The Commodity Futures Trading Commission is holding trading limit hearings to determine needed changes in reporting and classification of traders, especially in the energy markets, but agriculture "and other physically delivered commodities” also "deserve thoughtful review. CFTC chairman Gary Gensler says "It is incumbent upon the CFTC to ensure a fair and transparent price discovery process for all commodities.”
CFTC will be seeking views on applying position limits consistently across all markets and participants, including index traders and fund managers. If is also examining whether the "bona fide hedging transaction” exemption that funds currently operate under (allowing them much higher position limits) should continue to apply to entities using futures to hedge purely financial risks rather than the actual use of the commodity.
"This could have a huge impact if it means a lot of investor capital leaves the markets,” says Jerry Gulke of Strategic Marketing Services.
CFTC will also be breaking out and reporting positions for more specific market players in its weekly reports, so it will be more clear what various trading categories are doing.