The Commodity Futures Trading Commission (CFTC) proposed limits on energy speculation Thursday that may curtail the investment of large banks and swaps dealers in the markets for oil, natural gas, heating oil and gasoline.
Speculators in the futures market would no longer be lumped with commodity-linked businesses like airlines and oil companies allowed to exceed limits on the number of energy futures one trader can hold, according to the proposal.
Swaps dealers, index funds and commodity traders have been waiting for the proposal since August, when the commission last held hearings amid concerns that speculators drove oil prices to a record high of $147.27 a barrel in 2008.
"The CFTC does not set prices," Commission Chairman Gary Gensler said at a meeting in Washington. "Rather, the commission is directed to make sure the commodity markets are fair and orderly."
The commission voted 4-1 to put the proposal out for a 90- day public comment period. Only Commissioner Jill Sommers opposed putting the rule out. Gensler declined to comment on when the commission may vote on a final rule.
The chairman has pushed for tighter rules on energy speculators, calling for strict limits on who is exempt from regulation. He has asked Congress for authority to regulate over-the-counter markets, where traders can sidestep restrictions.
Commissioners Michael Dunn and Scott O'Malia said their support to put the proposal out for comment didn't mean they would support a final rule after public comments are evaluated, a process that may take many months. Commissioner Bart Chilton said he supports tightening limits.
If approved by the CFTC, the position limits would apply to physically settled and cash-settled futures in light, sweet crude oil, Henry Hub natural gas, and New York Harbor gasoline and No. 2 heating oil.
