Comment Text:
As a trader for 20 years I totally agree with Mr. Chilton and his examples of how excessive speculation has added to the general underlying prices for various if not all commodities. It all comes down to one very simple point and one can easily research the timeline for the occurrence. The volumes that have entered the market when the MERC. expanded limits immediately set the tone for an increase in volatility and what some people call over exuberance. A perfect example of the dissemination of a commodity happened in the wheat market when limits were expanded to such great lengths that the amount of participants became larger then the actual crop. This cannot happen in a commodity the has seasonal tendencies and traits that allow the general end user to utilize the market as a hedge against their physical inventory.
So along come the funds which happen to coincide with the advent of the electronic venue.. They then had this immediate access at their finger tips that gave them opportunities they never had before. This occurrence overwhelmed the markets scaring away the general commercial and end users, who were the so called "common senses " I the process of price discovery. To this day they remain on the sidelines ( a major portion ) as the risk is too great for them to accommodate into their daily risk management calculations.
Then the markets evolved into another android of sorts as the algorithmic participants invaded the arena. Now they say they are there to provide liquidity and to be truthful to some extent that do provide this to the marketplace. But what they do not tell you is that they are capable in manipulating prices by the shear volume they throw at the screen. They can daily control the direction buy buying more then they sell or visa- versa and according to their argument end up with no position at the end of the day. You have to think they can buy as an example 10,000,000 and sell 10,000,001, but do it in such as fashion and I see it everyday where they buy more early and sell higher as their buy orders are seen below the markets scaring other traders into a forced trend trade.
What is the answer, well there might be a few, but the few are not heard as this conglomerate if huge influx of trading capital with their lobbyists are just too powerful to fix the problem. That is why CFTC and people such as Mr, Bart Chilton need to meet and sit down with individuals who have experienced both ends of the spectrum. I hope that there could be a time were we could sit down in front of a subcommittee and tell it like it is and what can be done about the incredible wrongs that have taken away a viable and constructive venue that embraced the worlds views on prices.
Thank you for your time,
Regards
Dezso J. Szalay ( Commercial Trader )
CBOT
141 Jackson Blvd.
Chicago, Illinois
60604
1-132-427-9342
1-630-360-5433
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