The Commodity Futures Trading Commission (CFTC) voted 3 to 2 today to limit trading in oil, wheat, gold and other commodities after a boom in raw-materials speculation, record- high prices and years of debate and delay.
The rule limits the number of contracts a single firm can hold and it limits traders to 25 percent of deliverable supply in the month nearest to delivery. The spot-month limits apply separately to physically settled and cash-settled contracts. Deliverable supply will be determined by the CFTC in conjunction with the exchanges.
The rule has been among the most controversial provisions of the Dodd-Frank Financial Reform Act which gave the CFTC the authority to limit trading in over-the-counter commodity swaps as well as exchange-traded futures. Chairman Gary Gensler stated that the limitation would prevent excessive speculation that may burden interstate commerce.
