Indiana Grain Company, LLC

Posted: 10/19/11

By: tomgrisafi

On Tuesday, a divided Commodity Futures Trading Commission approved new rules limiting trading in the commodities market, seeking to curb excessive speculation and potential manipulation.

The newly established laws of the land substantially restrict the number of commodity contracts that any investor can hold in agriculture, energy or metals contracts.

"Position limits have been the subject of heated debate in Washington in recent years, as backers of such caps have complained that large financial investors taking huge stakes in commodity futures and options contracts have driven up the price of heating oil, gasoline, diesel and jet fuel," MarketWatch reported in its coverage of the decision.

“A position-limits regime in the commodity futures and swaps markets is a critical component of comprehensive regulatory reform of the derivatives markets,” said CFTC Chairman Gary Gensler.

The rule allows a single trader to hold spot month positions equal to 25% of the estimated physical, deliverable supply of a given commodity, such as crude, gasoline or heating oil.

But have no fear... you probably won't be impacted by the change.

Approximately 84 traders in agricultural-futures contracts, 85 traders in energy contracts and 12 traders in precious-metals contracts will be affected by the proposed restrictions, Market Watch reports.

Source: Market Watch

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