It seems that significant changes to the Commodity Futures Trading Commission (CFTC) are just around the corner, if and when reauthorization of the regulatory body comes up for a vote someday.
On Wednesday, the CFTC’s Acting Chairman Walter Lukken testified before the Subcommittee on General Farm Commodities and Risk, (the title of which alone is testimony for the need to change), and proposed that the Commodity Exchange Act be amended such that the CFTC has four new authorities:
1. Require large trader position reporting
2. Require exempt commercial markets (ECM) to adopt position limits or accountability levels.
3. Require ECMs to exercise self-regulatory responsibility over that contract to avoid manipulation; and
4. Provide the ECM and the CFTC with emergency authority over that contract.
In press statements, the Nymex and the Intercontinental Exchange both came out in support of changes to the current regime, and as they are potentially the most affected by the changes, that is all well and good. The question is now and will be, should this apply to all ECMs all the time? Lukken addressed that issue by adding that “price discovery is the key determinant to Commission regulation and oversight.” But is this the targeted approach that the ICE and Nymex intend to support? Maybe, maybe not.
