Commodity panel moves to rein in speculative trading
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WASHINGTON -- Big financial speculators will be limited in their ability to manipulate the price of oil and 27 other commodities under a set of new rules adopted Tuesday by the Commodity Futures Trading Commission.
Yet even as the CFTC approved the new rules to rein in excessive speculation on a 3-2 party-line vote -- with Democratic commissioners in the majority -- some financial-market analysts and lawmakers in Congress complained that the new rules fall short of what's needed to curb speculation effectively.
"This rule begins the process of doing that, but much more needs to be done," Dennis Kelleher, president of the advocacy group Better Markets, said in a statement. "Speculators' casino mentality brings them big profits, but hurts everyone else from the kitchen table to the gas pump."
In a series of investigative reports in the past three years, McClatchy Newspapers has shown that financial speculation is driving up prices of commodities, including oil, coffee and cotton, and that price volatility in those goods is not resulting simply from ordinary market forces of supply and demand among producers and consumers.
The CFTC regulates trading of contracts for future delivery of oil, wheat, corn and a host of other commodities. In those markets, financial speculators far outnumber both the producers and actual users of the products, who are looking to those markets to hedge against price shifts.
Congressional Democrats and the Obama administration sought to rein in speculation in futures markets, which originally were designed to help buyers and sellers of a commodity such as oil to discover a mutually acceptable price for future delivery of the product.
The rules, which aim to impose a market-wide ceiling on speculative trading, were mandated under the broad revamp of financial regulation in July 2010, known as the Dodd-Frank Act.
First Published October 19, 2011 12:00 am
