Levin Statement on CFTC Revised Position Limits Rule

Tuesday, November 5, 2013

WASHINGTON – Sen. Carl Levin, D-Mich.,  chairman of the Senate Permanent Subcommittee on Investigations, said today that the revised position limits rule approved by the Commodity Futures Trading Commission “will help fill a big hole in the needed protections” against trading abuses.  Levin’s subcommittee has held hearings and issued multiple reports on excessive speculation in U.S. commodity markets.  Levin also led the filing of legal briefs by 19 senators establishing that Congress mandated position limits to prevent trading abuses.  Levin said the following:

“American families and businesses are still facing roller-coaster gasoline, oil, electricity, and food prices.  Three years ago, the Dodd-Frank Act called for mandatory trading limits on energy, metal, and agriculture speculators to restrict the size of their commodity holdings and curb massive speculative trading by banks and other financial firms.  Businesses that actually use commodities – farmers, manufacturers, airlines – are exempted from that requirement and continue to operate free of position limits.

“Stronger trading limits to stop excessive speculation and price manipulation are critical to protecting commodity prices from trading abuses.  Six years ago, in 2007, my Subcommittee showed how a single hedge fund, known as Amaranth, sometimes held as much as 75% of the natural gas futures in a single month and distorted market prices.  In 2009, my Subcommittee showed how some commodity index traders enjoying position limit exemptions amassed 7 times more than the official limit on wheat holdings.  In 2011, we showed how tens of billions of dollars in speculative money are bombarding U.S. commodity markets.  The result is excessive speculation, price manipulation, and unfair prices hitting American families and businesses.

“The revised rule is the CFTC’s second effort to fulfill the Dodd-Frank position limits mandate to stop trading abuses, and it will help fill a big hole in the needed protections against such abuses.  CFTC Chairman Gary Gensler and Commissioner Bart Chilton deserve credit for finally pushing the revised rule over the finish line.  Despite massive pressure from Wall Street against speculative limits, the underfunded, understaffed CFTC has struck another blow on behalf of consumers, business, and fairer commodity prices.”