"Position limits fundamentally undermine the flexibility needed to ensure that commodity markets function effectively" (translation, we are majorly f'd and so is the world economy if anything resembling position limits in gold or silver happens anytime soon, got that Bart? )
Global regulators may need to tighten their rulebooks for commodity derivatives markets to ensure they operate transparently and free from abuse, the International Organization of Securities Commissions said.
The Group of 20 Nations commissioned IOSCO to produce guidelines for commodity supervision last year. The use of derivatives to manipulate the price of foodstuffs and other raw materials is of “notable concern,” according to a European Union impact study on possible rules, as it can lead to “distorted” prices that harm the real economy.
Strict position limits would be overkill, Blythe Masters, head of global commodities at JPMorgan Chase & Co., wrote in an article distributed at the Eurofi financial forum in Wroclaw, Poland, today. She called instead for position “management” as a more effective solution.
Limits “would be a move in the wrong direction,” Masters said. “Position limits fundamentally undermine the flexibility needed to ensure that commodity markets function effectively.”
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