Tue, Apr 27, 2010
Organization Says Excessive Speculation Distorts Oil Markets,
Kills Jobs
The Air Transport Association (ATA) last week submitted public
comments to the Commodity Futures Trading Commission (CFTC) in
support of the proposed rule on speculative position limits for
certain energy contracts. The CFTC rule proposes to establish
speculative position limits and increase market transparency and
reporting requirements. These measures will provide regulatory
support for a return of supply-and-demand fundamentals in the
marketplace. The ATA contends that these reforms will help address
the high fuel prices and volatility seen by consumers in recent
years. The three-month public comment for this rule (75 FR 4144)
expires on April 26, 2010.
A strong CFTC rule in combination with congressional passage of
the Wall Street Transparency and Accountability Act of 2010, will
close loopholes, increase transparency and limit speculative
trading in the commodity futures markets.
In its comments, the ATA said that:
- The proposed speculative position limits should be
strengthened
- Excessive speculation distorts oil markets, causing higher
prices and increased volatility.
- Excessive speculation has contributed to lost jobs, reduced
service and industry losses.
- Evidence demonstrates that speculative trading, volatility and
high prices are linked.
- Index funds and other passive investors should be subject to
position limits.
- Exemptions should be limited and apply narrowly to true end
users.
"Oil speculators exploit gaps in the regulatory structure to
drive up oil prices out of sheer greed," said ATA President and CEO
James C. May (above). "The proposed CFTC rule, particularly if
strengthened, would limit excessive speculation and the ability of
investment banks and large financial interests to dominate oil
markets at the expense of consumers."
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