CFTC Vote on Trading Curbs Stalls

Wall Street Journal

By JEFFREY SPARSHOTT

December 17, 2010

WASHINGTON—U.S. regulators Thursday released a broad proposal that seeks to curb speculative trading in oil, metals and other commodities, but held off voting on it in another setback for efforts to put in place Congress’s Wall Street overhaul.

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CFTC Commissioner Bart Chilton asked how traders would be treated while the rules are being phased in.
The new rules would limit the size of the positions traders could take in the commodities. They respond in part to the spike in oil prices above $140 a barrel in the summer of 2008, which some critics blamed on regulators’ alleged failure to keep a tighter leash on speculation.

Top commodities regulator Gary Gensler has been pushing for position limits since last year, and the Dodd-Frank financial law passed in July authorizes his Commodity Futures Trading Commission to act on the issue.

The commission was nearly ready to do so Thursday, as the five-member body met with a draft of the rules before it. But Mr. Gensler had cold feet at the last moment after commissioners expressed concern, and put off a vote on a formal proposal, probably until January. After a public-comment period, a second vote would be needed to make the proposal final.

“I think it’s just appropriate to let this one ripen a little bit more,” Mr. Gensler said.

The delay highlighted concerns among some, including Republicans in Congress, that the CFTC isn’t taking enough care as it writes rules to transform commodities markets at breakneck speed to meet deadlines under the Dodd-Frank law.

The law gives broad new powers to the CFTC, sparking a rolling battle with Wall Street about issues that will shape markets for many years to come.

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