Publications: Notes at the Margin

The CFTC Fails Again on Position Limits (November 11, 2013)


On November 5, the Commodity Futures Trading Commission issued a proposed rule for setting position limits for passive investors and speculators in physical commodity markets, including energy. If approved, the rule will establish separate maximums for spot contracts and for all other contracts. The proposed regulation is open for comment for sixty days. It could become law as early as March 2014, assuming the courts do not intervene. In reality, though, the rule is already "taking effect" in some areas. In the critical distillate fuel market, it may have set the stage for dramatic price volatility during cold weather events. This week's report examines the potential impact of the CFTC action.


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