CFTC mulls investment limits on commodities-linked products

The Commodity Futures Trading Commission is mulling setting position limits on physical commodities and is questioning whether swaps dealers should remain exempt from position limits.
JUL 30, 2009
By  Bloomberg
The Commodity Futures Trading Commission is mulling setting position limits on physical commodities and is questioning whether swaps dealers should remain exempt from position limits. Policy changes under debate at the CFTC may limit the amount of money investors put into commodities-linked products. Exchange traded notes are the primary way that retail investors get exposure to commodities. The commission yesterday concluded three days of hearings to address concerns over excessive speculation in futures markets epitomized by the run-up in oil prices in 2007 and 2008. “Most of the stink-eye is being cast in the direction of [commodities] index investors,” said Brad Zigler, Santa Rosa, Calif.-based managing editor of hardassetsinvestor.com, a website from Van Eck Associates Corp. of New York. “The [ETNs that invest] in commodities were blamed for all kinds of evil.” The CFTC is considering setting position limits on physical commodities and is questioning whether swaps dealers should remain exempt from position limits. “The commission is taking a close look” at eliminating that exemption, said CFTC Chairman Gary Gensler in a hearing today. The exemption for swaps dealers is crucial for funds that track the price of commodities such as grains, metals and energy. These products and exchange traded notes use swaps to get exposure, rather than futures. Because swaps dealers are exempt from position limits, sponsors of commodities funds don’t have to worry about hitting capacity constraints in the futures markets, Mr. Zigler said. Without swaps, product sponsors would have to use more types of futures contracts to meet investor demand. But in doing so, they wouldn’t track their underlying commodity index as well, he said.

Latest News

Advisor headcount down at Bank of America, Osaic and UBS so far in 2025, Wolfe Research analyst says
Advisor headcount down at Bank of America, Osaic and UBS so far in 2025, Wolfe Research analyst says

Counting advisor moves in and out of firms requires some art as well as science.

Carson Group's M&A head sees '10-to-15 year bull market' for RIAs
Carson Group's M&A head sees '10-to-15 year bull market' for RIAs

“I'm just a big believer that based on demographics alone, we are looking at a 10-to-15 year bull market in M&A in the RIA and independent wealth space,” said Michael Belluomini, SVP of M&A at Carson Group.

Nationwide finds Medicare myth on long-term care could cost Americans dearly
Nationwide finds Medicare myth on long-term care could cost Americans dearly

As a tsunami of retirees comes crashing in, three-fifths of those surveyed believe – wrongly – that the federal safety net will cover their LTC needs.

Fintech bytes: Orion, Altruist unveil new RIA-focused integrations
Fintech bytes: Orion, Altruist unveil new RIA-focused integrations

Orion's latest update, a partnership with 11th.com, focuses on an underserved area of compliance for advisors and wealth firms.

Raymond James reels in advisors managing $1B+ in Colorado
Raymond James reels in advisors managing $1B+ in Colorado

The latest arrivals, including a 10-advisor ensemble from Ameriprise, bolster the firm's independent contractor and employee advisor channels.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave