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Speculators Bigger Players in Futures, Options Markets Than Thought

Congress and the CFTC has concluded the following:

The Congressional hearings held some weeks ago with the CFTC, Traders, University Professors, CME, ICE, etc. concluded that commodity exchanges are functioning properly.

ALL issues regarding margin requirements and investment limits by speculators, pensions, etc were VETTED. It is EXTREMELY unlikely there will be any HEAT put on the CFTC regarding additional regulations for exchanges. The Congressional Committees fully understand that margin requirements are to protect the exchange's risk and increasing requirements is a penalty/tax on commercial users, if set higher could have unintended consequences. Furthermore, changing speculator limits could also lead to problems.

Congress may bark at the CFTC but they are not going to BITE! Demanding exchange changes would be construed as "manipulation". All of Congress may not understand this - but the Committees that ultimately control agriculture, banking and finance absolutely understand this.

The testimony by the CFTC, and industry led to OTC trading as being the the big Boogy Monster! In fact the CFTC does not have any CLUE what is going on in OTC and could not give Congress a full and balanced report. CFTC also looks even worse since the commodity driven OTC market dwarfs the exchanges.

Congress understands further regulation of the exchanges will simply drive commodity transactions off the exchanges!

REGARDING OTC markets: Investment banks are trying to stall Congress by presenting a report called: "Containing Systemic Risk: The road to reform" www.crmpolicygroup.org...... .
The report points out the gravity of the OTC problems and promises to have them fixed in 2 years.

If CME/NMX deal happens the combined company will be able to take all the future OTC business and clear it immediately, providing a solution for the CFTC via transparency that will enable CFTC to report to Congress any day of the week what is going on.

CONGRESS HAS PROMISED a much larger CFTC budget! If CME/NMX happens, the increased CFTC resources will be used to rapidly transition OTC markets to the exchanges before investment banks create another taxpayer nightmare.

Speculators Bigger Players in Futures, Options Markets Than Thought

Samueic, Investment banks are "writing" commodity trades in the OTC market. NO ONE knows the amount of these off exchange contracts, however, the consensus seems to be that it's a significant multiple greater than the open interest of many commodities traded on an "exchange".

It is true - "the market is the market". However, a commodity is finite and money/currency is elastic, therefore money can "chase" an asset like a BULL in a china shop.

Without market transparency, i.e. Exchange cleared commodity trading, we simply "don't know what we don't know".

Speculation and free markets are what makes the world go round, both fear and greed. Manipulation is, however, is extremely destructive.

WHO IS BEHIND THE CURTAIN?

Speculators Bigger Players in Futures, Options Markets Than Thought

The non-transparent OTC commodity "market" dwarfs the exchanges, thus CFTC data in any way shape or form is misleading. Randomly querying the street for commodity information accomplishes nothing. Either commodity OTC markets become globally regulated under the CFTC and FSA, for example, and be required to "clear" through an exchange or the world risks another debacle rivaling subprime mortgages.

Financial Markets Have Leapfrogged CFTC.

Speculators Bigger Players in Futures, Options Markets Than Thought

Lindberg landed! What is the point of the article, haven't we known everything you mention for some time now?

The non-transparent OTC commodity "market" dwarfs the exchanges, thus CFTC data in any way shape or form is misleading. Randomly querying the street for commodity information accomplishes nothing. Either commodity OTC markets become globally regulated under the CFTC and FSA, for example, and be required to "clear" through an exchange or the world risks another debacle rivaling subprime mortgages.

Financial Markets Have Leapfrogged CFTC.