CBT HEAD SAYS POSITION LIMITS HAVE NO PURPOSE
The Commodity Futures Trading
Commission, CFTC, should increase speculative position limits
on agricultural futures and do away with them for financial
futures, Chicago Board of Trade, CBT, chairman Karsten Mahlmann
said.
    Reporting to the CFTC Financial Products Advisory Committee
on the conclusions so far of an ad hoc CBT committee on
off-exchange trading issues, Mahlmann said, "We came to the
conclusion that no meaningful purpose is served by speculative
position limits."
    Position limits were supposed to prevent market
manipulation, but "I would submit that the Exchange and the
CFTC currently have all the tools necessary to prevent market
manipulation, whether an account is speculative or a hedge,"
the CBT chairman said.
    Malmann said the issue was of particular concern to the CBT
because the exchange faced increasing competition from foreign
markets, most of which did not have position limits.
    He said the ad hoc committee, which he also chairs, had
agreed to propose that the definition of hedging be expanded to
include risk management as well as risk reduction.
    Mahlmann said there was a danger that if a category of
trading was given a name such as "non-speculative hedging,"
insurance companies and pension funds might be held back from
engaging in it by the regulatory bodies that govern such
entities.
    The ad hoc committee proposed the establishment of
"prudence guidelines" and a list of market activities that fell
within those lines which might be lengthened in the future, he
said.
    The committee might also propose that CBT itself be allowed
to enforce position limits on agricultural futures, he added.
 Reuter
