June 17, 2008 / 5:27 PM / 9 years ago

FACTBOX: Oil futures regulation in the United States

(Reuters) - The London-based ICE Futures Europe futures exchange will adopt the same rules on position limits that New York’s NYMEX NMX.N exchange has for West Texas Intermediate crude oil futures trading, the head of the U.S. Commodity Futures Trading Commission said on Tuesday.

The move comes as U.S. regulators have come under pressure from politicians to boost oversight of futures trading as oil prices have surged to nearly $140 a barrel this year.

ICE Futures Europe, which is owned by Atlanta’s Intercontinental Exchange Inc (ICE.N), has rejected claims made by NYMEX that it has captured a large chunk of trading in the WTI futures contract due to less restrictive regulation in Britain.

The following summarizes how the oil futures trading on the NYMEX is currently regulated:


-The Commodity Futures Trading Commission, a U.S. federal regulator, tracks the positions and potential market power of large traders. For the U.S. crude oil futures market, all positions of 350 contracts or more must be reported to the CFTC on a daily basis.

-Unlike in other commodity markets, the CFTC does not limit the size of individual traders’ positions in oil, since NYMEX itself limits the size of traders’ positions.


-The New York Mercantile Exchange (NYMEX) imposes limits on traders’ positions and also collects daily reports on large positions.

-NYMEX Clearing Member firms are limited to a risk exposure from customer accounts and its own trading account of no more than 250 percent of the firm’s capital. For rule-making purposes, the maximum capital a clearing firm can have is $1 billion.

-No trader or firm is permitted to hold a net long or net short position greater than 3,000 contracts in the front-month contract.

-Ordinary members of the exchange are limited to holding a maximum net long or net short position of 20,000 contracts. No more than 10,000 contracts can be owned in any one month, except the front month. A clearing member can obtain permission from the NYMEX to exceed these limits upon demonstration of a hedging need or swaps exposure.

-Any firm or trader that exceeds the limits set for member firms above must report their position to NYMEX and disclose their trading strategy and hedging requirements. The exchange has the right to limit further purchases of securities by large traders. The exchange can also force the sale of securities if a trader fails to supply strategy information.

(Source: CTFC, NYMEX rulebook)

Reporting by Robert Campbell; editing by Jim Marshall

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below