Comment Text:
10-002
COMMENT
CL-08295
From:
Sent:
To:
Subject:
Attach:
R.Forester
Monday, April 26, 2010 3:21 PM
secretary
Speculative Energy Limits.pdf
Mr. Stawick,
Please read the attached letters.
Thank you,
John Cipollone
Michael V. CipolloneApril 26, 2010
David Stawick, Secretary
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Stroker, NW
Washington, D.C. 20581
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 ~witing 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 .,'ely 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 cm~se of recent market instability -
e:rc'e~xive spee~l~fio~
Financial investors~ inch~dJng b~ks, hedge
funds and index funds, speculate in the energy commodities 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
speculat~o~ has on b~s~nesses like mine, my co~3sumers a~d 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 consideration°
Sh'~c~rely,
ohn Cipollo~
600©a'by~ oad~ /aveto,:~s~ SA 9083®6 0-~446 787/~ FAX6 0~446528 ~w~w o~sc 9o ose,cc,April 26, 2010
David Stawick, Secretary'
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
I t55 21
st
S~cet, NW
Washington, D.C. 20581
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 tbr 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 riley 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 m~rket JnstabJ!Jty -
exe~wive .~ec~lalion.
Financial investors~ including bank.% hedge
funds and index fhnds, speculate in the energy commodities 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,
1 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 b~siaesses like mine, my coasumers aad tl~e broader econovay. It should establi~l~ 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
countLw still recovering from recession.
Thank you for your consideration.
Michael V. Cipollone
