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CFTC wants position limits to reflect newer data

  • Märkte: Crude oil, Natural gas
  • 19.10.16

The US Commodity Futures Trading Commission (CFTC) wants to ensure that position limits it is developing for crude, natural gas and gasoline contracts are not based on outdated data, agency chairman Timothy Massad said today.

The CFTC is working to make sure its forthcoming position limits are based on the "most current available data on deliverable supply," Massad said today. That could be positive news for oil and gas groups that have worried the agency might instead use data they say has not been updated since the mid-1990s, when US gas and crude production levels were about 30pc less than today.

Deliverable supply refers to the amount of commodity that meets the specifications of a futures contract. The CFTC plans to use the metric as tries to finalize position limits for 28 energy, metal and agricultural contracts, where an increase in deliverable supply could result in more relaxed position limits. The CFTC wants to finalize its position limits rule by the end of the year.

Industry groups have argued that using older data on deliverable supply could result in position limits that are too stringent. They say the shale drilling boom and recent infrastructure developments have increased the size of the markets that underlie those same commodity contracts. This would mean the CFTC could position limits at higher levels without the risk of a single market participant controlling too much of the market.

But deciding where to set deliverable supply has been difficult, industry officials say, because of the technical complexity of determining how much of a commodity could physically be delivered to the location specified by a futures contract. Oil and gas officials as a result have met with CFTC staff to discuss the details of the markets in which they are involved.

The Natural Gas Supply Association, a trade group, said it was cautiously optimistic about the developments related to deliverable supply. The group's government affairs senior vice president Jenny Fordham said the "unprecedented" changes in US gas markets over the past decade necessitate changes to deliverable supply to reflect new delivery capacity and flexibility.

"Without laying the right foundation by starting with an appropriate deliverable supply calculation, it would be impossible to have a reasonable discussion about position limits," she said today.

Massad spoke at the Futures Industry Association's meeting in Chicago. He also said his staff has had "extensive discussions" with exchanges about deliverable supply, though he did not name which exchanges were involved.

Exchange operators ICE and CME did not respond for comment on whether they had participated in those discussions.


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