A new plan to curb commodity speculation could prove to be far less rigorous than feared by markets, data provided by the world's largest futures exchange the CME Group Inc showed. Under a proposal by the Commodity Futures Trading Commission, the maximum position traders would be allowed to hold in derivatives could dramatically rise rather than tighten sharply, the numbers showed.
In the case of soybean oil contracts, the position limit for traders would be 10 times higher than under the present rules used by the CME, according to the numbers the CME provided to the regulatory agency. A copy of the document was viewed by Reuters. The CFTC plans to set a maximum of 25 percent of the deliverable supply of the underlying commodity. By comparison, the CME currently uses a 2.59 percent limit in one contract the CFTC plans to cover, that of soybean oil.
In other contracts the CME also sets caps below the 25 percent, and often far below it. The CFTC on Tuesday reintroduced its plan for position limits after a judge knocked down a version of the rule in a ruling last year. The proposal will put CFTC-imposed caps on positions in four energy contracts, five metal contracts and 10 agricultural contracts for the first time. At the moment, the CME imposes and certifies the limits itself, and it might still have some role to play once the new rules are in place, the source said. Only in nine agricultural contracts does the CFTC already impose limits.
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