The Commodity Futures Trading
Commission's (CFTC’s) announcement that it plans
appeal a circuit court's decision to void the
position limits rule does not serve the interests of small
investors and is questionable from a procedural standpoint, US
lawyers have said.
But other markets observers disagreed, saying the regulators
are making a responsible move to curb out-of-control
speculation in the commodities markets.
The widely divergent reactions reflect divisions within the
financial sector over whether position limits unfairly limit
competition and liquidity and the extent of the CFTC's
Part of the controversy stems from a lack of clarity over
the meaning of excessive speculation, noted Dan Waldman, a
partner at Arnold & Porter in Washington.
"What is excessive, and if there is too much speculation,
will position limits be effective in reducing it? The question
is very difficult to test, it’s very difficult to
empirically demonstrate one way or...