I 

113TH CONGRESS 

1ST SESSION H. R. 785 

To prevent excessive speculation in energy commodities, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 15, 2013 

Mr. MARKEY (for himself, Ms. DELAURO, Ms. BORDALLO, Ms. BROWN of 

Florida, Mr. CAPUANO, Ms. EDWARDS, Mr. GRIJALVA, Mr. HOLT, Ms. 

LEE of California, Mr. MICHAUD, Mr. MORAN, Mr. PASCRELL, Ms. 

SCHAKOWSKY, Mr. SCOTT of Virginia, Ms. SLAUGHTER, Ms. SPEIER, Mr. 

TIERNEY, and Mr. WATT) 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: 


tjames on DSK6SPTVN1PROD with BILLS
2 

•HR 785 IH

1 (1) Investment in our commodities markets has 

2 grown dramatically in recent years. While the vol3 ume of futures contracts traded in the United States 

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

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

6 (2) According to testimony provided to the 

7 Committee on Natural Resources of the House of 

8 Representatives, this growth in volume has been ac9 companied by a huge increase in the percentage of 

10 commodity futures contracts owned by speculators. 

11 While physical hedgers used to account for 70 per12 cent of futures contracts and speculators accounted 

13 for just 30 percent, those numbers have reversed, 

14 and speculators now possess 70 percent of all open 

15 commodity futures contracts. 

16 (3) Almost all of this increase in speculation 

17 has been caused by a surge in trading of commodity 

18 index funds. 

19 (4) Commodity index trading is investing in 

20 funds or other financial products which are indexed 

21 to changes in value of various commodities traded on 

22 commodity markets in the United States. These 

23 funds can be tied to a basket of different commod24 ities or just to a single commodity. 


tjames on DSK6SPTVN1PROD with BILLS
3 

•HR 785 IH

1 (5) Investment in funds tied to these indexes 

2 has grown enormously in the last 2 decades. Accord3 ing to the Commodity Futures Trading Commission, 

4 a partial tally of net long positions in United States 

5 markets in these indexes reached to over 

6 $160,000,000,000 in February 2012, and net long 

7 positions in West Texas Intermediate Crude Oil 

8 reached to over $39,000,000,000. Many of the inves9 tors in these funds are institutional clients, such as 

10 pension funds and universities. 

11 (6) The vast majority of investors in commodity 

12 index funds do not use the commodities involved. 

13 These investors are only interested in profiting from 

14 a rise in value of the commodities and must sell 

15 their interests in the commodities before the futures 

16 contracts they own close. This practice, known as 

17 rolling, causes hundreds of billions of dollars of addi18 tional trading to flow through our commodities mar19 kets each month, artificially increasing the volatility 

20 of our markets and driving up prices for many of 

21 our commodities, including crude oil. 

22 (7) Because our commodities markets are tied 

23 to the actual retail prices of our commodities, the 

24 artificial and excessive levels of speculation have sig25 nificantly increased the retail prices our citizens pay 


tjames on DSK6SPTVN1PROD with BILLS
4 

•HR 785 IH

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

2 speculation may have added nearly $1.00 to the per 

3 gallon price of gasoline. 

4 (8) As sharp increases in energy costs reduce 

5 economic growth, these commodity index funds are 

6 creating a weight on the overall economy, threat7 ening to delay our Nation’s full recovery from the 

8 2008 financial crisis and recession. 

9 (9) Thus, commodity index funds hurt economic 

10 growth and consumer’s wallets. 

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

12 Act, Congress ordered the Commodity Futures 

13 Trading Commission to limit the number of posi14 tions that a person or a class of persons may hold 

15 in the commodities markets. Congress has taken ini16 tial steps to set boundaries on commodity trading, 

17 but more must be done to address the role of com18 modity index funds in the energy commodity mar19 kets. 

20 (11) Because oil prices have been at elevated 

21 levels for much of the last year, Congress believes 

22 the situation is an emergency and warrants imme23 diate action to ban commodity index trading in en24 ergy commodities. 


tjames on DSK6SPTVN1PROD with BILLS
5 

•HR 785 IH

1 SEC. 3. PREVENTION OF EXCESSIVE SPECULATION IN EN2 ERGY COMMODITIES. 

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

4 6c) is amended by adding at the end the following: 

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

6 fund to engage in a transaction involving an energy com7 modity if any person investing in the fund is an excluded 

8 investor. 

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

10 index fund to accept an investment from a person who 

11 is an excluded investor. 

12 ‘‘(C) Beginning 2 years after the date of the enact13 ment of this subsection, it shall be unlawful for a com14 modity index fund to hold an investment in an energy 

15 commodity if any person investing in the fund is an ex16 cluded investor. 

17 ‘‘(2) In this subsection: 

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

19 fund that consists principally of swaps involving, or 

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

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

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

23 1 commodity, and that transfers, as between the 

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

25 financial risk associated with a future change in any 

26 such value or level. 


tjames on DSK6SPTVN1PROD with BILLS
6 

•HR 785 IH

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

2 means a commodity index fund that consists prin3 cipally of swaps involving, or contracts of sale for fu4 ture delivery of, more than 1 energy commodity. 

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

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

7 agricultural commodity) that is produced or refined, 

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

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

10 any kind, but does not include electricity. 

11 ‘‘(D) The term ‘excluded investor’ means a per12 son with respect to whom there is no position in at 

13 least 1 energy commodity which, if held by the per14 son, would be considered a bona fide hedging posi15 tion (within the meaning of section 4a(c)(1)). 

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

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

18 the Dodd-Frank Wall Street Reform and Consumer 

19 Protection Act defining, and authorizing further def20 inition of, the term were in effect.’’. 

Æ 


tjames on DSK6SPTVN1PROD with BILLS