Commodity position limits could hurt entire market, experts warn

Proposals by the Commodity Futures Trading Commission (CFTC) - now also proposed in the recently approved Senate Bill on Finanicial Reform - to limit larger energy traders' positions, could drive down liquidity in energy markets across the board, causing problems for end-users, according to panellists at Energy Risk USA in Houston this week.

The results of limiting larger players’ positions could filter through to the rest of the market, including end-users who would be exempt from position limit rules proposed in January by the regulator, warned the energy market experts. Curbing large players' trading capabilities could push them out of the maket, or at least limit their interest in trading commodities, potentially depleting liquidity in less popular contracts and at quiet times for the market.

“As a large company in this business

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