US Regulators Trying to Cripple Foreign Commodity Markets

American regulators don't seem to understand that if you put limits on how much prices can move that you increase the riskiness of those investments. You make markets less efficient for many reasons. People are unable to make trades that they want to make. Traders who want to get in or out of an investment are stuck and can't do what they want. Anyway, here is the US CFTC trying to mess up the London commodities exchange.

A rift has opened between regulators in Washington and London after the Americans called for restrictions on oil trading in the City.

It is understood that the Financial Services Authority (FSA) is resisting calls by the US Commodity Futures Trading Commission (CFTC) to introduce daily price limits on some oil futures contracts.

The Americans also want to cap the amount of particular oil contracts that a trader can hold. The moves would limit the ability of a trading firm or individual trader to corner the market in one type of futures oil contract.

The price cap measure, which exists in American energy markets, has been devised to stem sharp rises in the price of a particular commodity. However, London regulators believe that the market should determine the price of an asset, rather than it being limited by a daily price cap. . . .



Post a Comment

<< Home