Comment Text:
23 March, 2011
Submitted with all due respect:
Dear Sirs:
Thank you for giving us the opportunity to comment on setting position limits in the operations of the CFTC. The question of what the proper limit of course is questionable, the objective however is clear, to prevent the potential for manipulation of the market in the price of a commodity. Each commodity likely deserves its own analysis perhaps but in general, the limit should be related to the markets fluid demand for the commodity and in line with what the volume is that is exchanged by the general traders of the commodity who work with it on a daily basis for their livelihood.
From cursory information available in the markets, it would appear that a limit between 1000 to 1500 contracts would be a reasonable position limit to consider. The regular market traders could use this volume of the commodity to sustain certain operations in need. It is reasonable to think a larger commodity consumer might use up to 1000 contracts in its operations for the year. Allowing the trade volume to be larger would then open the window to speculation, the larger the position limit, the larger the opportunity for speculation and manipulation.
On this basis it appears to me to be reasonable to set the position limit to the high end of my estimate, 1500 contracts. I think 1000 contracts might be more appropriate, but some market consumers might consider taking more than their fair share for storage to consider longer term operations.
For the sake of fair market operations, please consider setting the position limit at a value of no higher than 1500 contracts.
Sincerely,
Gary Woloshyniuk
