The CFTC should ban all investors from making passive investments in commodity derivatives markets, Michael W. Masters, managing member and portfolio manager at hedge fund Masters Capital Management, testified before the commission.
“Passive investment provides no benefits to the markets while it exacts a heavy toll” in driving up commodity prices, Mr. Masters said today in prepared his testimony at the Commodity Futures Trading Commission hearing.He also urged the Commodity Futures Trading Commission to crack down on speculation in energy commodities by adopting aggregate position limits that would apply across all trading venues.
“The cure for excessive speculation is aggregate speculative position limits,” Mr. Masters said.
In an opening statement at today's hearing, Gary Gensler, CFTC chairman, said he believed the agency had to seriously consider position limits for energy markets.
“Position limits should enhance liquidity by promoting more market participants rather than having one party that has so much concentration so as to decrease liquidity,” Mr. Gensler said in prepared remarks.
He also said that major traders have advised the CFTC that position limits would be beneficial.
“The signal that the exchanges and the traders sent ... is that they support position limits to protect the markets and the American public,” Mr. Gensler said.
Public comment on whether the CFTC should adopt the limits will be accepted until Aug. 12.