I 

112TH CONGRESS 

2D SESSION H. R. 5186 

To prevent excessive speculation in energy commodities, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 27, 2012 

Mr. MARKEY (for himself, Mr. FRANK of Massachusetts, Ms. DELAURO, Ms. 

EDWARDS, Mr. LARSON of Connecticut, Mr. MORAN, Mr. PASCRELL, and 

Mr. SCOTT of Virginia) introduced the following bill; which was referred 

to the Committee on Agriculture 

A BILL 

To prevent excessive speculation in energy commodities, and 

for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Halt Index Trading 

5 of Energy Commodities (HITEC) Act’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 

8 (1) Investment in our commodities markets has 

9 grown dramatically in recent years. While the volVerDate Mar 15 2010 03:24 May 03, 2012 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5186.IH H5186

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1 ume of futures contracts traded in the United States 

2 was only 630,000,000 in 1998, that volume 

3 ballooned to over 3,200,000,000 in 2007. 

4 (2) According to testimony provided to the 

5 Committee on Natural Resources of the House of 

6 Representatives, this growth in volume has been ac7 companied by a huge increase in the percentage of 

8 commodity futures contracts owned by speculators. 

9 While physical hedgers used to account for 70 per10 cent of futures contracts and speculators accounted 

11 for just 30 percent, those numbers have reversed, 

12 and speculators now possess 70 percent of all open 

13 commodity futures contracts. 

14 (3) Almost all of this increase in speculation 

15 has been caused by a surge in trading of commodity 

16 index funds. 

17 (4) Commodity index trading is investing in 

18 funds or other financial products which are indexed 

19 to changes in value of various commodities traded on 

20 commodity markets in the United States. These 

21 funds can be tied to a basket of different commod22 ities or just to a single commodity. 

23 (5) Investment in funds tied to these indexes 

24 has grown enormously in the last 2 decades. Accord25 ing to the Commodity Futures Trading Commission, 


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1 a partial tally of net long positions in United States 

2 markets in these indexes reached to over 

3 $160,000,000,000 in February 2012, and net long 

4 positions in West Texas Intermediate Crude Oil 

5 reached to over $39,000,000,000. Many of the inves6 tors in these funds are institutional clients, such as 

7 pension funds and universities. 

8 (6) The vast majority of investors in commodity 

9 index funds do not use the commodities involved. 

10 These investors are only interested in profiting from 

11 a rise in value of the commodities and must sell 

12 their interests in the commodities before the futures 

13 contracts they own close. This practice, known as 

14 rolling, causes hundreds of billions of dollars of addi15 tional trading to flow through our commodities mar16 kets each month, artificially increasing the volatility 

17 of our markets and driving up prices for many of 

18 our commodities, including crude oil. 

19 (7) Because our commodities markets are tied 

20 to the actual retail prices of our commodities, the 

21 artificial and excessive levels of speculation have sig22 nificantly increased the retail prices our citizens pay 

23 for their commodities. In the case of oil, excessive 

24 speculation may have added nearly $1.00 to the per 

25 gallon price of gasoline. 


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1 (8) As sharp increases in energy costs reduce 

2 economic growth, these commodity index funds are 

3 creating a weight on the overall economy, threat4 ening to delay our Nation’s full recovery from the 

5 2008 financial crisis and recession. 

6 (9) Thus, commodity index funds hurt economic 

7 growth and consumer’s wallets. 

8 (10) In the Dodd-Frank Wall Street Reform 

9 Act, Congress ordered the Commodity Futures 

10 Trading Commission to limit the number of posi11 tions that a person or a class of persons may hold 

12 in the commodities markets. Congress has taken ini13 tial steps to set boundaries on commodity trading, 

14 but more must be done to address the role of com15 modity index funds in the energy commodity mar16 kets. 

17 (11) Because oil prices have been at elevated 

18 levels for much of the last year, Congress believes 

19 the situation is an emergency and warrants imme20 diate action to ban commodity index trading in en21 ergy commodities. 

22 SEC. 3. PREVENTION OF EXCESSIVE SPECULATION IN EN23 ERGY COMMODITIES. 

24 Section 4c of the Commodity Exchange Act (7 U.S.C. 

25 6c) is amended by adding at the end the following: 


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1 ‘‘(h)(1)(A) It shall be unlawful for a commodity index 

2 fund to engage in a transaction involving an energy com3 modity if any person investing in the fund is an excluded 

4 investor. 

5 ‘‘(B) It shall be unlawful for an energy commodity 

6 index fund to accept an investment from a person who 

7 is an excluded investor. 

8 ‘‘(C) Beginning 2 years after the date of the enact9 ment of this subsection, it shall be unlawful for a com10 modity index fund to hold an investment in an energy 

11 commodity if any person investing in the fund is an ex12 cluded investor. 

13 ‘‘(2) In this subsection: 

14 ‘‘(A) The term ‘commodity index fund’ means a 

15 fund that consists principally of swaps involving, or 

16 contracts of sale for future delivery of, more than 1 

17 commodity, the value or level of which is based, in 

18 whole or in part, on the value or level of more than 

19 1 commodity, and that transfers, as between the 

20 parties to the transaction, in whole or in part, the 

21 financial risk associated with a future change in any 

22 such value or level. 

23 ‘‘(B) The term ‘energy commodity index fund’ 

24 means a commodity index fund that consists prinVerDate Mar 15 2010 03:24 May 03, 2012 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5186.IH H5186

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1 cipally of swaps involving, or contracts of sale for fu2 ture delivery of, more than 1 energy commodity. 

3 ‘‘(C) The term ‘energy commodity’ means crude 

4 oil, natural gas, or any other product (other than an 

5 agricultural commodity) that is produced or refined, 

6 in whole or in part, from crude oil or natural gas 

7 and that may be used as fuel for a power source of 

8 any kind, but does not include electricity. 

9 ‘‘(D) The term ‘excluded investor’ means a per10 son with respect to whom there is no position in at 

11 least 1 energy commodity which, if held by the per12 son, would be considered a bona fide hedging posi13 tion (within the meaning of section 4a(c)(1)). 

14 ‘‘(E) The term ‘swap’ shall have the meaning 

15 the term would have if the provisions of title VII of 

16 the Dodd-Frank Wall Street Reform and Consumer 

17 Protection Act defining, and authorizing further def18 inition of, the term were in effect.’’. 

Æ 


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