CFTC to Revise Commodity Index Fund Policies

The New York Times reported that the CFTC is set to announce new policies on Monday, June 2. There are no details available, except that the Commission is not expected to enact sweeping changes recommended by me and others. Read the Times article here: 

This announcement does have market-moving potential if it is perceived as restricting the buying activity of commodity index traders. I cover the CFTC’s current and historical policies regarding CITs on pages 9 through 13 of my book, The Commitments of Traders Bible. To recap, the Commission has been most accommodating to these long-only commodity “investors” represented by the largest swap dealers. They have granted wholesale exemptions from speculative trading limits imposed on traditional commodity and hedge funds. Last fall they announced their intention to drop limits altogether for long-only commodity indexers. (This idea has since been put on hold.)

Continue reading

CFTC Announces Multiple Energy Market Initiatives

"The U.S. Commodity Futures Trading Commission (CFTC or Commission) today announced a number of initiatives to increase transparency of the energy futures markets. You can read their statement here: /generalpressreleases/2008 /pr5503-08.html , but don’t get too excited. I counted 5 occurrences of the word transparency, plus a "bringing greater sunshine to these markets" thrown in for good measure.

Bunk. The CFTC’s announcement provides not one new piece of public information or data about the petroleum markets. We are simply to take their word that they are increasing surveillance.

If the CFTC truly wishes to provide greater transparency, it would include petroleum markets in the COT-Supplemental weekly report, which breaks out the positions of commodity index players. These are the largest long players in the dozen markets that the CFTC does report, suggesting that they are a dominant player in oil as well.

The curtain has already been pulled on the Commission’s using the "commercial" category to camouflage the big swap dealers holdings. Why don’t they just come clean and report the totals.

These should also include the ICE crude oil contracts. After all, ICE is an American company, which by operating in London allows large traders a certain degree of anonymity not provided here. The CFTC allows ICE trading terminals in the US. They should report the large traders. Just my opinion…