Comment Text:
Dear Commission,
As an active market participant in CME Group Inc., Livestock Futures and Options I would like to strongly discourage the implementation of the proposed speculative position limits scheme currently being considered. Over the past five years I have intimately observed the loss of liquidity in the back months of these products. It can be argued ad nauseam why this has occurred. Perhaps the most obvious reason is the nature by which these products are now traded. The dominance of electronic trading has had the tendency to eliminate the home-grown, if you will, liquidity providers that devoted themselves and their capital to making markets and taking positions in less traded back months. As an investment vehicle, generally speaking, exposure to livestock futures returns, is only concentrated in the front month contract. Therefore, it is the end users and hedgers who rely on liquidity in the back months of these products. It would be a disservice to very group, for which these products exist in the first place to do anything to make the back months less liquid. The proposed position limits would only exacerbate this dilemma by focusing on specific contracts, and not the entire product..
Thank you for the opportunity to comment.
Sincerely,
David Hill
[email protected]
