FACTBOX-US works to expand CFTC role, commods oversight

Fri Jul 10, 2009 7:01pm BST

referred to the Senate Agriculture Committee, would expand CFTC powers to prevent excessive speculation. Main points:

- CFTC would convene a working group of international regulators to develop uniform reporting and regulatory standards to protect energy futures from excessive speculation, manipulation or trading practices that pose systemic risk.

- CFTC would set position limits on energy and agricultural futures contracts. Exchanges must adopt and enforce position limits on contracts with a significant price-discovery role.

- CFTC would have oversight of any major commodity market disturbance that disrupts liquidity or price discovery.

- Index and swaps dealers would be required to provide detailed reports of their activities.

HOUSE BILL

Approved by the House Agriculture Committee, HR 977 requires clearing of OTC transactions, expands CFTC's powers to control speculation and gives CFTC criminal-prosecution power. [ID:nN20271292]

Its main points are:

- OTC transactions must be cleared through central clearinghouses, unless the CFTC grants an exemption.

- CFTC can suspend trading in "naked" credit default swaps related to securities barred from short-selling by the Securities and Exchange Commission.

- CFTC is required to set position limits for physically deliverable commodities for the spot month, each month and aggregate totals for all months.

- If needed to assure liquidity and unbiased price discovery in agricultural and energy futures markets, CFTC can impose position limits on look-alike OTC contracts. (Compiled by Charles Abbott, Christopher Doering, and Jasmin Melvin)

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