institutions hedging price-directional bets such as commodity index swaps, Exchange Traded Funds and Exchange Traded Notes also should not be considered as bona fide hedgers.
Thank you,
Yours Sincerely,
John Skutsch
