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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5186 Introduced in House (IH)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Halt Index Trading of Energy 
Commodities (HITEC) Act''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Investment in our commodities markets has grown 
        dramatically in recent years. While the volume of futures 
        contracts traded in the United States was only 630,000,000 in 
        1998, that volume ballooned to over 3,200,000,000 in 2007.
            (2) According to testimony provided to the Committee on 
        Natural Resources of the House of Representatives, this growth 
        in volume has been accompanied by a huge increase in the 
        percentage of commodity futures contracts owned by speculators. 
        While physical hedgers used to account for 70 percent of 
        futures contracts and speculators accounted for just 30 
        percent, those numbers have reversed, and speculators now 
        possess 70 percent of all open commodity futures contracts.
            (3) Almost all of this increase in speculation has been 
        caused by a surge in trading of commodity index funds.
            (4) Commodity index trading is investing in funds or other 
        financial products which are indexed to changes in value of 
        various commodities traded on commodity markets in the United 
        States. These funds can be tied to a basket of different 
        commodities or just to a single commodity.
            (5) Investment in funds tied to these indexes has grown 
        enormously in the last 2 decades. According to the Commodity 
        Futures Trading Commission, a partial tally of net long 
        positions in United States markets in these indexes reached to 
        over $160,000,000,000 in February 2012, and net long positions 
        in West Texas Intermediate Crude Oil reached to over 
        $39,000,000,000. Many of the investors in these funds are 
        institutional clients, such as pension funds and universities.
            (6) The vast majority of investors in commodity index funds 
        do not use the commodities involved. These investors are only 
        interested in profiting from a rise in value of the commodities 
        and must sell their interests in the commodities before the 
        futures contracts they own close. This practice, known as 
        rolling, causes hundreds of billions of dollars of additional 
        trading to flow through our commodities markets each month, 
        artificially increasing the volatility of our markets and 
        driving up prices for many of our commodities, including crude 
        oil.
            (7) Because our commodities markets are tied to the actual 
        retail prices of our commodities, the artificial and excessive 
        levels of speculation have significantly increased the retail 
        prices our citizens pay for their commodities. In the case of 
        oil, excessive speculation may have added nearly $1.00 to the 
        per gallon price of gasoline.
            (8) As sharp increases in energy costs reduce economic 
        growth, these commodity index funds are creating a weight on 
        the overall economy, threatening to delay our Nation's full 
        recovery from the 2008 financial crisis and recession.
            (9) Thus, commodity index funds hurt economic growth and 
        consumer's wallets.
            (10) In the Dodd-Frank Wall Street Reform Act, Congress 
        ordered the Commodity Futures Trading Commission to limit the 
        number of positions that a person or a class of persons may 
        hold in the commodities markets. Congress has taken initial 
        steps to set boundaries on commodity trading, but more must be 
        done to address the role of commodity index funds in the energy 
        commodity markets.
            (11) Because oil prices have been at elevated levels for 
        much of the last year, Congress believes the situation is an 
        emergency and warrants immediate action to ban commodity index 
        trading in energy commodities.

SEC. 3. PREVENTION OF EXCESSIVE SPECULATION IN ENERGY COMMODITIES.

    Section 4c of the Commodity Exchange Act (7 U.S.C. 6c) is amended 
by adding at the end the following:
    ``(h)(1)(A) It shall be unlawful for a commodity index fund to 
engage in a transaction involving an energy commodity if any person 
investing in the fund is an excluded investor.
    ``(B) It shall be unlawful for an energy commodity index fund to 
accept an investment from a person who is an excluded investor.
    ``(C) Beginning 2 years after the date of the enactment of this 
subsection, it shall be unlawful for a commodity index fund to hold an 
investment in an energy commodity if any person investing in the fund 
is an excluded investor.
    ``(2) In this subsection:
            ``(A) The term `commodity index fund' means a fund that 
        consists principally of swaps involving, or contracts of sale 
        for future delivery of, more than 1 commodity, the value or 
        level of which is based, in whole or in part, on the value or 
        level of more than 1 commodity, and that transfers, as between 
        the parties to the transaction, in whole or in part, the 
        financial risk associated with a future change in any such 
        value or level.
            ``(B) The term `energy commodity index fund' means a 
        commodity index fund that consists principally of swaps 
        involving, or contracts of sale for future delivery of, more 
        than 1 energy commodity.
            ``(C) The term `energy commodity' means crude oil, natural 
        gas, or any other product (other than an agricultural 
        commodity) that is produced or refined, in whole or in part, 
        from crude oil or natural gas and that may be used as fuel for 
        a power source of any kind, but does not include electricity.
            ``(D) The term `excluded investor' means a person with 
        respect to whom there is no position in at least 1 energy 
        commodity which, if held by the person, would be considered a 
        bona fide hedging position (within the meaning of section 
        4a(c)(1)).
            ``(E) The term `swap' shall have the meaning the term would 
        have if the provisions of title VII of the Dodd-Frank Wall 
        Street Reform and Consumer Protection Act defining, and 
        authorizing further definition of, the term were in effect.''.
                                 <all>
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