Commodities Trading
The proposal by Commodity Futures Trading Commission head Gary Gensler could be a devasting blow to commodity traders like JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) which have counted on commodities trading as a major portion of their revenue, which in the case of Goldman Sachs is ten percent of their total revenue over the last several years.
For J.P. Morgan, they said in their recent letter to shareholders that the commodities trading business for the company has more than doubled since 2006.
Two important commodities sectors Gensler wants to put limits on are metals and oil contracts, allowing only double the volume of other commodity investors.
In other carnage Gensler wants to impose on the commodities market, he also is pushing to bring what he is calling more "transparency" to the over the counter trading markets by forcing investors to trade through a centralized, regulated clearinghouse.
Commodities Trading
Showing posts with label Commodity Futures Trading Commission. Show all posts
Showing posts with label Commodity Futures Trading Commission. Show all posts
Friday, April 2, 2010
Saturday, September 19, 2009
CME Offers Commodity Speculation Recommendation
In an effort to curb the influence of speculation in the commodity markets, CME Group offered up some of its own recommendations, among which is a stronger role for the Commodity Futures Trading Commission in reference to energy products in hard singel exchange positions, specifically those at exchanges that are regulated.
"We recognize that misperceptions can undermine confidence in well-functioning markets, which is why we support the CFTC's mission to provide regulatory certainty and to ensure that the energy markets can operate efficiently," said Terry Duffy, CME Group executive chairman. "Regulatory parity, however, must be given to all markets under the CFTC's jurisdiction."
But as CME's Donohue states, a number of studies have disproven the idea that commodity speculators have been the force behind driving commodity prices and energy prices up, and rather it's the supply and demand factors which drive prices, and not commodity speculators.
Donohue also, probably rightly, added, that if there are limits imposed on index funds, that will more than likely simply move the funds to invest in markets that are unregulated.
The government needs to simply stay out of attempting to be the central planner for the economy, it hasn't worked anywhere in the past, and it won't work now or in the future. Supply and demand drives commodity prices, not speculators.
"We recognize that misperceptions can undermine confidence in well-functioning markets, which is why we support the CFTC's mission to provide regulatory certainty and to ensure that the energy markets can operate efficiently," said Terry Duffy, CME Group executive chairman. "Regulatory parity, however, must be given to all markets under the CFTC's jurisdiction."
But as CME's Donohue states, a number of studies have disproven the idea that commodity speculators have been the force behind driving commodity prices and energy prices up, and rather it's the supply and demand factors which drive prices, and not commodity speculators.
Donohue also, probably rightly, added, that if there are limits imposed on index funds, that will more than likely simply move the funds to invest in markets that are unregulated.
The government needs to simply stay out of attempting to be the central planner for the economy, it hasn't worked anywhere in the past, and it won't work now or in the future. Supply and demand drives commodity prices, not speculators.
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