Hirsch fuels, Inc.

508 Wheeler Road C.F.T.O.

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~w.hirschfuels.net 2tJrU1mtJ 29-m-'i 4[ Telephone (631) 234-6209

. Fax (631) 234-6445

November 19,2010

David A. Stawick, Secretary

Commodity Futmes Trading Commission

Thl'ee Lafayette Center

115521 st Street, NW

Washington, DC 20581

COMMENT

Re: CFTC Rulemakings as Required by the Dodd-Frank Wall Street Reform Act

Dear Mr. Stawick:

I am writing to urge the Commission and its staffto consider the following comments on

several key areas requiring rulemakings under Title VII ofthe Dodd-Frank Wall Street

Retorm Act.

Tl~iRlegislation sought to reverse the l1ega9ve affects of derivatives market deregulation

thitfhad occurred over the previous two decades. This market deregulation resulted in an

opaqueinarket that catered to the needs of financial speculators rather than bona-fide

hedgers and consumers, for whom futures, options and swaps were created in the first

place.

We are an energy supply company that serves thousands of consumers on Long Island;

for us, the deregulation ofthe derivatives markets has resulted in diminished confidence

in these markets. The volatility and speculation in energy commodities vital to our

region's economic welfare has not only skewed price discovery, but has unhinged these

markets from responding to concrete economic fundamentals such as supply and demand,

thus making it difficult for hedgers such as ourselves to insulate our customers from

enatic and unwarranted price spikes.

Robust implementation and vigorous enforcement ofthe regulatory initiatives under the

Dodd-Frank Act is absolutely vital ifthe legislation is to have its desired effects. Title

VII refo1111S the derivatives markets, including energy futures, options, swaps and related

products and seeks to bring renewed transparency, oversight and accountability to these

markets while preserving market liquidity, competition and hedging, and price discovery·

functions. We strongly urge the Commission to address the following issues:

'~ "De'fiilitions:

Heati;lgbil~'. . , Heatit)g Systems Security Systems

Celebrating Fifty-Eight Years of Service in the Home Heating Oi/lndustry

Family Owned and Operated

Member of Oil Heat Institute of Long Island
1. Commercial Risk

The defInition of "Commercial risk" should be narrowly tailored to apply only to

those entities whose businesses activities expose them to risk from physical

commodity price fluctuations. "Commercial risk" should not include risk that is

purely financial in nature, including balance sheet risk.

2. Major Swan Participant

It was the intent of Congress to require that only large market participants be captured

under this definition. I am supportive ofthe exclusion for "positions held for hedging

or mitigating commercial risk," but again, this should not be defIned so broadly as to

create a new loophole for financial speculators to avoid requirements under the new

law.

3. Captive Finance Affiliates

The major swap participant definition also includes an exception for captive finance

at11liates we similarly encourage the Commission not to allow the exception to be

abused or too broadly interpreted.

4. SwaP

The legislative definition excludes forward delivery contracts (and options on such

contracts) for commodities that are intended to be "physically settled." Any

exemption for forward delivery contracts and options should be limited to bona fIde

commercial end-users.

• Governance & Possible Limits on Ownership & Control - Swan Dealers

The CFTC must establish both a meaningful limit on individual ownership and a limit on

collective ownership ifthe proposed rule is to have the intended effect oflimiting conflict

of interest, assuring transparency and open competition, and preventing clearinghouses

and exchanges from catering to the interests of a few large participants in the financial

community. This requires both a cap on ownership for individual entities, as well as a

sector~wide aggregate cap on banks.

iii End-User Exception

The end-user exception should remain narrowly tailored to those businesses that produce,

refine, process, market or consume an underlying commodity and counter-parties buying

or selling a position to an end-user. Purely financial risk, including broad terms such as

"balance sheet risk," should not be considered legitimate "commercial" risk.

iii New Registration Requirements for Foreign Boards of Trade (FBOTs)

I support the requirement that FBOTs register with the CFTC and make their trading data

available, as well as requiring that they adopt position limits and implement prohibitions

on manipulation and excessive speculation. They should also be subject to ownership

caps as described above.

Heating Oils Heating Systems Security Systems

Celebrating Fifty-Eight Years of Service in the Home Heating Oi/lndustry

Family Owned and Operated

Member of Oil Heat Institute of Long Island
• Anti-Manipulation & Disruptive Tradin.~Practices

I strongly suppOli prohibitions on "insider trading" based on nonpublic information,

prohibitions on manipulation and trading on false information, and new authority to

identify swaps that are "abusive" by virtue of being potentially detrimental to either the

stability of the market or its participants. I urge the CFTC to be thorough in its

interpretation and enforcement ofthese new authorities.

I also encourage the Commission to scrutinize the use of computerized/algoritlml-based

trading programs to determine iftheir application and use in the commodities markets has

a disruptive affect on market stability or function.

• Position Limits, Aggregate Position Limits & the Bona Fide Hedging

Definition

I support enforcement ofthe strongest possible speculative position limits under the

Dodd Frank Act for exempt commodities such as energy, rather than simply the

promulgation offormulae for establishing limits that can be then imposed at some later

date.

Due to their approach to commodity trading, index funds treats finite commodities as an

"asset class" rather than as vital resources to American industries, businesses and

consumers. I believe that the Commission should establish separate and more aggressive

limits on the positions of Exchange Traded Funds and Notes, including index funds.

• Conclusion

American businesses and consumers are relying on the CFTC to vigorously enforce these

rules in a mamler which will restore confidence, stability and transparency to the

derivatives markets, especially in the energy commodities markets. All Americans

depend on these markets to insulate both energy consuming businesses and individuals,

(and the broader economy), from fraud, manipulation, and disruptive/abusive trading, and

from excessive volatility, speculation and unwalTanted price spikes.

The Dodd-Frank Reform Act provides the Commission with a number of powerful tools

in this regard; I hope that the CFTC will use them to their fullest extent.

Thank you in advance for your consideration.

Sincerely,

Robert 1. Hirsch

Hirsch Fuels, Inc.

508 Wheeler Road

Hauppauge, NY 11788

Heating Oils Heating Systems Security Systems

Celebrating Fiffy~Eight Years of Service in the Home Heating Oi/lndustry

Fami/y Owned and Operated

Member of Oil Heat Institute of Long Island