Comment Text:
Dear Chairman Gensler and fellow Commissioners:
I urge you to approve the staff’s proposal on position limits, including limiting exemptions to legitimate hedgers, but to readjust the proposed formula in silver.
The current formula would result in a position limit of over 5,000 contracts for any single speculator, on an all-months-combined basis. 5,000 contracts is the equivalent of 25 million ounces of silver. This is too high of a threshold in light of the realities of the world silver market.
There are only three mining companies in the world who produce more than 25 million ounces of silver per year and only a similar number of industrial consumers using more than that amount. Any speculator holding an amount of silver derivatives greater than what 99% of the world’s silver producers and consumers make or use in a year would have inordinate pricing power. The purpose of speculative position limits is to prevent such a circumstance.
The primary purpose of a contracts market is to facilitate commerce and production by allowing businesses to hedge price volatility. Allowing any one trading entity to accumulate 5,000 contracts cannot possibly serve that purpose; it's only true purpose would be price manipulation.
Please institute a 1500 contract (7.5 million ounce) position limit for silver.
Respectfully,
Jim Magnant
