CFTC Position Limit Rule Places Financially Conflicted For-Profit Exchanges in Charge

WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) voted to approve a final rule Thursday to establish position limits on speculators’ bets in markets for certain commodities. Public Citizen previously called for the proposed rule to be withdrawn. Tyson Slocum, director of Public Citizen’s energy program, released the following statement:

“Congress mandated position limits in energy commodity markets as a centerpiece of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act to reign in the effects of rampant speculation that has harmed consumers. Position limits restrict the size of speculators’ bets in markets. Effective position limits reduce excessive levels of speculation and restrict the ability of traders to dominate a market. Households benefit from fairer prices reflecting actual supply and demand when strong position limits are employed.”

“But this rule fails consumers by placing the financially-conflicted for-profit exchanges in charge of determining exemptions. Federal law should be enforced by federal regulators, not corporations. The result will dilute the effectiveness of the position limits, exposing consumers to prices driven more by excessive speculation and market position concentration. The rule fails to consider lessons learned from recent turbulence in oil markets, when speculators’ actions drove prices below zero.”