By Sarah N. Lynch, Christopher Doering and Roberta Rampton
WASHINGTON | Fri Sep 23, 2011-11: 36-BST
WASHINGTON (Reuters) - the US futures, the controls on several controversial parts of down on a plan to the commodity speculation, brought marking has to a modest victory for banks and merchants, who have made lobbying market increased control to limit.
A draft of the last rule of the commodity futures trading Commission, revised by Reuters late on Wednesday, claimed that the Dodd-Frank Wall Street overhaul law requires position limits-caps on the number of contracts, a single trader can - hold to excessive speculation in oil, grain, to prevent silver and other commodities.
But the CFTC areas of the plan changed the major banks such as Morgan Stanley (MS.)(N) and companies such as shell (RDSa.L), including the different coat of arms of separately managed positions one must include a single company and whether swaps and Futures positions can be compensated.
While sticking to one unpopular step by step, more data on the opaque 600 trillion dollar-OTC derivatives market collects plan limited in time as the Agency, the proposal regulators shows response to concerns of the financial industry and Republicans.
U.S. regulators are also wrestling with how much leeway to banks in hedge own risk under the so-called Volcker rules, Reuters reports...
"At least they hear with the industry, because people were concerned, that was not (Gary) Chairman Gensler," derivatives lawyer of told of Reuters.
The last rule would still hooks large passive index funds, which have made responsible critics, a massive run-up of in oil prices in 2008 by purchase and operation of futures contracts without regard for fundamental market data.
"they complete the risk-management exceptions for merchants that have for big passive media, door", informed a lawyer on the final draft said.
It would also have significant implications for the CME Group Inc (CME).(O) and IntercontinentalExchange (Ice.N). the two largest futures exchanges in the United States have fretted that strict boundaries could ride trade abroad.
Rising food and oil prices renewed this year political pressure on the Agency blamed by some for high prices on, against speculators.
"The draft final rule on position limits, as you currently written, extremely weak,", said Senator Bernie Sanders, a staunch critic of the CFTC.
"At a time when the American people experiencing extremely high oil and gas prices, this proposal will do little or nothing to lower prices, and it is not to eliminate, prevent or reduce excessive speculation in the Dodd-Frank Act", he said.
238 Page design, by 19 September, could be subject to changes. The five-member Commission and its staff were divided craft such as the rule. It is uncertain whether the CFTC on the rule are, to vote at its October meeting as before, according to which an official of the CFTC had been expected.
"It remains a work in progress... and our Commissioners not yet weighed yet," CFTC said spokesman Steve Adamske, who refused to comment on the details late Wednesday evening.
AGGREGATION POLICY CHANGES
An important change in the final draft relaxes some of the proposed requirements for some great resources on disposals deal players in entities, hedge and speculate.
The CFTC wanted to first add or total positions for entities, the common shares, regardless of whether they share trading strategies and control.
The Agency would now allow some players to aggregate all positions in various trading accounts if these accounts are controlled independently and the companies impose strong firewalls between their trading desks. The CFTC said it can improve promote market liquidity for bona-fide Hedger and efficient pricing.
"It would be good news, if you to relax, that it have apparently not much justification," Julie Winkler, managing director of CME, told Reuters at the edge of a seminar were in London.
The CFTC said that index funds would not be released. She would have managed to aggregate for positions in accounts or pools with identical trading strategies, including passive index funds.
The CFTC rule maintains its proposal of position limits to the "front place" month immediately, but phase in the limit values for non-place months after 12 months swap data collect.
Traders have argued, there is no evidence speculators inflate prices and say that prices could make volatile curbs by liquidity and companies on foreign markets to send. Own economists CFTC have not found a causal link between speculation and price volatility.
"These changes the general question - address not as this rule will impact liquidity and price discovery in these markets?" asked Frank Lucas, Chairman of the Agriculture Committee, which monitors the CFTC. "Not the data, simply have the CFTC to answer this question, and it should move not to the front until it works," he said.
CLASS BOUNDARIES MAKES IT EASY
Another important change, which the industry has searched for so-called "class limits" revolves.
First of all, the CFTC said it would apply the formula for Exchange-traded futures related over-the-counter swaps traded and over both these classes kombiniert-- d. h. Merchant would compensate a short position on the market of swaps with a long position in futures, not necessarily how many.
Banks objected, saying that to imitate merchant protection on OTC derivatives, the performance of exchange-traded futures. You had complained that the CFTC plan would create a very distorted view.
The CFTC said it would relax the class limits, so that traders, exceeding the futures can use opposing positions that fall under the swaps limit to reduce their overall. The CFTC added, it is once again the question.
"Although class limits an effective instrument to address the unnecessary market power on a particular segment of the derivatives market the Commission has noted, such limits should not without further data and analysis imposed can," the draft says.
The CFTC plan applies to 28 were, for most markets open interest and 2.5 percent based on a formula of 10 percent of the first 25,000 contracts after that.
Merchants who use, protect the market to price risks, in contrast to speculate market the CFTC is ready to expand the definition of exceptions to the limits as "bona fide hedgers"-claim can be moved.
The extended definition responds to dealers, who said that the original definition was so tight that some genuine hedging activities would be interpreted as speculation.
The CFTC kept a requirement that merchants limit values on the basis of "intraday" despite concerns from companies such as Barclays (BARC.)(L) of the difficulties in complying with and share information in real time.
(additional reporting by Eric Onstad in London;) (Editing by Jonathan Leff, Michael Urquhart, Bob burgdorfer and David Gregorio)
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