WASHINGTON, D.C.—Stephen Hall, Legal Director and Securities Specialist, released the following statement on a letter Better Markets filed with the Commodities Futures Trading Commission urging the agency to revisit and repair its rule on position limits:

“The CFTC’s position limits rule, issued in January this year, was far too weak and the agency must move quickly to shore it up. Otherwise, excessive speculation will continue to corrupt the risk management and price discovery functions that the derivatives market were always intended to serve.  If the rule isn’t strengthened, businesses and consumers will continue to suffer, in effect paying a ‘speculation tax’ on essential goods, from groceries to gas.

“Speculators have become a dominant force in these markets, and they cause distortions and volatility in the prices of derivatives on physical commodities.  That in turn directly impacts the prices of critical agricultural products, energy resources, and metals used in the production of virtually all goods and services across the U.S. economy. Ultimately, those distortions hurt working families who are forced to pay inflated prices.

“As we explain in our letter, the rule set position limits that are far too high, created large loopholes, and established legal hurdles that Congress never intended in the Dodd-Frank Act, all of which does little to curb excessive speculation. The CFTC must now put meaningful limits in place, scale back the amount of speculation in these markets, and protect their fundamental risk management and price discovery functions.

“We appreciate Acting Chair Behnam’s dissent from the Commission’s ill-considered framework and urge him to lead the agency forward to ensure that it takes the necessary steps to remedy the deficiencies we identify in our letter and end the ‘speculation tax’ on Main Street families. This should be among the CFTC’s highest priorities.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.