Tuesday, October 18, 2011


Breaking...the CFTC meeting on position limits is currently in process.  We are providing LIVE COMMENTARY for those unable to watch the live video feed.

 This thread will be used to provide updates throughout the discussion.  Keep refreshing the full post for the most up-to-date commentary.

Swaps Regulation delayed to July 2012 to give CFTC further time to "define."

Dodd Frank Act getting shoved down the road again.

"We have to define the rules, to give them (market participants) something to comply with."

 Position limit ruling coming up......

CFTC taking their time to get to the real ruling of the day.  Hopefully they do not need to take a lunch break before starting the talk of the day.

Interestingly, the poll currently open to vote on the CFTC's decision is showing us silver bugs with a wide range of opinions on what the decision will be.

Trying to stay awake....that lunch break is becoming more and more likely.  Hopefully, they just don't decide to call it a day.

Brief 10 minute break now.  Position limit ruling (I'm sure after a lengthy debate) coming up after the break!

While your waiting, be sure to visit our sponsors.  All funds going towards a website remodel which will alter the silver website news landscape!!  

The break officially now at 18 minutes....let's get this started!

They are now back in the room.  No audio yet, but it's looking to being shortly.  Now at 23 minutes.  Almost everyone in their seats.

And here we go....

Chairman Gary Gensler to start off today's proceedings.  False alarm, after everyone was seated, Gary Gensler has now left the room.  No audio was ever reinstated, but you wonder if it was an important phone call from Blythe???  30 minutes after breaking for 10 minutes and still going.  Now practically everyone has left the room again. Must have needed a back office meeting off the mic before beginning discussion.

Video now cut-off and we get some elevator music to listen to.  Unbelievable...

Elevator music off has now been turned off, video restored, and almost everyone back in their positions.

Audio on and Gary Gensler has called the meeting back to order.  "A productive break" he calls it.

 Staff recommends approval of Federal position limits in 28 core positions, now as amended.  The core positions selected because of the open interest in these core positions.

Exemptions and final rules being listed.  Details of them will be need to be reviewed before a full celebration today if the commission approves the staff recommendation.

Chairman Gary Gensler's view...

"Position Limits
I support the final rulemaking to establish position limits for physical commodity derivatives. The CFTC does not set or regulate prices. Rather, the Commission is charged with a significant responsibility to ensure the fair, open and efficient functioning of derivatives markets. Our duty is to protect both market participants and the American public from fraud, manipulation and other abuses."

 Gary Gensler, if approved "No one will have control of over 25% of available deliverable supply."

Gary Gensler, "Will commercial hedgers be able to do what they have continued to do in the past?"

Staff- Yes, they will continue to be able to hedge.

Over 16,000 comments from the public regarding this issue!!! That a boy SilverDoc readers!

Chairman Dunn now on the mic, thanking everyone, etc, etc.

 Will we be actively monitoring the trading to determine it's impact on trading?

Staff- Yes we will.  Congress has mandated we do a study on excessive speculative trading.  If some market participant needs clarification, they will have the ability to seek the advice of staff and commissioner.  12 more staff members will be added for surveillance. 

Commissioner Summer now on the mic  (Silver now up 0.22% after being down ~4% earlier)

It'll be 2014 before we have updated numbers of deliverable supply which have not been updated since 2005.

Commisioner Summer, Exemption regime for a certain class of traders? (will need to go back and review this part of the video) 1:25p.m.

Summer, will need to look at to see if an exemption for a certain class of traders is deemed to be appropriate.  (this summary will need to be reviewed in detail)

Chilton on the mic!!

Conditional limits of 1 to 5 on natural gas and 1 to 1 on everything else.  In 12 months after collecting the data, we will go final on the swaps limits.  At that time we will re access the limits if the commission so desires.

4 criteria to look at with how we will establish position limits.
1. Guarding against excessive speculation
2.  Assure and detore manipulation and corners
3.  Ensure liquidity so hedgers can hedge
4.  Appropriate price discovery.

Staff- the rules does address those 4 criteria.

The last thing Commissioner Summers asked on what about all those things that we do not know.

Staff- we provided the bonafide verified exemptions which we know of.

Energy and ag taking up much of the discussion currently.

Chilton- The rule says we will reexamine every 2 years regarding position limits.  10 2/12 method he believes should be tighter when it comes to metals.  There is nothing in the rule which restricts us from reviewing this ruling sooner than 24 months, Correct?

Commission- that is correct.

Chilton off the Mic

Commision O'Malia now on the mic.
OMalia- what is the definition of excessive speculation.

Staff-   We do not have a working definition of excessive speculation.

OMalia- So how does the commission address excessive speculation.

Staff- The commission judgement regarding appropriate levels.  

A trader will not be able to reach a position limit and then go into another fund and aggregate more long positions. 

OMalia- Lengthy dissent going into federal registers (no surprise there)

Chilton- isn't there away to not put this off till 2014 regarding being able to have position limit on deliverable supply information?
I now will conclude this lengthy live commentary.  We will re-examine available documents and try to provide an accurate summary of today's proceedings. 

Chilton- Excessive speculation "pornographic"

It passes 3 to 2!!!!
It will be a couple of days for the amendment to be released.

* note all comments are abbreviated/generalized to the best of our ability to provide live commentary, much is left out due to the inability to appropriately quote exact phrases or words with live typing speeds.  Accurate clarification will also need to be determined through the release of the full transcripts and amendments.