CFTC May Ease Dodd-Frank Commodity Speculation Limits

UPDATE: The CFTC has announced that it has raised the ownership threshold from 10% to 50%. Read more here. The U.S. Commodity Futures Commission is considering changes to rules limiting speculation in commodities such as oil and natural gas, according to people with knowledge of the matter. The rules put a limit on the number of contracts a trader can have. The change being considered by the CFTC concerns provisions that...

An E.U. lawmaker announced her support for shortening the time to settle trades to two days, improving the chances of a common transatlantic approach to curbing settlement risk in securities trading. At present, the industry standard is T+3, or three days after the trade. The new proposal would change that to T+2. On Thursday UK MEP Kay Swinburne said she would back T+2, allaying fears that she would push for a stricter...

Following JP Morgan’s announcement last week that it had lost $2 billion in a hedge trade gone awry, the U.S. House Agriculture Committee decided to postpone a May 17 meeting on legislation that would limit the international reach of some Dodd-Frank provisions. “As always, Washington has a tendency to overreact. While the news of JPMorgan’s trading loss is unfortunate, the bipartisan legislation the committee was...

Amid the barrage of analysis of JPMorgan’s announcement last week of a $2 billion trading loss by the firm’s Chief Investment Office, one factor in its implications is how hedging should be defined. By definition, it is impossible for a perfect hedge to result in either a loss or a gain. Real world hedging, however, is not as clear-cut as it is in textbook examples. When it is done through synthetic positions in...

Despite Jamie Dimon’s efforts to explain away a $2 billion trading loss, proponents of the Dodd-Frank Act were quick to pounce on the J.P. Morgan CEO, a leader of industry efforts to reverse key provisions of the law. “The argument that financial institutions do not need the new rules to help them avoid the irresponsible actions that led to the crisis of 2008 is at least $2 billion harder to make today,” said...

The Commodity Futures Trading Commission unanimously decided Thursday to allow exchanges to begin listing swaps contracts, while extending relief on other rules governing the derivatives market until December 31. Swaps, traditionally traded over-the-counter (OTC) and therefore notoriously opaque, will be transformed by the change. “When markets are open and transparent, prices are more competitive, markets are more...

Representative Michael Grimm (R-N.Y.), together with other lawmakers and former MF Global customers, will officially call tomorrow for an independent counsel to take over the ongoing investigation into the causes of the MF Global debacle. Last week, Grimm circulated a letter calling on Attorney General Eric Holder to appoint an independent counsel, citing former MF Global Chairman and CEO Jon Corzine’s political...