The benefits of a Commodity Futures Trading Commission
rule to finalise speculative position limits for 28 types
of commodity futures and swaps contracts are unclear. But the
cost to hedge funds is not.
Costs will be especially high for those hedgers who exceed a
non-spot-month position visibility level in energy and metal
contracts subject to the position limits rule. These hedgers
will be required to file quarterly reports on their physical
and swaps portfolios to the CFTC. The position visibility level
threshold has not been determined.
Cadwalader Wickersham & Taft partner Paul Pantano said
the position limits increase all the administrative burdens on
Hedgers will have to comply with many additional reporting
requirements, collecting and bucketing the required information
is going to be more time consuming than government realizes,
Pantano said. Additionally, if liquidity in the marketplace
decreases, its going to be more...