Comment Text:
10-002
COMMENT
CL-02675
David Stawick, Secretary
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155 21
~t
Street, NW
Washington, D.C. 20581
O.F.T,O.
OFFICE OF THE SEORETAfi!AT
Subject: Comments on Proposed Speculative Position Limits for Energy (File #10-002)
Dear Mr. Stawick:
I am writing today to endorse comments submitted by the Petroleum Marketers Association of America
and the New England Fuel Institute submitted on April 9, 2010 on the proposed rule to implement
speculative position limits for futures and options contracts for natural gas, crude oil, heating oil and
gasoline. I am also writing to add my own thoughts on this matter to the public record.
Futures markets were designed as a tool for
bonafide
commercial businesses and end-users to manage
risk and "discover" prices for energy based on supply and demand economics. Businesses and
consumers rely on these markets and are harmed when they become excessively volatile or subject to
extreme price shocks, as we saw with the 2007-2008 energy bubble. In the past ten years, such events
have become common and federal regulators failed to take assertive action to address the causes and to
restore confidence in the energy futures markets.
By strengthening and passing this proposed rulemaking, the Commission has an opportunity to take an
important step in this regard. It.will be addressing the main cause of recent market instability -
excessive ~eculation.
Financial investors, including banks, hedge funds and index funds, speculate in
~ energy ~~ifies markets for profit, rather than commodity-related businesses and users, who do
so to protect themselves from volatility and risk. Speculators take on the risk that hedgers seek to shed,
however speculation should not dominate the markets. Moreover, one speculator or class of speculator
should not be allowed to take a large, controlling position in any a single commodity.
The Commission has a statutory obligation, if not a compelling moral obligation, to establish hard limits
on the size of positions that speculators can take in these markets, and to bar them from any exemptions.
The rule that has been proposed is not perfect, and again, I strongly urge the technical improvements
suggested by the comments I have written to endorse.
In considering the
rule,
Commissioners must look past opposition by the financial community and
remember the affect that excessive speculation has on businesses like mine, my consumers and the
broader economy. It should establish restrictive speculative position limits, and implement them
expeditiously, before we see a repeat of the 2007~2008 energy bubble and another major shock to a
country still recovering from recession.
Thank you for your C~nsiderati~
Sincerely,, ('/", _/~j
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/3~ ~
[NAM~OMPANY AND ADD~SS]
