By Jonathan Spicer
CHICAGO, Nov 3 (Reuters) - The U.S. futures regulator must gather and analyze data on the swaps market before it can determine appropriate speculative position limits, a top official of the Commodity Futures Trading Commission told Reuters on Wednesday.
The Dodd-Frank financial reform law mandates the CFTC to finalize position limits for energy and metals futures and swaps markets by mid-January -- well before the agency has tools to collect and analyze data on the swaps market.
CFTC Chairman Gary Gensler has suggested the agency has the option of proposing a position limits formula by the deadline, but waiting to phase in the limits until a future date, when the CFTC gets the information it needs.
'I am not supportive of that,' CFTC Commissioner Jill Sommers said in an interview on the sidelines of a futures industry conference.
'I don't know how you come up with a formula or methodology when you haven't looked at the data,' said Sommers, a Republican.
Position limits for futures and swaps mandated by the Dodd-Frank financial reform law are a top concern for commodity traders who say the plan could limit fund participation in markets.
Industry groups including CME Group Inc and Morgan Stanley, and the Futures Industry Association have told the CFTC it risks harming commodity markets with overly restrictive speculative trading limits, and have urged the agency to move cautiously.
COALITION URGES TOUGH APPROACH
But a coalition including farmers, petroleum marketers and convenience store operators told the CFTC it must quickly implement position limits to bring stability and confidence to the market.
'It is not enough to deal just with manipulation, excessive speculation will require a stricter approach,' the Commodity Markets Oversight Coalition said in a letter posted on the CFTC's web site on Wednesday. http://r.reuters.com/vaw63q
The group said the CFTC should not wait to phase in the limits, and should consider setting more aggressive limits on positions held by exchange-traded funds and index funds.
The CFTC is unlikely to unveil its new position limits proposal in November, and would more likely wait until Dec. 1 or later to discuss the plan, Sommers said.
The CFTC is holding a series of public meetings to discuss the many regulatory proposals required by the law before opening the rules up for public comment. Meetings are slated for Nov. 10 and 19 and Dec 1.
Earlier this month, the agency tentatively slated the position limits meeting for Nov. 30, but it has since said that date would not work.
The CFTC announced earlier on Wednesday its agenda for Nov 10, saying it would consider a series of rules for swap dealers and major swap participants, as well as whistleblower provisions.
(Additional reporting by Roberta Rampton and Christopher Doering; Editing by David Gregorio)
((roberta.rampton@thomsonreuters.com; +202 898 8376; Reuters Messaging: roberta.rampton.reuters.com@reuters.net)) Keywords: FINANCIAL REGULATION/LIMITS (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
CHICAGO, Nov 3 (Reuters) - The U.S. futures regulator must gather and analyze data on the swaps market before it can determine appropriate speculative position limits, a top official of the Commodity Futures Trading Commission told Reuters on Wednesday.
The Dodd-Frank financial reform law mandates the CFTC to finalize position limits for energy and metals futures and swaps markets by mid-January -- well before the agency has tools to collect and analyze data on the swaps market.
CFTC Chairman Gary Gensler has suggested the agency has the option of proposing a position limits formula by the deadline, but waiting to phase in the limits until a future date, when the CFTC gets the information it needs.
'I am not supportive of that,' CFTC Commissioner Jill Sommers said in an interview on the sidelines of a futures industry conference.
'I don't know how you come up with a formula or methodology when you haven't looked at the data,' said Sommers, a Republican.
Position limits for futures and swaps mandated by the Dodd-Frank financial reform law are a top concern for commodity traders who say the plan could limit fund participation in markets.
Industry groups including CME Group Inc and Morgan Stanley, and the Futures Industry Association have told the CFTC it risks harming commodity markets with overly restrictive speculative trading limits, and have urged the agency to move cautiously.
COALITION URGES TOUGH APPROACH
But a coalition including farmers, petroleum marketers and convenience store operators told the CFTC it must quickly implement position limits to bring stability and confidence to the market.
'It is not enough to deal just with manipulation, excessive speculation will require a stricter approach,' the Commodity Markets Oversight Coalition said in a letter posted on the CFTC's web site on Wednesday. http://r.reuters.com/vaw63q
The group said the CFTC should not wait to phase in the limits, and should consider setting more aggressive limits on positions held by exchange-traded funds and index funds.
The CFTC is unlikely to unveil its new position limits proposal in November, and would more likely wait until Dec. 1 or later to discuss the plan, Sommers said.
The CFTC is holding a series of public meetings to discuss the many regulatory proposals required by the law before opening the rules up for public comment. Meetings are slated for Nov. 10 and 19 and Dec 1.
Earlier this month, the agency tentatively slated the position limits meeting for Nov. 30, but it has since said that date would not work.
The CFTC announced earlier on Wednesday its agenda for Nov 10, saying it would consider a series of rules for swap dealers and major swap participants, as well as whistleblower provisions.
(Additional reporting by Roberta Rampton and Christopher Doering; Editing by David Gregorio)
((roberta.rampton@thomsonreuters.com; +202 898 8376; Reuters Messaging: roberta.rampton.reuters.com@reuters.net)) Keywords: FINANCIAL REGULATION/LIMITS (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.