July 14, 2016
CFTC Should Abandon Proposal to Give For-Profit Corporations Regulatory Authority Over Markets
Dodd-Frank Rule Is Designed to Protect Consumers From Energy Price Spikes
WASHINGTON, D.C. – A proposal to give for-profit corporations some regulatory authority over markets should be abandoned, Public Citizen has told the U.S. Commodity Futures Trading Commission (CFTC). The proposal is related to a “position limits” rule required by the Dodd-Frank Act. The rule is designed to protect consumers and limit excessive speculation by preventing a small group of traders from dominating the market.
The CFTC proposal would give exchanges authority to determine hedge exemptions from federal position limits. This would place the clearinghouse corporations in a conflict of interest, Public Citizen said late Wednesday in comments to the CFTC. Such a move also would subvert the CFTC to a lessor, after-the-fact regulator of position limits. The comments came from Public Citizen’s Energy Program Director, Tyson Slocum, who serves as one of nine members of the CFTC’s Energy and Environmental Markets Advisory Committee.
“If the exchanges are to be involved at all in granting hedge exemptions to position limits, it should be limited to an advisory capacity, with both the initial, and final, hedge exemption determinations made by CFTC staff,” Slocum wrote. “Public Citizen calls on the CFTC to abandon allowing for-profit, corporate exchanges from having any role in granting hedge exemptions to federal position limits other than in an advisory capacity. The CFTC alone must be the agency determining hedge exemptions for federal position limits.”