Futures regulators to move quickly on position limits

By Christopher Doering

WASHINGTON (Reuters) - The Commodity Futures Trading Commission will move aggressively to rein in excessive speculation in the energy and metals markets by focusing largely on expanding its existing authority, and could have new regulations in place as soon as late October.

"We're looking at a pretty fast timeline," Bart Chilton, a CFTC Commissioner, said in an interview. "We're going to use our authority to the fullest extent possible. That doesn't mean we're going to be draconian or go too far."

In response to recent swings in oil prices, the CFTC announced this week it was considering clamping down on big market players by implementing position limits on all commodity futures contracts, focusing especially on energy and metals such as gold and silver.

The surprise announcement marked an abrupt departure for the once staid agency accused of taking a decidedly hands-off approach toward market regulation during the last two decades.

Chilton said that, while he couldn't ultimately predict what the CFTC will do, he would like to put out proposed rules in September, open them up to public comment and implement them by late October or November.

A slew of essential commodities -- including oil, wheat, copper and platinum -- surged last year on what some analysts said was excessive speculation and big money inflows. Crude oil shot above $147 a barrel, but like other commodity prices it deflated in the face of financial turmoil before rebounding.

Chilton defended the CFTC, saying the agency was not overreacting and having open, public meetings is the right thing to do.

"As long as we strike a reasonable balance with whatever sort of position that we end up instituting I don't think we'll drive folks from the market," he said.