Comment Text:
10-002
COMMENT
CL-08380
From:
Sent:
To:
Subject:
Attach:
Brian Wright
Monday, April 26, 2010 2:32 PM
secretary
submission regarding proposals with respect to revision certain position limits
with respect to energy contracts
CFTC.doc
Dear Secretary,
Please see attached letter which I wish to submit as a comment regarding
proposals with respect to revision certain position limits with respect
to energy contracts.
Sincerely
Brian Wright
Professor
ARE, UC BerkeleyUNIVERSITY OF CALIFORNIA, BERKELEY
BERKELEY ¯
DAVIS ¯
IRVINE ¯
LOSANGELES ¯
RIVERSIDE ¯
SAN DIEGO ¯
SAN FRANCISCO
Professor Brian D. Wright
Department of Agricultural and Resource Economics
207 Giannini Hall
Berkeley CA 94720
(510) 642-9213
SANTA BARBARA
SANTA CRUZ
25 April, 2010
Mr. David Stawick
Secretary
Commodity Futures Trading Commission
1155 21 st. Street, NW
Washington, DC 20581
Dear Mr. Stawick,
On January 26 the Commission issued a notice regarding proposals with respect to revision certain
position limits with respect to energy contracts.
I do not have time to make a full response. However, I have reviewed the very relevant submission of Dr.
Philip Verleger.
I agree with Dr. Verleger that there is no evidence that index traders caused increased price volatility
recently. Indeed I strongly suggest that careful attention be paid to his argument that increased
stockholding induced by index funds when prices are low, and sales when prices are high, help moderate
prices during shortages such as the heating oil demand spike last winter.
Further, experience suggests that restricting market participation could lead to inefficient integration and
concentration of energy suppliers. Indeed the availability of derivatives, as noted by Verleger, has
facilitated the growth of specialized refining corporations, which have purchased facilities previously
owned by integrated petroleum corporations.
Sincerely,
Brian D. WrightProfessor
