Regulators Approve Speculation Limits for Energy Trading

The New England Fuel Institute and the Petroleum Marketers Association of America expressed “guarded optimism” over two important new commodity trading rules approved by the U.S. Commodity Futures Trading Commission (CFTC). The groups also expressed “concerns” on the specifics of the rules and certain implementation deadlines that will be tied to other, long-overdue commission actions.

NEFI President and CEO Michael C. Trunzo said the 1,200 NEFI and 8,000 PMAA members, which include gasoline marketers and home heating oil dealers, are hopeful the regulatory measures, which would establish speculative position limits on futures and swaps and clarify rules for derivative clearing organizations (DCOs), will result in more transparent, stable and competitive energy trading markets.

“We believe the position limits rule is the most significant rule yet to be taken up by the commission under last year’s Wall Street Reform bill,” Trunzo said.  “However, the delay in the rule implementation for the spot month contracts concerns us greatly, as there is no timeframe in place.” The commission announced that spot-month limits would not be imposed until 60 days after the term ‘swap” is defined, which as of right now has no date certain.

‘Further, we are fearful the limit levels themselves may be insufficient to adequately address excessive volatility and speculation