Reuters: Regulatory News: US regulator urges faster curbs on oil speculation

Reuters: Regulatory News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

US regulator urges faster curbs on oil speculation May 25th 2012, 17:19 Fri May 25, 2012 1:19pm EDT * CFTC's Chilton calls for quick action on position limits * Says limits needed, particularly for summer driving season * Rule slated to go live later this year * Pushes to move quickly on Volcker rule, cites JPMorgan By Alexandra Alper WASHINGTON, May 25 (Reuters) - A U.S. commodities regulator said he is "acutely dismayed" that his agency is not moving quickly to curb speculation in the oil markets, especially as summer driving season begins. Bart Chilton, a Democratic commissioner at the Commodity Futures Trading Commission, said in a letter to Congress that the agency's "position limits" rule is a critically important tool to address speculation that may drive up fuel prices. In October, the CFTC finalized the rule despite fierce opposition from industry groups who have challenged it in court. It is set to go into effect later this year. The rule aims to curb speculation in commodities markets by limiting the number of contracts any trader can hold in gold, oil and other commodities. "Particularly as we go into the summer driving season - a time when we usually see spikes in, for example, crude oil and gasoline prices -- I think it is extremely important that the CFTC has all the necessary arrows in our quiver to ensure that consumers pay fair prices," Chilton wrote in a letter to Democratic Senator Deborah Stabenow, chairman of the Agriculture Committee. Chilton's letter is a response to Stabenow's May 18 plea to regulators to hurry up and implement reforms included in the 2010 Dodd-Frank financial oversight law. One such reform was the position limits rule, which industry groups have challenged in court, saying they would irreparably harm the marketplace. The Securities Industry and Financial Markets Association (SIFMA) and the International Swaps and Derivatives Association (ISDA) filed their legal challenge in December. SIFMA and ISDA argue that the regulations would force their members to drastically alter their businesses, cost them tens of millions of dollars, and send customers fleeing. VOLCKER RULE Chilton also said JPMorgan Chase & Co's $2 billion-and-growing trading loss is a timely reminder for regulators to implement a tough Volcker rule against proprietary trading. He said the losses at the biggest U.S. bank weakens the argument of reform critics. "It undercuts the anti-regulatory naysayers who have been trying to de-fund and de-fang financial market reform rules," Chilton wrote. The Volcker rule was included in the Dodd-Frank law and seeks to ban banks that receive government backstops like deposit insurance from trading for their own gain. The rule, which was proposed by regulators in October and has yet to be finalized, is part of a broader bid to reduce risk and boost oversight of the financial system, which was severely shaken during the 2007-2009 financial crisis. It includes key exemptions to allow banks to hedge risk and make markets for customers seeking to trade securities. Questions have swirled over whether the current draft of the rule would have banned JPMorgan's trades which were part of a faulty hedging strategy had generated a loss that could reach $5 billion. The CFTC is hosting a roundtable on Thursday to discuss the exemptions. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions