' 08/05/2009 15:43 9733513737 RANDOLPH MEDICAL PAGE 02/03 

RANDOLPH DERMATOLOGY 

AND MOHS MICROGRAPHIC SURGERY, LLC DAVID J. NAJARIAN, M.D. 

121 CENTER Gr~OVE ROAO • RANDOLPH, NJ 078f)9 • 973-366-6303 

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Dear Commissioner Dunn, 

_c 

As a 34 year old dennatologist. I am writing to protest the CFTC's recent push iP 

impose energy futures positions limits. According to one article I recently read: ""No 

longer must we debate the issue of whether or not to set position limits," Gensler said 

during the second day of CFTC hearings on excessive speculation in the energy 

markets."" 

Well, I totally disagree. What does he mean by "no longer must we debate." 

Gensler says this as if he is absolutely right and wants to deny others their freedom of 

speech. 

T have read too much nonsen.c;e about how speculators are responsible for excess 

volatility and the high price of oil last year. Too rnany people calling for trading limits 

because of excess speculation. Too many people blaming index funds for the high price 

of oil last year. 

First of a.ll, why are you singling out the Energy market as an inappropriately 

volatile market? I've been trading in all sorts of markets since 1991, and with the 

exception of one day in 1987, I've never seen volatility in the stock market, bond market, 

and all so1is of commodity markets like I saw last year. Do we therefore a.lso need to 

now blame speculators for excessive volatility in stock markets? Bond markets? How 

about other commodity markets? How do you even define "excessive?" 

There is no good reason why the energy market should be picked on. In fact, 

there were very good reaso.ns to have volatility and high prices in the energy market last 

year. Oil supplies were tight. .. the largest oil fields in the world are declining in 

production, yet demand was growing ... espccially from large economies like China. 

When it looked like the US housing market might fall apart, along with the rest of our 

economy, there was a great deal of economic uncertainty. Recall Ben Bemanke saying 

he doesn't see problems in subprime affecting the rest of our economy? Remember how 

suddenly we realized he was \.VI'ong? Remember how our economy, the largest consumer 

of oil, fell off a cliff suddenly? Are these not rational reasons to have had a very volatile 

market in energy (as well as stocks, bonds, and other commodities) last year? 

Placing trading limits on energy futures to curb excess speculation (e.g. by those 

who don't take possession of the physical commodity) does not appear to be in the best 

interests of the industry. As far as I know of, there is no good evidence that anyone 

0 

AUG 05 2009 16=46 9733613737 PAGE.02 
08/~5/2009 15:43 9733513737 RANDOLPH MEDICAL PAGE 03/03 

RANDOLPH DERMATOLOGY 

ANO MOHS MICROGRAPHIC SURGERY, LLC DAVID J. NAJARIAN 1 M.D. 

121 CE'\i1'ER GReWE ROAD • RANDOL~H, NJ 07869 • 973-366-6303 

cornered the market, unfairly 111anipulating the price of oil for everyone else. If 

there was such evidence, then new mles surely would be needed. The fact is however, 

there is no such evidence put forward. In addition, there are good reasons to believe that 

in the absence of such inappropriate market manipulation the more speculation allowed 

the better. Why? Speculators do a great dea] of research to uncover investment ideas. 

Some of that research is important and would never have been completed without 

lucrative incentives for speculators. For example, take a look at Matt Simmons book, 

"Twilight in the Desert." This book, written by an investment banker, is a masterpiece of 

fine, original research of the Saudi Oil fields that I doubt would ever have been written if 

purely financial speculators were not allowed to participate in the markets. Yet :findings 

published in this book are tmly important for anyone involved in Energy policy. The fact 

is, allowing speculators to participate in the energy markets leads to more research into 

the field's supply and demand dynamics ... how can this be a bad 'thing? More research 

should lead to rnore appropriate prices over the long term. However, curbing the ability 

of speculators to make money from trading in energy futures could easily reduce the 

amount of research done in the field, decreasing the visibility of supply and demand 

trends, and thus lead to greater distortions of supply, demand, and prices in the future. 

Finally, placing trading limits on energy futures by threatening the ability of index 

funds to invest in them is blatantly unfair to many Americans like myself. For example, I 

commute a long distance by car every day. Maybe I'd like to hedge against a possible 

rise in gas prices? How can I reasonably do that without investing in an index fund that 

· invests in the energy futures markets? The fact is, index funds, ETNs, and ETFs that 

invest in energy futures are an important way that small investors can hedge themselves 

against a possible rise in the pJice of energy in tbe future. If I want to invest in oil, I 

should be able to. If I want to invest in gas, I should be able to. And so should all other 

Americans. These rights are especially important given the possibility that our 

goverrunent's monitary policy could decimate the value of paper money--leaving physical 

goods (like oil) as important store of value. 

Sincerely yours, 

David .T. Najatian, MD 

Hoboken , New Jersey 

AUG 05 2009 16=47 9733613737 PAGE.03 
From: Leslie, Douglass

To: energyhearingcomments 

cc: Holifield, Robert 

Subject: FW: Position l mit legislation

Date: Thursday, August 13, 2009 4:17:24 PM

A comment for the hearing file.

From: REILLY, BRIAN

Sent: Thursday, August 13, 2009 4:15 PM 

To: Leslie, Douglass 

Subject: Position limit legislation

Doug, pls forward to Gary Gensler. Thx, 

Brian 

Reilly 

Dear Gary, I am an investment broker and have clients who own shares of the United States Natural Gas Fund (UNG). 

This Portfolio of natural gas contracts currently has about 400,000 nat. gas contracts in the current month and they do 

not leverage beyong the inherent leverage in the commodity market itself. It provides me and my clients to own and track 

natural gas without the risk of owning commodity contracts themselves which as you know have a finite life. This public 

security also provides the opportunity to do covered call writing to generate cash flow for those folks who wish to participate 

in that kind of program. I bring this to your attention because of the interest in your committee to put position limits on the

energy and other commodity contracts particularly by hedge funds and other investors who are able to ramp up leverage 

beyond reason. I am in favor of limits that are truly in the public interest. I am concerned, however, that we may throw the 

baby out with the bath water if the cash based participants in these markets are knocked off their horses along with 

the aggressive over leveraged participants in the hedge fund arena. I am hoping that your committee will exercise caution 

when you create your limit rules and try not to hurt the public investors who are simply investing to achieve capital gains 

and generate cash flow. Thanks for listening. Sincerely, Brian Reilly
From: secretary

To: energyhearingcomments; 

Subject: FW: 

Date: Thursday, August 13, 2009 10:30:07 AM

Attachments: Commodity Markets Oversight Coalition.PDF
To CFTC Div. of Enforcement Page 1 of 9 8 58:30 PM, 8/4/2009 617 9241022 New Eng•and Fuel Institute 

COMMODITY MARKETS OVERSIGHT COALITION 

The Honorable ~ancy Pelosi 

Speaker of the House 

U.S. House ofRepresentatives 

H·232 Capitol Building 

Washington, DC 20 515 

The Honorable Hany Reid 

:\.faj ority Leader 

United States Senate 

S-221 Capitol Building 

Washington, DC 20510 

August .5, 2009 

The Honorable John Boehner 

Minority Leader 

U.S. House ofReprescnrarives 

H-204 Capitol Building 

Washington, DC 20515 

The Honorable Mitch McConnell 

Minority Leader 

United States Senate 

S-230 Capitol Building 

Washington, DC 20510: 

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A CALL FOR MEA~INGF"CL REFORM OF COMMODITIES TRADING 

Dear Congressional Leaders: 

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The undersigned organizations, representing business, industry and consumer interests vital to the 

United States economy, urge you to take &\\lift and meaningful action to improve federal oversight and 

transparency and to address regulatory inadequacies in the commodities markets. Our organizations and 

the public in general have lost confidence in these markets due to extreme price volatility, unwarranted 

price spikes and excessive spe'--ulation. It is time to restore confidence, stability and transparency in 

these markets. 

This letter is a follow-up to our June 3, 2009 letter regarding needed refonns, which we have attached 

for your convenience. We now wish to take the opportunity to address some of the arguments being 

made by opponents ofn:tonn- namely, the financial services industry. 

The CFTC Needs the Tools to Regulate 

Today, the Commodity Futures Trading Commission (CFTC) will wrap up a series of hearings 

examining the use of its statutory authority to set limits on the size of positions that individual traders 

may take in the market, as well as who may receive exemptions from such limits. We commt!nd 

Chairman Gensler and his te11ow Commissioners for these hearings and tor their commitment to greater 

transparency, accountability and oversight in the commodity markets. These hearings have brought to 

light some stil.ltling into1mation. 

For example, on the NYMEX, where only energy ··accountability" limits exist (as opposed to hurd limits 

that exist for agricultural commodities), 70 traders have held positions exceeding these limits- by as 

much as two to three times these limits - in the past 12 months for contracts such as crude oil. natural 

gas, heating oil and gasoline, and faced no disciplinary action. Commissioner Bart Chilton likened 

accountability limits to "suggested speed limits on a dark, desert highway." We are pleased the CFTC is looking 

into this issue. 

Page 1 of 5 

RUG 04 2009 23=10 617 9241022 PRGE.01 
To. CFTC Div. of Enforcement 

Commodity Merkets Oversight Coelition 

Letter to Conllruslon•l Lnders 

AUiUJt S, 2009 

Page 2 of 9 8:58:30 PM, 8/4/2009 617 9241022 New England Fuel Institute 

Coalition Contact: 

Jim Ccllur1, New Enillnd Futllnstitu:t 

Jlmco!lurl@ntfl.com or [202) 584·0160 

Furthermore, this information was made available only because the NYMEX is largely a transparent, 

regulated exchange. Most trading activity is conducted off·exchtmge, \-Vhere the CFTC will require 

additional authorities from Congress in order to cmry out its mandate to protect the American public 

ti·om manipulation, excessive speculation and abusive trading activities. Many of its a\Jthorities over 

these markets were stripped by the Comm.odity Futures Modemization Act of 2000. Congress needs to 

rel:itore these authoritie:; and deliberate on whether additional authorities are needed. \Ve urge you to do 

so inllnediately t'ullowtng your return fton1 the August Congressional recess. 

::\iany in the financial services industry strongly oppose meaningful refom1. The reason is obvious. 

Aided by deregulation and lack of federal supervision, they have been able to transform the derivatives 

markets, fi·om a tool used by commercial participants with a need to hedge against the risk of rising and 

falling commodities prices, into a method to invest in consumable commodities as an asset class and a 

cun·ency hedge. This ensuing domination by financial speculators has unde1mined the commodity 

markets' function as a hedging and price discovery tool for commercial industry and end-users. These 

markets were not designed as financial markets, the:r were designed for co1mnodities hedging and 

price discovery and we urge that they be restored to this original purpose. 

SpeculaJors Should Not Dominate the Markets 

We recognize the role that speculators play in providing the neces~·my liquidity in order for commodity 

producers, distributors, processors and end-users to manage risk. However, when speculators <Jie 

allowed to dominate the markets (i.e., exoe:mve speculation) it undermines risk management tor 

physical market participants. Excessive speculation distorts the ability of industry and end-users to 

detezmine a price tor commodities bused on supply and demand. The commodities bubble of 2008 

contributed to the financial collapse we experienced in the fall. Another commodities bubble would stall 

or even kill any anticipated economic recovery. 

::\iany opponents of reform outright oppose limits on speculation and argue that there can never be such 

a thing as exaess1ve speculation. They held true to this beliet~ even as - despite the lack of correlating 

fimdamentals- crude oil skyrocketed from $68 in January 2008 to $147 that July and $33 in December 

2008 to $72 this June. They have claimed that such price spikes are a result of investor need to use 

commodities as a hedge against a devalued dollar. Congress :should nut allow the t1nandal sel"'ices 

industry to use consumable cunmiUdities, that are a basl:s t'or our national :security and ecunumlc 

welfare, as a hedge against llm iuations .. in the value of the dollar. Such hedging artificially ~kr::ws 

the supply and demand picture. The resulting price volatility and unanticipated spikes cause h<Jim to 

American industry, struggling businesses and consumers at the pump. 

Investors should use products other than oil, natural gas or food in order to hedge against inflation, such 

as precious metals or the foreign currencies markets. The cunency markets JJ'e more efticient, liquid 

and much less costly for investors. Furthermore, we grow increasingly concerned about the role being 

played by exchange traded funds (ETFs) and exchange traded notes (ETNs). We believe Congress 

should be concerned as well and should continue to look into this issue. 

Overall, we tee! that investors that are unwilling to behave like traditional speculators, trade openly on 

regulated exchanges, play by the rules and report all trading data to the CFTC should not be playing in 

these markets and gambling with the American economy. 

Pege 2 of 5 

~UG 04 2009 23=10 617 9241022 P~GE.02 
1 o. \_.r 1 \_. u1v. ur r::.nrorcemenr 

Commodity Markets Oversisht Coalition 

Letter to Congressional Lnd1rs 

August 5, 2009 

"age.; or~ c;::;,l;l:.;u "'M, l:II41£UU:.< ol f :.<£41ULZ New Engiand Fuel institute 

Caalitian Contact: 

Jim Collura, N•w England Futllnstituu 

Jlmcollura@nlfl.com or(202) SS4·0l!SO 

The Threat of lvfoving to Off-Shore :Markets is a "Scare Tactic" 

The financial services industry also continues to claim that if Congress and the CFTC impose strong 

refonn of these markets, then investors will just move their activity overseas to take advantage of 

n:gulatory arbitrage. This is not a reason against action; it is a reason tor even stronger and more 

comprehensive action. The CFTC will need adequate authorities from Congress, and will need to 

cooperate even more closely with overseas regulators. We are already seeing signs of cooperation 

between C.S. and overseas policymakers and regulators, including several European Union leaders. 

Even the G8 earlier rhis month made a strong statement when it ordered rhe International Monetary 

Fund, the Intemational Organization of Securities Commissions and the International Energy Agency to 

coordinate on commodity market surveillance and hopefully, the drafting of new regulation. 

Congress should also work with the CFTC to tighten existing rules regarding foreign boards of trade. In 

order to allow for u.n exchange to trade in U.S.·destined commodities or allow U.S. access to their 

trading platforms without federal oversight, the Congress and the CFTC should require the presence of 

foreign regulators with a comparable regulatory regime. The CFTC should also review all existing no 

action letters and withdraw them as necessary, including those given to foreign exchanges nm by U.S. 

firms (e.g., Atlanta-based ICE runs an exchange in London and the Dubai Exchange is in part ov,rned by 

the NYMEX). If abusive nctlvtty Is to flee elsewhere because ot' meaningtW ret'orm, then it Is the 

responsibility ut' Congress and the CFTC to ensure that foreign markets are nut allowed tu 

compete unfail'ly with U.S. rrunkets. 

Let us not forget that the American marketplace is the most sought after trading venue in the world. 

With so many foreign entities seeking counterpruiies in the United States, it is difticult to com\eive of 

any finn wanting to do business elsewhere. Further, any contract with cash-settlement or physical 

delivery on American soil is under American jurisdiction. It is hard to imagine why bona-fide hedgers 

and large financial interests would even consider leaving the security and liquidity of the American 

marketplace to trade in an overseas markt:t where they are exposed to uncertain counter·pruiy risk. 

"Dark .11arket" Trading is a National Security Risk 

Additionally, Congress should be concerned about the national security risks posed by inaction. Dennis 

Blair, the Director of National Intelligence, has determined political instability caused by the global 

economic crisis to be the chief U.S. national security threat. Financial services industry deregulation 

and the lack of supervision over energy derivative markets have been recognized as triggers of that 

economic t.:risis. Insufficient regulation of global cash flows and investments presents a real challenge 

not only for economic recovery, but for stability and security of U.S. commodity markets. 

The opaque nature of so many market participants, activities, products and environments provides more 

than just an easy opportunity for excessive speculation and potential manipulation. We fear that foreig:n 

persons, entities ru1d gowmments unfi'iendly to the United States and its allies may take advantug~ of 

the "'dark" nature of these markets in order to unde1mine our economies and commit commoditytrading-based sabotage. This issue was brought up briefly during last year in the Senate Committee on 

Homeland Security, and it should be examined more thoroughly. Appropriate committees in 

Congress should thoroughly investigate fo1·eign investment in the commodities markets and take 

all appropriate action. 

Poge 3 of 5 

~UG 04 2009 23=11 617 9241022 P~GE.03 
r-a!,j<:: ... u1"' o.oo:.:>u r-1v1, 0141-!UU~ ol r ~L41 022 New England Fuel Institute 

Commodity Markets Oversisht Coalition 

L1tt1r to Coniruslonll Lnders 

AUiUst 5, 2009 

Congress lvfust Act Now 

Coalition Contact: 

Jim Collur1, N1w Enil•nd Fu•llnstltuu 

Jlmeollura@nlfl.com or (202) 584·0160 

Our organizations again urge swift and comprehensive action in order to refom1 these markets. We urge 

members of Congress not to be dissuaded or distracted by the "scare tactics'' of those in the fmancial 

services industry that are profiting :ti·om the status quo. Further, \Ve encourage Congress to ignore calls 

for "watered do\W" legislation that is less than what is needed to bring real reform to these markets, 

including the recent proposal by the New Democrats. 

We recognize that in requiring that opaque market activity move onto transparent and regulated 

exchanges, there may be some disagreement as to the appropriate way to deal with customized over-the· 

counter (OTC) derivative contracts that some commercial interests rely on to hedge. Congress should 

work with bona-fide commercial hedgers that require such products in order to ±ind a solution, while 

also taking care not to create any new "loopholes" for non-commercial interests to exploit. This iss1.1e 

should not delay strong action and this coalition supports the Obama administration's efforts to extend 

CFTC authority to the OTC markets. 

Again, we are prepared to meet with you and your staff regarding these issues. Thank you again tor 

your consideration. 

Sincerely, 

Agricultural Retailers Association 

Air Transport Association 

American Trucking Associations 

Califomia Independent Oil Marketers Association 

Consumer Federation of' America 

Consumer Watc.:hdog 

Food & Water Watch 

Florida Petroleum Marketers & Convenience Store Association 

Friends ofthe Ea.tth CS 

Fuel ::vierchants Association of~ew Jersey 

Gasoline and Automotive Se~vices Dealers of America 

Grassroots International 

Illinois Association of Convenience Stores 

Illinois Petroleum Marketers Association 

Independent Connecticut Petroleum Association 

Independent Oil Marketers Association of New England 

Industrial Energy Consumers of America 

The Institute for Agriculture and Trade Policy 

Louisiana Oil :Vfarketers & Convenience Store Association 

:Yfaine Oil Dealers Association 

~aryknoll Oftice tor Global Concerns 

~assachusetts Oilheat Council 

:Y.fichigan Petroleum Association 

:Y.fichigan Association of Convenience Stores 

~id-Atlantic Petroleum Distributors' Association 

~issionary Oblates 

Page 4 of 5 

AUG 04 2009 23: 11 617 9241022 PAGE.04 
I\,,. \.,,,ol I'- 1-JIV. VI L._III\,11\,..CIIII;;IIL r-coye ::> OT::! o.oo:.:> I r-IVI, OI'+ILUU':j l:>i f ':jL'I1 UL.< New t=ngiand Fuel lllStl!Ute 

Commodity Merkets Oversight Coelition 

Letter to CCJnQrnslonll Lnders 

AUQUJt 5, 2009 

:\iunicipal Gas Systems of Oklahoma 

National Association of Truck Stop Operators 

~ational Family Farm Coalition 

~ational Farmers Union 

National Latino Fanner;;; & Ranchers Trade Association 

~ebraska Petroleum Marketers & Convenience Store Association 

~ew England Fuel Institute 

New Jersey Citizen A"iion Oil Group 

~ew Me..'{ico Petroleum Marketers Association 

New York Oil Heating Association 

Ohio Petroleum Marketers & Convenience Store Association 

Oilheat Council ofNew Hampshire 

Oil Heat Institute of Long Island 

Oil Heat Institute ofR110de Island 

The Organization for Competitive Markets 

Petroleum Marketers Association of .America 

Petroleum Marketers & Convenience Stores of Iowa 

Propane Ga::~ Association ofNew England 

Public Citizen 

Public Power Association of New Jersey 

R·CALFUSA. 

Tennessee Oil Marketers Association 

United Egg Producers 

Utah Petroleum Marketers and Retailers Association 

Western Peanut Growers 

V em10nt Fuel Dealers Association 

cc: All Members of the United States House ofRepre::~entatives 

All Members of the United States Senate 

Coalition Contact: 

Jim Collur1, New EnQIInd F~•i lnstltuu 

Jlmeollura@nlll.com or [202) 584·0160 

The Honorable Gary Gensler, Chairman, Commodity Futures Trading Commission 

The Honorable :\iichael Dunn, Commissioner, Commodity Futures Trading Commission 

The Honorable Jill E. Sommers, Commissioner, Commodity Futures Trading Commission 

The Honorable Bart Chilton, Commissioner, Commodity Futures Trading Commission 

Poge 5 of 5 

AUG 04 2009 23:12 617 9241022 PAGE.05 
I U. '-11'-.UIV. Ul ~IIIUI\,;t;:;lllt:::IIL r-"y<:: 0 Ul ::1 0.:>0 . .:> I r-IVI, 0/'+1£UU::I 0 I I ::!.£.'1"1 U/.<: NeW t:ng1ana rUe I I~S11tute 

COMMODITY MARKETS OVERSIGHT COALITION 

The Honorable ~ancy Pelosi 

Speaker of the House 

U.S. House ofRepresentatives 

H-232 Capitol Building 

Washington, DC 20 515 

The Honorable Hany Reid 

Majority Leader 

United States Senate 

S-221 Capitol Building 

Washington, DC 20510 

Dear Congressional Leaders: 

June 3, 2009 

The H011orable John Boehner 

l\•1inority Leader 

U.S. House ofRepresenrarives 

H-204 Capitol Building 

Washington, DC 20515 

The Honorable Mitch McConnell 

Minority Leader 

United States Senate 

S-230 Capitol Building 

Washington, DC 20510 

Members of this coalition remain concerned that inadequate oversight of the commodities markets and 

excessive speculation \Vill continue to erode public confidence in the ability of these m.arkers to esrablish 

fair prices for energy, agricultural products and other commodities that are reflective of market 

fundamentals. \'\Te urge Congress to act decisively to bling full transpa1·ency to all h·adtng 

environments and platfonns, to p:revent e:xcessive speculation, and to dose the door to potential 

manipulation. 

2008 saw the most dramatic rise in commodities prices in history, resulting in inflated costs tor energy 

and consumer goods in the United States. Internationally, millions of people were suddenly unable to 

feed themselves due to rising food commodity costs. Congressional hearings and reports revealed that 

inadequate or non-existent oversight of oft:.shore and over-the-counter (OTC) markets, ineffective 

oversight of on-exchange participants and activity, and an under-funded and under-staffed Commodity 

Futures Trading Commission (CFTC) had opened-the-door to excessive speculation and opaque trading 

activity. Additionally, members of this coalition voiced growing concern that passively-managed inde.-x 

funds. exchange-traded funds and actively traded hedge funds, swaps and derivatives were tuming our 

commodity markets into a highly volatile "asset class." 

\Ve again m·ge the Congress to pass strong new legislation to 1·esto:re om· confidence in these 

markets a:s a risk management and prh:e discovery tool for bmw-fide cummcrclal players. 

Congress has taken some positive steps in the right direction, including last year's CFTC 

Reauthorization Act, which returns to the CFTC some authority over exempt commercial markets it had 

lost under the "'Enron Loophole" in 2000. Appropriators have steadily increased CFTC funding levels in 

recent years to allow t'or much-needed stan: resources, and technology investments and we commend 

the President's FY2010 budget request of $161 million. We commend the Senate for swift 

consideration of CFTC nominees, including the recc:ntly·con1i11lled Chaimlan Gruy Gensler. We are 

also pleased that on May 13, 2009, President Obama announced his support for full transparency, 

accountability and oversight in the OTC markets. 

Plill ol4 

~UG 04 2009 23=12 617 9241022 P~GE.06 
1 \,/. "-1 1 "- I.JIV. \,,I !-Ill VI r..;r;1 I It;: I I~ 

Commodity Markets Oversight Coalition 

Litter to ConQruslonal Lnde rs 

June 3, 2009 

r-<Jge r or~ ~:~::,tl:~l r-'M, tl/4/:.!UU9 617 9241022 New Engi<Jnd Fuell~stitute 

Coalition Contact: 

Jim Collura, New Eneland Fu•llnstltut• 

Jlmcollura@nlfl.com or (202) 584·0160 

But absent strong und sweeping refonu, we will continue to witness extreme price volatility and 

excessive speculation. Trading v.~ll continue to grow in ''dark" or unregulated markets and investment 

speculators will continue to elude federal oversight, data reporting requirements and position limits. 

Families, businesses, fanners and laborers at home <J.lld abroad ·will continue to "pay the price" in many 

w-ays, including volatile and unpredictable energy, food and raw materials prices; impeding economic 

growth, development, investment, and job creation. 

Therefore, we urge Congress to work switl:ly and approve legislation that \vill: 

• Addnss market acti"ity fo1· all commodities, including energy, agriculture, livestock and metals; 

• Fully close the "Enron Loophole" by req1.1iring rhatlarge over-the-counter trades comply with data 

reporting requirements und are made subject to speculative position limits; 

• Close the so-called "Foreign Markets Loophole" or "London Loophole" by requiring the presence 

of toreign regulators with comparable oversight in order tor an otl::.shore exchange to obtain 

regulatory exemptions (i.e., no-action letters); 

• Close the "Swaps Loophole" by limiting hedging exemptions to bema-fide commercial pruticipants 

and requiring that swap traders, index funds and institutional investors comply \\'ith all CFTC 

speculation limits and data reporting requirements; 

• Limit exchange traded fund investments in physical commodities and their derivatives; 

• Requite actoss-the-boaJ·d agg1·egate speculation lhnits to prevent traders from taking a 

controlling position in a commodity by taking large positions on multiple platforms; 

• Require the CFTC to review all current regulatory eXemptions and require Commissioners to 

withdraw them as appropriate or in accordance ·with existing or new authorities granted by Congress; 

• Require a thorough review of all new and existing rules and regulations designed to protect 

market users a.ud the public from fraud, manipulation and excessive spectihitiou, l.nCI1lding position 

limits, margin requirements, data reporting requirements, and public availability of data; and 

• Require a thOl"ough review of emerging enviromnental Jmll'kets, emissions trading and related 

Wall Street products and instruments, including derivatives, index funds and exchange traded funds. 

The ability to dete1mine a 1:1.ir price for commodities based on market fundamentals is vital to the 

success of recent efforts to address energy securiry. climate change. and the needs of the poor. low 

income and unemployed. It is essential to the \-velfare of fanners, tJ.uckers, laborers and small 

businesses, to new job growth and to the overall recovery of an economy that has been wounded by 

insufl:icient transparency and oversight ofthe tinancial services industry. 

In recent weeks, energy commodities including natural gas, crude oil and refined petroleum products 

have been trading substantially higher despite record inventories and low demand. Internationally, some 

predict a tight food commodity market in the year ahead. According to a recent Barclays Capital survey, 

79 percent of investors plan to increase holdings in these markets. Congress must do its p;ui to help 

prevent another speculator-driven mn-up in energy, agriculture, and other vital commodities. 

P•ll• 2 of 4 

AUG 04 2009 23:13 617 9241022 PAGE.07 
To: CFTC D1v. of Enforcement Page 8 of 9 8:58:31 PM, 8/4/2009 617 9241022 New England Fuel Institute 

Commodity Markets Oversisht Coalition 

Letter to Conaruslonal Luders 

June 3, 2009 

Coalit:on Contact: 

Jim Collura, New Enaland Futllnnltuu 

Jlmcollura@nefl.com cr (202) 584·0160 

In both chambers of Congress, several bills have been introduced to address the issues discussed in this 

letter. It is our hope that members can work out their diffen:nces and, working with members of this 

coalition, move forward to pass strong and comprehensive legislation, put an end to excessive 

speculation and "dark market" trading, and restore confidence in our commodity markets. 

Thank you for your consideration. 

Sincerely, 

Agricultural Missions, Inc. 

Agricultural Retailers Association 

.-\.ir Transpo1t Assoi.:iation 

American Association of Crop Insurers 

American Cotton Exporters Association 

Ametican Cotton Shippers Association 

.Ametican Public Gas A.ssociation 

Ametican Tmcl<ing Associations 

Arkansas Oil Market~s Association 

Atlantic Cotton A.sl:lociation 

California Black Fanners and Agricult1.1ralists Association 

Caney Fork Headwaters Association 

Colorado Wyoming Petroleum Marketers Association 

Columban Center for .-\.dvocacy and Outreach 

Congregation of Holy Cross 

Consumer Federation of America 

Consumer Watchdog 

Cumberland Countians for Peace & Justice 

Family Fillm Defenders 

Florida Petroleum Marketers and Convenience Store Association 

Food & Water Watch 

Friends ofthe Earth l?S 

Fuel Merchants Association ofNew Jersey 

Gasoline & Automotive Service Dealer's of America 

Grassroots International 

Holv Cross International Justice Ofiicc 

Illinois Association of Convenience Stores 

Illinois Petrokl.Un Marketers Association 

Industrial Energy Consumers of An1erica 

Independent Oil :Marketers Association of New England 

Institute for Agriculture and Trade Policy 

Justice and Witness Ministries, United Church of Christ 

Louisiana Oil Mcuketers & ConvenienL:e Store Assn. 

:'v.!aine Oil Dealers Association 

:'v.!aryknoll Oftice for Global Concems 

~1assachusett.s Oilheat Council 

Mid-Atlantic Petroleum Distributors Association 

:\fissionary Society of St. Columban 

617 9241022 PAGE.08 
f-'age 9 ot 9 8:58:31 PM, 8/4/2009 617 9241022 New England Fuel Institute 

Commodity Markets Oversight Coalition 

Letter to Con&~reulonal Leaders 

June 3, 2009 

l\:iontana Petroleum Marketers Association 

National Association of Convenience Stores 

National Association of Oil Heat Service Managers 

National Association of Truck Stop Operators 

National Catholic Rural Life Conference 

National Family Farm Coalition 

National Farmers Cnion 

National Latino Fannm-s & Ranchers Trade Association 

Nebraska Pctroloum Marketers & Convenience Store Association 

Co a lit ion Contact: 

Jim Collura, New En11l1nd Fuel Institute 

Jlmcollura@nefl.com or (202) 584·0160 

Network for Environmental & Economic Responsibility, United Chun:.h of Christ 

New England Fud Institute 

New Jersey Citizen Action Oil Group 

New Mexico Peb:oleum Marketers Association 

New Rules for Global Finance 

New York Oil Heating Asso'-=iation 

Ohio Petroleum Marketers & Convenience Store Association 

Oil Heat Council ofNew Hampshire 

Oil Heat Institute of Long Island 

Oil Heat Institute of Rhode Island 

Petroleum Markctm-s Association of America 

Petroleum and Convenience Marketers of Alabama 

Petro!t:um Marketm-s and Convenience Store Association of Kansas 

Petroleum Marketers and Convenience Stores of!owa 

Platfon11 ABC (Earth, Fam1er, Consumer), Netherlands 

Public Citizen 

Quixote Center 

Ranchers-Cattlemen Legal Action Fund I R·CALF USA 

Rw·al Coalition/Coali'-=ion Rural 

Sisters of the Holy C.ross Congregation Justice Committee 

Sisters of Notre Dame de Namur Justice and Peace Network 

Society of Independent Gasoline Marketers of America 

Southern Cotton Association 

Texas Cotton Association 

United Egg A:ssociation 

United Egg Producers 

Utah Petrolel.U11 Marketers and Retailers Associati011 

Vmmont Fuel D~alcrs Association 

West Virginia Oil Marketers and Grocers Association 

Western Cotton Shippers Association 

Westem Peanut Growers .Association 

Wisconsin Crop Produr:tion .~sodation 

World Cotton E"'-po1ters Association 

cc: All members of the C'nited States House of Representatives lUld the United States SenaTe 

The Honorable Gary Gensler, Chai1man, Commodity Futures Trading Commission 

Ptil4of4 

The Honorable Michael Dunn, Commissioner, Commodity Futures Trading Commission 

The Honorable Walter Lukken, Commissioner, Commodity Futures Trading Commission 

The Honorable Jill E. Sommers, Commissioner, Commodity Futures Trading Commission 

The Honorable Bart Chilton, Commissioner, Commodity Futures Trading Commission 

AUG 04 2009 23=13 617 9241022 PAGE.09 
From: danidavidi

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Wednesday, August 12, 2009 11:45:47 PM

Dear Sir 

To allow fair free market trading, all changes must include the short 

side as well. Regulating the funds which buy on behalf of many 

individuals and not regulating the big traders on the short side is to 

increase market distortions which have led to this crisis to begin. 

And gold and silver markets should be looked at as well as these are 

the most rigged market in the US. Just look at the 75% of the net 

shorts in silver are concentrated with 2 US banks. One of the biggest 

manipulation in history is happening in front of your regulating eyes 

with no interference. 

Hope you will do the right thing for the little guy which needs your 

protection and not for the huge banks. 

Dani Davidi 
From: Ross Pellegrino

To: energyhearingcomments; 

Subject: Dear CFTC Commissioners

Date: Wednesday, August 12, 2009 10:54:26 PM

Dear CFTC Commissioners: 

 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

 

And by commodity market analyst Adrian Douglas here: http://www.

gata.org/node/7683

 

Short-side position limits are as necessary as long-side limits. 

 

The danger in massive short positions artificially suppress prices, thus, 

making them even more scarce as at such low prices. In fact, artificially 

suppressing prices is actually more dangerous to scares resources such 

as gold and silver. 

 

Thanks for your consideration, 

 

Ross Pellegrino 
From: Dwight Freeman

To: energyhearingcomments; 

Subject: Uniform application of Speculative Limits to include Gold and Silver Trading

Date: Wednesday, August 12, 2009 10:39:55 PM

Dear Chairman Gensler, Thank you for the opportunity to contact you 

regarding this issue. I am an 80 yr old retired physician whose IRA was 

decimated one year ago and who is now trying to regain some lost ground. I, 

among others believe precious metals are a good investment as we enter unsure 

economic conditions followig the collapse of one year ago. My efforts have been 

thwarted along with those of many other investors to say nothing of miners losing 

jobs, mines closing, etc., by the manipulation of the gold and silver prices 

seemingly by HSBC-USA and JPMorgan, respectively.using ovefwhelming short 

positions. The details have been presented to you by others far more 

knowledgeble than mysellf but I can tell you from personal bitter experience the 

hopeless fury I feel when time after time as the prices go up and they feel they 

have enough longs in the trap they drop the price to whatever it takes, within 

minutes of the opening of the Comex, gold and silver in tandem. It is done with 

no attempt to disguise this illegal activity so that one is forced to suspect that the 

fix must be in. Since the dollar competes with precious metals as the refuge in 

uncertain times, crippling its competetor my seem a plausible course, (if one 

were of a suspicious mind), for some agencies of the Government. Please use all 

the power at your disposal to investigate this and correct it by whatever means 

the Law allows. thanking you in advance for your efforts, I am, Dwight W. 

Freeman< M.D. (Ret) 
From: enoriega1

To: energyhearingcomments; 

Subject: Comex Silver Futures Market

Date: Wednesday, August 12, 2009 10:26:34 PM

August 10, 2009 

Chairman Gensler, 

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities 

of finite supply. The hearings you conducted were of great public service. 

I will confine my comments to one market 

– the COMEX silver futures market. 

I have excerpted the following passages from your opening statement of 

August 5th. You said: 

“I believe that position limits should be consistently applied across 

markets for physical commodities of finite 

supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

“The very important question becomes: how much concentration is too much? 

At what point of market concentration 

does a trader detract from liquidity instead of enhance it? I think we 

would all agree that if one party controls half 

the market, that party is more likely to lessen liquidity than enhance it. 

Position limits should enhance liquidity by 

promoting more market participants rather than having one party that has so 

much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of Traders and 

Bank Participation Reports, both for 

positions held as of August 4, the level of concentration on the short side 

of COMEX silver futures would appear to 

meet or exceed the level you imply threatens market integrity and 

liquidity. After published non-commercial and 

imputed commercial spreads are removed, the net short position of one or 

two US banks exceeds 40% of the total 

net futures open interest. That same calculation indicates the net short 
position of the four largest traders exceeds 

66% of total net open interest. Such levels of concentration do not exist, 

either on the long or short side, in any 

other market for physical commodities. 

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose 

legitimate speculative position limits. This will increase the number of 

traders on the short side of COMEX silver, as 

you stated. The level of the current accountability limit of COMEX silver 

futures (6,000 contracts), on an all months 

combined basis, is way out of line with any other commodity. Any reasonable 

method of applying position limits 

consistently across all commodities of finite supply, whether in relation 

to actual production or as a percent of total 

open interest, would dictate that the Commission impose a speculative 

position limit of no more than 1500 

contracts in COMEX silver futures. 

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or 

consumers of the actual commodity, and not to those engaged in financial 

trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to 

guard against excessive speculation on the long side, commodity law 

requires you to guard against excessive 

speculation or manipulation on the short side as well. No other market 

comes as close to fitting the profile of a 

manipulated market than does COMEX silver on the short side. Once again, I 

urge you change that profile by 

establishing a speculative position limit of no more than 1500 contracts in 

COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal. 

-------------------------------------------------------------------- 
From: Orlando Almodovar

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:13:02 PM

Greetings - I ask that you address the concerns raised by Mr. Ted Butler in 

your hearings as they relate to the precious metal Silver and Gold. I also 

ask that you consider the position of Jeffrey Christian at CPM Group as 

well. I ask that you make these debates and results public and seek to 

obtain the attention of the media so that the populace may learn of the 

issues with more ease, and all walks of life are alerted as opposed to only 

the astuste observers. Lastly it has been a belief that JP Morgan Chase is 

the exchange in regards to Silver and holds a large short position as a 

market maker - please consider debunking this perspective. I saw some 

comments from the recent hearings that JP Morgan and Goldman Sachs 

feel only the end user should be subject to position limits and find this 

very troubling. The large short position transferred from Bear Stearns to 

JP Morgan Chase is also troubling - look into this as well! Many Thanks - I 

pray justice is served.

Orlando Almodovar - at present I hold no investment in Silver but plan to 

open one. 
From: bradrenfrow

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 9:53:03 PM

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments to 

one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of 

August 5th. You said:

“I believe that position limits should be consistently applied across markets 

for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one party 

controls half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by promoting more 

market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, the 

level of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity 

and liquidity. After publish ed non-commercial and imputed commercial 

spreads are removed, the net short position of one or two US banks 

exceeds 40% of the total net futures open interest. That same calculation 

indicates the net short position of the four largest traders exceeds 66% of 

total net open interest. Such levels of concentration do not exist, either on 

the long or short side, in any other market for physical commodities.

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of COMEX 

silver, as you stated. The level of the current accountability limit of COMEX 

silver futures (6,000 contracts), on an all months combined basis, is way 

out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether 

in relation to actual production or as a percent of total open interest, 
would dictate that the Commission impose a speculative position limit of 

no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on t he long side, commodity law requires you to guard 

against excessive speculation or manipulation on the short side as well. No 

other market comes as close to fitting the profile of a manipulated market 

than does COMEX silver on the short side. Once again, I urge you change 

that profile by establishing a speculative position limit of no more than 

1500 contracts in COMEX silver and by restricting any exemption to that 

limit to the actual producers and consumers of the metal. 

Brad Renfrow
From: tayl2229

To: energyhearingcomments; 

Subject: Position Limits in the Commodity Futures Markets

Date: Wednesday, August 12, 2009 9:42:09 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Matt Taylor 
From: fpbell

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Wednesday, August 12, 2009 9:25:40 PM

GENTLEMAN:

Any limits you put on trading must be applied equally to short sellers. Most 

of the time I read about decisions made by CFTC your position is 

subjective and your committee should be impartial. Your job is to protect 

the PUBLIC, i THINK THISW IS PART OF YOIUR OATH.

Frank
From: luke k

To: energyhearingcomments; 

Subject: CFTC

Date: Wednesday, August 12, 2009 9:06:13 PM

markets are exactly that. markets. unless of course, they are not. that 

means allowing all participants, regardless of size to vote with their feet 

and savings. to the thought that the CFTC may ban retail investor access 

to funds with large position sizing, i direct their attention to the COMEX, 

allowing 2 major investment banks to short more physical silver on paper 

than the globe produces in a year, or to ban anyone to do business again 

with the COMEX if they take physical delivery of the contract they hold in 

 the futures market; which was designed initially to facilitate. it is fraud 

and anyone informed knows it. 

no advantages or special exception rules on position sizing for anyone, 

regardless, is the market we must return to. if not, history points to 

violent civil unrest when a populous cannot protect itself with these types 

of options. be wise gentlemen.
From: Frank S

To: energyhearingcomments; 

Subject: position limits in the commodity futures markets

Date: Wednesday, August 12, 2009 8:56:25 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Frank Solway 
From: Orville Stifel

To: energyhearingcomments; 

Subject: ENERGY HEARING COMMENTS

Date: Wednesday, August 12, 2009 8:45:22 PM

It is important for the Commission to put an end to manipulation of the precious 

metal markets via concentrated naked short selling conducted by the bullion banks. 

I urge you to heed the comments of Ted Butler and Adrian Douglas.

Orville E. Stifel, II

Orville E. Stifel, II, Co., LPA
From: JB Williams

To: energyhearingcomments; 

Subject: Position Limits - Esp Silver Market...it has gone on for too long

Date: Wednesday, August 12, 2009 8:39:15 PM

CFTC 

Please enforce position limits in the commodity markets...especially the 

silver market. This tiny market has been manipulated by 4 commercial 

investment banks for way too long. 

It has hurt price discovery and taken money out of the hands of honest, 

rule/law abiding investors. 

Sincerely, 

JB Williams 
From: John W. Upson

To: energyhearingcomments; 

Subject: Comments regarding commodities futures position limits

Date: Wednesday, August 12, 2009 7:39:44 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

John Upson 
From: Rick Quataert

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 7:38:46 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Richard Quataert 
From: Diana and Harold

To: energyhearingcomments; 

Subject: enforcement of position limits in the futures markets

Date: Wednesday, August 12, 2009 7:35:15 PM

Please heed the comments sent to the commission by Ted Butler and GATA 

board member Adrian Douglas. 
From: zukor321

To: energyhearingcomments; 

Subject: Short Limits

Date: Wednesday, August 12, 2009 7:19:57 PM

Consider this letter to be an ORDER NOT a request. THE people are on to you, 

all of you. If you want to keep you jobs it would be in your selfish interest to right 

the ship of state.

 THE 

MESSENGER
From: Jeff Rosenberg

To: energyhearingcomments; 

Subject: short position limits

Date: Wednesday, August 12, 2009 7:03:46 PM

large short positions = market manipulation ... it has happened many 

times ... please limit the size of short positions any person or entity 

can have to a few percent of the market ... bring back "free" markets 

jeff rosenberg 
From: Mark Gore

To: energyhearingcomments; 

Subject: CFTC should bar manipulation by shorts not just longs

Date: Wednesday, August 12, 2009 6:49:45 PM

Dear Chairman Gensler:

Your hearings on position limits in the commodity futures markets have 

presupposed that the issue is speculation on the long side. You will not correctly 

regulate markets if your inquiries and hearings are being conducted from the 

conclusion you want to make and then work backwards.

The fundamental problem is not with finite resources but with infinite production 

of dollars. You are turning a blind eye to the manipulation of markets on the short 

side (and the massive OTC derivatives markets) that is undertaken to mask the 

uncontrolled creation of fiat dollars backed by nothing. 

The price suppression is rampant and is making finite commodities even more 

finite as it becomes uneconomic to produce them. The paper promises to supply 

commodities from stocks that do not exist suppresses prices. 

The CFTC has been investigating price manipulation in silver and gold for almost 

a year. The manipulators here will be drawing a pension before you recognize 

manipulation. Meanwhile the U.S. Senate can apparently recognize long-side 

manipulation of wheat and even crude oil in a flash. 

Why have your hearings focused on how oil rose to $147 per barrel and not 

equally how it fell to $35 per barrel and how the dollar made a magnificent rise in 

the middle of a credit crisis, a feat never before achieved?

Federal Reserve Chairman Ben Bernanke testified in response to U.S. Rep. Alan 

Grayson that the rise in the dollar was a total coincidence even though it 

occurred even as half a trillion dollars of currency swaps were executed with 

foreign central banks. Really? And was it an equal coincidence that as a result of 

the dollar's rising from the dead the entire commodity complex cratered, including 

the most time-honored safe-haven asset, gold? 

Any limits you put on trading must be applied equally to short sellers. But the 

CFTC's investigation needs to dig into how markets are being manipulated at the 

behest the U.S. government to maintain dollar hegemony so that imports can be 

purchased for free and so the United States doesn't have to compete in the 
global marketplace to manufacture anything anymore except a torrent of 

greenbacks.

My guess is that you will aid and abet the continuation of this Ponzi scheme 

because that is so much easier than doing what is right and what you are paid to 

do as a servant of the American people.

Regards

Mark Gore
From: bruce zeitlin

To: energyhearingcomments; 

Subject: Gold and silver

Date: Wednesday, August 12, 2009 6:27:12 PM

Dear Sirs:

I am sure there are some people who wrote in must explain how they could read 

huge manipulation of gold and silver prices on Comex. So I would not bring it up. 

The facts are crystal clear. I currently live in Europe and it is almost musing to see 

how gold and silver prices tank as soon as the NY market open. It is as if 

synchronized. I understand that you have been denying those apparent facts and 

this must have some political reasons. I would like to bring the fact that all Asian 

countries are watching you how you have been ignoring . Your decision to let this 

rigging carrying on would be backfired someday 

Regards,

A. Teratani
From: A Marsiglia Jr

To: energyhearingcomments; 

Subject: POSITION LIMITS - COMMODITIES FUTURES MARKETS

Date: Wednesday, August 12, 2009 6:23:12 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Antonio Marsiglia Jr
From: Joe Knipp

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 6:21:33 PM

Dear CFTC Commissioners:

I'm very glad that you are actively holding hearings on this very

very important subject, and that you're taking public comments

on it also.

However, please understand that limiting position limits is a great

idea, but you must enforce it completely on both the long-side and

especially the short-side. There should be NO EXCEPTIONS and

NO EXCLUSIONS to this rule. 

The manipulation that is allowed to happen in the Silver & Gold 

markets is frankly, a disgrace to commodity law. It is not at all

uncommon to see four or fewer banks holding 70% or more of the

short interest in Silver. An interest of this size (short or long) is

clearly price manipulation... in this case, manipulation of prices

to the downside. Regulators seem to turn a blind eye to this

illegal practice, resulting in the financial harm to the small investor.

If the markets were free and fair, no one would be allowed to hold

such massive short positions in this very strategic commodity.

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Joe Knipp
From: Carolyn Strickland

To: energyhearingcomments; 

Subject: Public comment about position limits

Date: Wednesday, August 12, 2009 6:19:16 PM

 Dear CFTC Commissioners: 

Thank you for asking for public comment about position limits on futures 

contracts. 

While I am concerned about the possibility of excess concentration and 

manipulation in energy markets, I think the situation in the silver market 

is much more immediately problematic for the integrity of the futures 

markets. 

1. Please reduce position limits for silver futures to a fraction of the 

current 6000 contracts. 

2. Please apply the limits to short positions, as well as to long 

positions, because that is where the current problem exists. 

3. Please stop granting exceptions to groups (such as investment banks) 

which are not directly involved in the physical silver markets as either 

miners or users. 

Thanks for your consideration. 

Carolyn D. Strickland 
From: Bob Sailing

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 5:52:48 PM

Commissioners,

 

I am urging the Commission to heed the comments sent to the Commission by Ted 

Butler and GATA board member Adrian Douglas regarding "Speculative Position 

Limits in Futures Markets".

 

I thank you in advance for you consideration of this request.

 

Best regards,

 

Bob Baumann
From: Gibbs, Ike - Communication of Counsel (Exchange)

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 5:48:58 PM

Attachments: Comments following hearings position limits and hedge exemptions final.pdf

Attached are JPMorgan Chase & Co.'s comments on the above-referenced matter.

___________________________________________________________________________

Ike Gibbs | Executive Director - Compliance Director & Asst. General Counsel | Global Commodities | J.

P. Morgan | 700 Louisiana Street, Suite 1000, Houston, Texas 77002 

T: 713-236-3322 | F: 713-574-4882| ike.gibbs@jpmorgan.com | jpmorgan.com
COMMENTS OF JPMORGAN CHASE & CO. 

REGARDING HEARINGS ON POSITION LIMITS AND HEDGE EXEMPTIONS 

IN ENERGY MARKETS 

JPMorgan Chase & Co. (“JPMorgan”) appreciates the opportunity to submit these 

comments regarding the Commodity Futures Trading Commission’s (“Commission”) hearings 

on July 28 and 29, and August 5, 2009, regarding the application of position limits and hedge 

exemptions in energy markets. As noted in the testimony submitted by Blythe Masters prior to 

the July 29, 2009 hearing, JPMorgan believes the application of position limits and exemptions 

to those limits are important to the proper functioning of commodities markets. 

 JPMorgan found each of the hearings to be enlightening and to provide useful 

information about the issue of position limits and hedge exemptions. JPMorgan limits these 

comments to highlight statistical data cited by Congressman Bart Stupak in his comments 

submitted prior to the hearing on July 28, 2009, and to compare those comments with the 

Commission’s “Staff Report on Commodity Swap Dealers & Index Traders with Commission 

Recommendations,” issued by the Commission on September 11, 2008 (the “Report”). 

Issue 1: The Increase in the Net Notional Value of Index Investments between January 1, 

2008 and June 30, 2008

In his written comments, Congressman Stupak stated that “according to CFTC data, from 

January 2008 through the end of June 2008, index investors poured $55 billion into major 

commodity indexes, pushing the price of crude oil from $99 per barrel to $140 per barrel. 

Gasoline prices spiked to a national average of more than $4 a gallon, with prices reaching more 

than $5 a gallon in some regions of the country.”1 This statement is inconsistent with the 

conclusions presented by Commission staff in the Report. 

 In the Report, Commission staff noted that the net notional value of index investments 

increased from $146 billion to $200 billion between January 1, 2008 and June 30, 2008.2

 

However, this increase was not the direct result of increased investment in commodity indices. 

For example, in discussing the increase of the NYMEX Crude Oil – Index Notional Value, 

Commission staff states that while the net notional value of commodity index business in 

NYMEX WTI crude oil increased by about 30 percent during this period, the “actual numbers of 

equivalent long futures contracts declined over that same period by about 11 percent” and that 

“the sharp rise in the net notional value of commodity index business in crude oil futures appears 

to be due to an appreciation of the value of existing investments caused by the rise in crude oil 

prices and not the result of more money flowing into commodity index trading.”3 

 

1

 Congressman Stupak Comments, p. 2. 

2

 Report, p. 3. 

3 Id., p. 22-23. See also p. 4. 
2

Issue 2: The Amount of Net Long Positions Held in Crude Oil

In his written comments, Congressman Stupak stated “this chart shows that speculators, 

such as banks and hedge funds, held...75 percent of the West Texas Intermediate crude oil 

market [on June 30, 2008]. Physical hedgers and middlemen took a much smaller share..."4 The 

“chart” referenced by Congressman Stupak is a chart that entitled “Long Positions Held in 

OTC.” The chart depicts long positions held in crude oil by three types of entities: (1) 

Speculators; (2) Commodity Brokers/Middlemen; and (3) Physical Hedgers. 

The Report provides specific data about two types of trading that appear to be covered by 

Congressman Stupak’s general “Speculator” category. The first type of trading is index trading. 

With respect to index trading, Commission staff stated "the total notional value of futures and 

options open contracts on June 30, 2008 for NYMEX crude oil $405 billion - the $51 billion net 

notional index value was approximately 13 percent of the total."5

 The second type of trading is 

trading by swap dealers with non-commercial entities.6

 Commission staff stated that 

“noncommercial client counterparties [of swap dealers] held about 41 percent of the estimated 

futures contract equivalents on the long side and about 31 percent on the short side.”7 However, 

Commission staff notes that a portion of the net notional value of 10 percent “includes the sum 

of the noncommercials identified as single-commodity swap counterparties and all of the 

dealer’s commodity index clients.”8 Even allowing for the potential for double counting certain 

net long positions held by index investors by combining the two referenced data points in the 

Report, the combined net notional value held by non-commercial entities was 23 percent. It is 

unclear what constitutes the remaining 52 percent of the “Speculator” category described by 

Congressman Stupak. 

 

4

 Congressman Stupak Comments, p. 3. 

5

 Report, p. 4. 

6

 JPMorgan assumes that a swap dealer’s positions with a commercial entity would be included in the category 

labeled by Congressman Stupak as “Physical Hedgers.” 

7

 Report, p. 23. 

8 Id., p. 23. 
From: nkbmab

To: energyhearingcomments; 

Subject: Position limits

Date: Wednesday, August 12, 2009 5:46:03 PM

Dear Commissioners,

Limits on positions should be implemented, without exceptions, especially 

for silver where short positions are disproportionately, even irrationally 

large, to allow an ethically sound market.

Thank you for the opportunity to comment.

Norman Brown, private individual investor
From: Medero, Joanne BGI SF

To: energyhearingcomments; 

cc: Durkin, Patrick: Barclays Capital; 

Thomas, Merritt: Barclays Capital; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 5:35:39 PM

Attachments: Barclays Capital CFTC Comment Letter Energy Hearings.pdf

Mr. Stawick: 

Attached please find Barclays Capital's comments on the Energy Hearings. 

If there are any questions, please contact Patrick Durkin ( 212 526 

9772) or the undersigned. 

 <<Barclays Capital CFTC Comment Letter Energy Hearings.pdf>> 

Joanne Medero 

Managing Director 

Government Relations and Public Policy, IBIM 

Ph: 415 597 2620 

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BGIS, a subsidiary of Barclays Global Investors, N.A. which is an affiliate of 

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prospectuses, go to http://www.ishares.com/misc/prospectus.jhtml
.BARCIAYS 

'CAPITAL 

August 12, 2009 

Mr. David Stawick 

Secretary 

Office of the Secretariat 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, N.W. 

Washington, DC 20581 

energyhearingcomments @cftc. gov 

RE: Energy Hearing Comments 

Dear Mr. Stawick: 

745 Seventh Avenue 

New York, NY 1 0019 

United States 

Barclays Capital1 ("Barclays") appreciates this opportunity to comment on the Energy Hearings 

held over the past two weeks by the Commodity Futures Trading Commission. Chairman 

Gensler and the Commission have clearly identified several key areas for regulatory review 

including systemic risk, market integrity, transparency and efficiency, and marketing practices. It 

benefits all market participants that these important objectives are achieved in the context of an 

effective regulatory environment. To that end, a number of proposals have been put forth which 

may address the issues raised by Chairman Gensler. All of these proposals require careful 

consideration to ensure that their implementation achieves the Commission's desired effects 

without risking unintended consequences. 

The CFfC's organization of public hearings over the past two weeks has been very positive in 

generating dialogue regarding the needs of market participants, and we were pleased by much of 

what we heard during those sessions. Commodity market participants are a diverse group with 

sometimes very different needs - it was important to hear the concerns of end-users and 

producers, particularly regarding clearing, the liquidity impacts of cash margining, and the impact 

these issues wiii have on company growth rates, capital investment, liquidity, and risk 

management strategies. 

Transparency was highlighted frequently in the discussions, and we support the CFTC' s efforts to 

ensure that it has a comprehensive picture of the markets, including information such as the 

Special Call to complement the information currently provided by the exchanges. We very much 

appreciate the Commission taking the time to hold these hearings. These are complex issues, and 

we would urge the Commission to solicit as much feedback and data as may be required to 

thoroughly evaluate the implications of any proposals; we stand ready to provide any such 

feedback or data that may be useful in this regard. 

1 Barclays Capital is the investment banking division of Barclays Bank PLC. Barclays Capital provides large 

corporate. government and institutional clients with a comprehensive set of solutions to their strategic advisory, 

financing and risk management needs. Barclays Capital has offices around the world and employs over 20,000 people. 

Barclays Capital Inc. 

Barclavs Bank PLC, New York Branch 
In our comments below, we hope to clarify a few points regarding the dynamics of futures 

markets and to offer some further background on the different types of intermediation required by 

commodity producers and consumers, the drivers for those requirements, and what is necessary in 

order to provide products, services, and risk management to meet those needs. We also outline a 

few examples of alternative and traditional energy projects that could not have been undertaken 

without access to both the futures market and the tailored hedging products and credit 

intermediation provided by intermediaries of scale who have the capital, experience, and 

diversified platforms required to structure unique solutions for these important projects and their 

corporate sponsors. 

Futures Market Dynamics 

We believe that two aspects of futures market dynamics which are shaping the ongoing policy 

dialogue would benefit from further clarification. Although we understand that the Commission 

is fully conversant in these issues, we thought it was worthwhile to provide this information for 

the record as there seemed to be some confusion in portions of the hearing testimony and in the 

broader media commentary on the subject. 

First, some of the analysis currently circulating in the media and in some policy circles seems to 

confuse the supply and demand of futures with the supply and demand of physical commodities. 

These are two different things. The overwhelming majority of investor funds entering the 

commodities markets over the past few years were invested in index-based products which utilize 

futures. This is not physical demand; investors seeking exposure to commodity markets in this 

way have had no ability to store or utilize the actual physical commodity. 

Futures are designed as a simple broad proxy to attract liquidity and to enable producers and 

consumers to transfer some amount of generic risk. Futures contracts are intended to mirror 

broadly the physical market, and indeed some can be delivered physically, but they do not mirror 

the actual diverse and specific underlying risks of producers and consumers. For example, the 

Nymex WTI contract specifies a light sweet crude oil of a particular sulphur content and API 

gravity deliverable at Cushing, Oklahoma. Only a small percentage of US oil production meets 

this specification and will be delivered to Cushing, yet this contract is seen as the world-wide 

benchmark and is used by many international producers and refiners of both heavier and lighter 

grades to hedge their crude exposure. 

As the CFTC well knows, to be useful to market participants, the price of the future at contract 

expiration must converge with the price of the physical commodity in the physical market at that 

time. If this convergence between the futures market and the physical market does not occur, the 

future is not a useful tool for hedging. To ensure this convergence, liquidity is essential and a 

great deal of thought goes into the design and specifications behind the futures contract, including 

ensuring that the delivery points and product grades are as relevant as possible to the physical 

market. Designing a successful futures contract requires balancing the need for a generic product 

to attract liquidity and the need for a specific product to mirror the physical underlying 

commodity. 

The key distinction between the physical and futures markets, however, is that market 

participants can, in theory, trade an infinite number of futures contracts. As long as two 

participants can agree on a price, a transaction can take place. By contrast, in the physical 

market, there is a limited amount of physical material available at any one time. Not everyone 

wanting to purchase or sell physical material can necessarily find a counterparty. If there is a 
shortage of material at a certain time, there is nothing to buy. For specific grades of material, 

there may be a limited number of users, and those users may have no need to purchase at a certain 

time, so sellers can not sell. Hence, while the futures market is designed to mirror the physical 

market and converge to the physical market price, physical market demand is not equivalent to 

demand for futures contracts. 

Investors in futures contracts actually aid convergence in that they "roll" their positions (selling 

the futures contract closest to expiration and purchasing a contract further out in the future) in the 

month prior to expiry, providing liquidity to the market at a time when it is needed for 

convergence. Importantly, at the point of expiration, there is very little, if any, remaining investor 

interest in the contract. Institutional investors can also be a stabilizing influence on the 

commodity markets as over time they rebalance their portfolio positions to achieve a consistent 

target allocation across multiple asset classes. This means that they are often selling after prices 

have risen and buying after prices have fallen. 

Second. we believe there is a growing misunderstanding in the media and in some policy circles 

regarding the drivers of forward prices. Forward prices can not be explained by spot supply and 

demand fundamentals: they are explained by future expectations of supply and demand. Forward 

prices communicate the amount of investment currently underway to bring new product to 

market, future demand and technology trends, risk of instability in producing regions, perceived 

threats to supply disruption, and other future drivers of prices. Current inventory levels serve as a 

starting point for forward supply and demand analysis, but current inventory itself is not a driver 

of forward prices. Price discovery in the forward markets is critical to ensuring that resources are 

allocated properly. The market provides producers with the opportunity to invest in costly new 

infrastructure like wind farms and pipelines to connect new sources of supply, and consumers 

with the opportunity to invest in energy-saving technologies like smart grids and more fuel 

efficient vehicles. Without these important forward price signals, we are liable to endure painful 

shortages or may waste precious natural resources. 

Research from Barclays Capital was referenced during the hearings. We would be happy to 

provide Barclays' research to interested parties at the CFTC. 

Unique Characteristics of the Commodities Markets 

There are a few points that we believe were not highlighted explicitly in the hearings, but which 

we feel are important to contribute to the ongoing dialogue. There are several fundamental 

characteristics of the commodity markets that drive the need for different types of intermediation. 

Exchanges have the resources to intermediate large volumes of generic commodity risks well, 

while commodity intermediaries of scale have the resources to intermediate the multitude of more 

specific idiosyncratic risks that face producers and end-users in these markets. 

(1) Commodity markets are global and incredibly diverse. Producers and end-users of 

commodities face very specific underlying risks due to the nature of the physical product, 

including risks based on the commodity's specification, volume, and location. For example, 

there are over 450 different types of crude, but the benchmark (most liquid) crude futures 

contract, WTI, specifies light sweet crude oil. Wind power doesn't blow a consistent amount 

of power every hour; production in any given time period varies with how the wind blows, 

and yet all futures contracts specify a given volume per time period. Physical natural gas has 

over 92 US delivery points as published by Natural Gas Intelligence, a major price reporting 

publication (and many more points that are too small to merit publishing), but the benchmark 
natural gas futures contract specifies delivery at Henry Hub, Louisiana. Intermediaries are 

needed to risk manage specific and varied risks that consumers and producers face because of 

the inherent diversity of physical commodities. 

(2) Commodities are substitutable. but rarely fungible. At a very basic level, this means you can 

produce power from coal-fired power plants instead of natural-gas fired plants if there is a 

shortage of natural gas, but you can't put coal into your natural gas-fired power plant. The 

infrastructure required for the production and processing of commodities is large, complex, 

and expensive. Processes typically utilize specific underlying grades of certain products and 

in many cases flexibility is limited by engineering constraints. This is well illustrated by coal 

and heavy crude oil. Physical steam coal used in power generation ships domestically from 

and to hundreds of rail and barge points, and internationally from and to dozens of ports 

worldwide. Every single coal mine has different chemical and combustion properties and 

while some of these differences can be subtle, some of them can be dramatic enough to limit 

substitutability between different coals from different origins. A power plant that uses 

Appalachian coal from West Virginia can not necessarily utilize Powder River Basin coal 

from Wyoming. As North Sea and US on-shore oil production declines, heavy crude oil is an 

increasingly large part of global supply, but this grade is difficult to refine in the US because 

most US refineries have been engineered to process light sweet crude oil. Refineries are 

converting their machinery to adapt to heavier grades of oil, but each individual conversion 

takes years and hundreds of millions of dollars to complete. 

Transportation costs and the physical nature of where commodities are located, often far 

away from centers of demand, also mean that there can be significant risk of regional supply 

and demand imbalances at any given time. These imbalances, combined with the lack of 

fungibility, naturally increases the volatility experienced in many commodity markets. 

Intermediaries with a sophisticated and expansive knowledge of regional markets and the 

underlying physical products are needed to risk manage this volatility. 

(3) Commodity markets are fragmented. The fragmentation in the commodity markets is most 

clearly evidenced by the location and size of its participants. While the majority of 

commodity futures contracts are currently traded on US exchanges, the broader commodity 

markets are truly global, with regional supply and demand balances generating localized 

volatility not always exhibited in the benchmark indices. There is a natural asymmetry in the 

size of producer and consumer hedging at any one time. Producers require large volume 

hedges because they are typically hedging to support sizeable investments in exploration, 

production, or infrastructure. The average end user is much smaller. Producers and end 

users are also often using different specific grades of underlying commodities, and are often 

not in the market at the same time. Commodity product expertise and a broad global reach 

are required to connect niche buyers with the sellers of certain more unique product grades. 

Intermediaries are needed to risk manage differences in timing. volume. and specific product 

grades. 

( 4) The production of commodities requires. in many cases. significant lead time and large 

investment. Both producers and consumers would like to be nimble and flexible entities, able 

to respond with "just-in-time" production. The reality is that because of the considerable 

capital expenditure required to explore for and develop large commodity assets, most 

producers and processors of commodities must plan and execute investment well in advance 

of anticipated physical demand. These large investments require significant capital and often 

utilize the credit markets. By contrast, most consumers look at much shorter timeframes, 

often hedging to their annual budgets. This creates a natural asymmetry with regards to the 
timing of hedging between consumers and producers, with generally only producers hedging 

in the outer years. Intermediaries are needed to risk manage these timing differences. and to 

provide credit to consumers and producers to facilitate hedging. 

(5) Commodity investment requires risk management tools. Because of the long lead times and 

capital requirements of commodity infrastructure projects, hedging commodity risk is often a 

necessary step to securing financing as stable cash flows are the foundation to prudent 

investment. For example, a company looking to develop a new natural gas reserve requires a 

certain level of guaranteed revenue from sales in order to justify the expenditure necessary to 

bring the field into production. Even if the company has a market view that gas prices will 

go up over time, a prudent lender to the project will require that a certain percentage of 

output be locked in at a known price level sufficient to ensure that the project is able to pay 

back debt and justify the initial expenditure. 

Smaller, independent companies and project developers rely most heavily on external sources 

of capital, and thus require hedging to facilitate investment. These independent players have 

a crucial role in the commodity markets. Looking at the contribution of independent 

producers to natural gas production growth in the US Lower-48 and Canada over the period 

2006-2008, independents have clearly been the primary driver of supply growth, adding an 

average of 2.24 Bcf/d over that period while total production grew by an average of 2.06 

Bcf/d. Independents account for 97% of the acreage owned by the top 10 acreage holders in 

six of the major shale plays. Growth in production from shale developments has been one of 

the most significant drivers in the large reduction of natural gas prices in the US over the past 

year, bringing benefits to consumers nationwide. 

In order to ensure ongoing commercial investment in both traditional and alternative energy. 

it is critical to have intermediaries that can provide meaningful and effective non-standard 

commodity hedging for complex and long dated requirements. 

All of these points above endemic to the commodity markets highlight the need for both the 

generic intermediation provided by Exchanges as well as the more specific intermediation 

provided by intermediaries of scale. It is critical that these characteristics are taken into account 

when evaluating policy options. Policy proposals which are structured to address concerns about 

the generic WTI contract may unintentionally negatively impact the coal producer in Wyoming or 

the natural gas consumer in New England if the complex nature of the underlying commodities 

markets is not thoroughly considered. 

Intermediaries of Scale 

The risk management and credit intermediation products and services required by commodity 

producers and consumers necessitate commodity intermediaries to assume a diversity of 

individual risks as highlighted above. In order to prudently provide for the effective risk 

intermediation of these complex risks, a certain amount of scale is required. Diversified business 

platforms, such as those that have been built out over decades by larger swap dealers and 

commercial participants with trading and marketing operations, allow for the provision of these 

tailored products. The points below illustrate why the services supported by these broader 

platforms can not be prudently provided by smaller intermediaries, nor easily or effectively 

moved to an exchange. 
(1) Portfolios help manage risk. Diversified global platforms which enable the trading of 

multiple commodities in multiple regions allow intermediaries of scale to prudently make 

markets in, and manage exposure to, the wide variety of specific risks facing consumers and 

producers in the commodities markets. Large liquidity providers have often spent a decade 

or more building these diversified global platforms. The greater the scale of such platforms. 

the more efficient and effective the intermediary will be in assuming and mitigating the risks 

caused by the underlying volatility and mismatches in the commodities markets as described 

above. 

(2) Diversified platforms require significant investment. Substantial amounts of IT 

infrastructure, operations capabilities, settlement and confirmation systems, modeling 

capabilities, trading systems, monitoring and risk management systems, logistics, legal 

documentation, legal and compliance expertise, and specialized tax and finance capabilities 

are required to support scalable risk portfolios. The largest intermediaries may have over 

1,000 clients globally and make prices on 800-1000 different commodities, locations, and/or 

grades. New products are added on an ongoing basis to accommodate customer requests. 

These platforms can not be built quickly, they are enormously expensive, and they require 

experienced commodity professionals to develop, maintain and manage them. Such 

infrastructure is necessarily customized, specialist, and sophisticated. By facilitating the 

efficient measurement. monitoring and management of risk positions. these platforms play a 

significant. and we believe central, role in reducing the systemic risks and volatility in the 

commodity markets. to the benefit of oroducers. consumers and regulators alike. 

(3) Economies of scale provide more hedging options for clients. Intermediaries of scale have 

the necessary systems in place to provide customized hedges to meet the individual risk 

profiles of clients, and the diverse portfolios required to manage these risks effectively. 

Tailored solutions enable end users and producers to meet the obligations of FASB 133 for 

hedge effectiveness. Customized hedges are also critical in providing risk management tools 

for the reduction of the large and complex risks inherent in significant infrastructure 

investments. In many cases. increasing cash flow certainty for these projects provided by 

appropriate customized hedging products enables the investments to proceed and to achieve 

financing at the lowest cost possible. creating jobs and producing new sources of energy. 

(4) Accepting non-cash collateral requires significant specialized resources. Producers and 

consumers in the commodities markets often post non-cash collateral, in many cases in the 

form of liens on assets or reserves. Non-standard collateral as a store of value reduces 

overall costs to the system and allows these companies to put their cash to better uses, for 

example in the development of infrastructure to bring more supply to market. However, to 

prudently extend these lines of credit, intermediaries require both experience and a wider 

portfolio in which to diversify project-specific risks. 

Accepting non-cash collateral requires significant due diligence and legal documentation; it 

is not as simple as producers putting the title to their reserves in a lock-box in favor of their 

hedge counterparty. There is often months of work involved in the valuation, credit and tax 

analysis of the assets, engineering work to be reviewed, appropriate documentation to be 

drafted, and necessary ongoing monitoring to be performed, all of which is facilitated by 

experience and diversified business platforms. It also requires the ongoing management of 

the risks of a non-liquid asset. Intermediaries of scale routinely hold these unhedged risks in 

their portfolios. Futures clearing houses monitor ongoing risks. but do not dynamically 

manage open risk positions. 
A common theme that we have noticed emerging in the policy dialogue appears to be the idea 

that more participants in a market automatically translates into greater liquidity provision to the 

market. Yet the themes noted above all emphasize the importance of economies of scale in 

offering products to help manage the fragmented and diverse risks inherent in the commodities 

markets. Robust competition is critical for markets and it is possible to have this without 

introducing artificial constraints that might hamper the ability of intermediaries to meet the 

legitimate needs of market participants. 

Clearly it is important to ensure that intermediaries of scale, like all market participants, are not 

building positions that may impact market integrity. Mechanisms are already in place to facilitate 

the CFTC' s regulatory review of such positions and information such as that suggested by 

proponents of the "Look to, Look through" concept would further enhance the Commission's 

ability to oversee these markets. All designated contract markets have rules to deal with large 

positions to avoid congestion issues, and the CFTC quite effectively uses its "Large Trader 

Reporting" system to conduct market surveillance. 

A few sample transactions from Barclays' own experience are provided below to demonstrate 

some of the capabilities afforded by intermediaries of scale: 

(1) Wind Energy in Texas. Barclays provided financing and a long-term hedge to a large wind 

farm project constructed in Texas. Without the long-dated hedges provided, the project 

would not have had the stable cash flows necessary to support its development. Wind farms 

contribute to growth in the local job markets and tax base, as well as the unique economic 

stimulus of landowner lease payments which provide supplemental income to area farms 

while allowing the land to remain in agricultural use. In addition, wind energy contributes to 

US energy security and helps meet environmental goals for a greener America. 

(2) US Refinery. Barclays provided financing and hedging to a US-based refinery to support its 

expansion and efficiency improvements. With the new investment, the refinery's production 

output will roughly double, while its crude oil consumption will increase by less than 30 

percent. The hedge provided was tailored to the very specific product mix and tenor 

requirements of the project, and it was the certainty of the hedge that allowed the company to 

prudently undertake this expensive capital investment. In addition to the economic benefits 

of the project, this refinery expansion contributes to US energy security by maximizing the 

different crude qualities that can be refined domestically. 

(3) Department of Energy ("DOE") Diesel and Gasoline Index Hedging. One of the most 

volatile exposures faced by Barclays' industrial and retail sector clients is the cost of gasoline 

and diesel used in deliveries by trucking fleets. Client exposure to this cost can come 

directly, through the operation of owned fleets of delivery vehicles, or indirectly, through the 

use of fuel surcharges on any outsourced transportation. Because the US diesel and gasoline 

futures contracts represent wholesale prices for products delivered in New York Harbor or 

the Gulf Coast, these contracts did not hedge risk sufficiently for our clients. Clients were 

unable to match their true retail exposure at the pump or achieve FASB 133 accounting. In 

response to client feedback on this risk, Barclays began offering its clients the ability to 

hedge against the DOE Diesel and DOE Gasoline indices. These indices represent "on-road" 

prices, helping clients to better manage their actual fuel costs at the pump. Clients are now 

hedging more of these risks, contributing to greater cash flow stability. 
Conclusions 

The commodity markets have proven themselves both robust in times of stress and capable of 

adapting to new risks. These markets have weathered multiple large bankruptcies (Enron, 

Calpine, Refco, SemGroup, Lehman), and the abrupt exit of numerous large players (Duke, TXU, 

Dynegy, El Paso, BMO, UBS, Constellation) over the past few years. In these times of stress, the 

markets, including the exchanges, look to intermediaries of scale to absorb significant risk 

quickly. Flexibility, the benefits of diversified portfolios, and the sophisticated platforms of 

systems and risk management expertise that these companies have built over decades allow them 

to absorb these shocks and digest diverse and complex risks quickly. 

The types of products required to support the projects outlined above require hedge exemptions 

for intermediaries of scale. These larger swap dealers and commercial participants with trading 

and marketing operations have the capital, experience. and diversified platforms required to 

structure unique solutions for these important orojects and their corporate sponsors. A market in 

which intermediaries of scale are unable to provide risk management for large and/or complex 

customer exposures is a market in which numerous participants will be trying to provide risk 

intermediation with less infrastructure, less expertise, and less capital. 

Encouraging smaller players that lack the required scale of operations and necessary expertise to 

offer more sophisticated and complex hedging products may not contribute to market stability or 

efficient regulation. It may also increase systemic risk and potentially jeopardize the leading role 

that the US currently plays in the commodities futures markets which is demonstrated by the fact 

that roughly 75 percent of all oil futures are traded on US markets, while only a quarter of the 

world's oil is consumed domestically. This type of migration would both damage a market 

leading industry and lead to greater instability in the commodities markets. Limits should not be 

a source of competitive advantage for inexperienced and potentially under-resourced 

intermediaries. 

Currently the leadership provided by the CFTC has made US exchanges the most attractive 

commodities futures markets in the world. The centralization of intermediaries of scale and other 

experienced, credit worthy participants in US regulated markets allows for better supervision of 

what is truly a global market. It is critical that the CFTC carefully consider every aspect of the 

current proposals to ensure that US markets remain a robust and attractive option for participants 

globally. 

Barclays Capital appreciates the opportunity to comment on the CFTC' s hearings, and to 

participate in this important policy dialogue. All market participants have a vested interest in 

ensuring the health of the commodity markets, in maintaining market integrity, and in supporting 

and encouraging efficiency. As you further evaluate the implementation of specific proposals, 

please do not hesitate to contact us should you require additional information or any further 

clarification. 

c;cerel;t) L_4'( _ .. _. 

Jerry del Missier 

President 

Barclays Capital 
iPath Exchange Traded Notes are issued by BBPLC and promoted by BGIS. For a 

current prospectus, go to http://www.ipathetn.com/prospectuses.jsp

Barclays Bank PLC and its affiliates, including Barclays Global Investors, N.A. and 

Barclays Global Investors Services, do not provide tax advice. Please note that (i) 

any discussion of U.S. tax matters contained in this communication (including 

any attachments) cannot be used by you for the purpose of avoiding tax 

penalties; (ii) this communication was written to support the promotion or 

marketing of the matters addressed herein: and (iii) you should seek advice 

based on your particular circumstances from an independent tax advisor. 
From: AFH

To: energyhearingcomments; 

Subject: For your consideration of position limits

Date: Wednesday, August 12, 2009 5:30:05 PM

Dear CFTC Commissioners:

For your consideration of position limits in the commodity futures markets I urge 

you to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. Market 

manipulation is market manipulation regardless of which side of the market it is on!

Thanks for your consideration.

Anthony F. Herbst, Ph.D.

of Finance, UTEP
From: Edward Wisniewski

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 5:27:48 PM

 

Energy Hearing Comments 

 

8/12/2009 (email) 

 

I concur with Mr. Butler's statement, as attached below. 

 

Position limits need to b enforced; otherwise, extreme concentration in 

both gold and silver 

will continue. This is absurd. This is illegal; and this should end 

immediately. 

 

This opinion also ignores the fact that material losses have occurred 

because of this manipulation; I 

hope this gets addressed in the future. And I bid you well. Thank you for 

listening. 

 

Edward J. Wisniewski 

 

 

 

August 10, 2009

 

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in energy and other 

physical commodities of finite supply. The hearings you conducted were of great public 

service. I will confine my comments to one market – the COMEX silver futures market.

 

I have excerpted the following passages from your opening statement of August 5th. You 

said:

“I believe that position limits should be consistently applied across markets for physical 

commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do not 

become too concentrated.”

 

“The very important question becomes: how much concentration is too much? At what point 
of market concentration does a trader detract from liquidity instead of enhance it? I think we 

would all agree that if one party controls half the market, that party is more likely to lessen 

liquidity than enhance it. Position limits should enhance liquidity by promoting more market 

participants rather than having one party that has so much concentration so as to decrease 

liquidity.”

 

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of concentration on the 

short side of COMEX silver futures would appear to meet or exceed the level you imply 

threatens market integrity and liquidity. After published non-commercial and imputed 

commercial spreads are removed, the net short position of one or two US banks exceeds 

40% of the total net futures open interest. That same calculation indicates the net short 

position of the four largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market for physical 

commodities.

 

The only effective means of ensuring market integrity and enhancing liquidity is for the 

Commission to impose legitimate speculative position limits. This will increase the number of 

traders on the short side of COMEX silver, as you stated. The level of the current 

accountability limit of COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether in relation to 

actual production or as a percent of total open interest, would dictate that the Commission 

impose a speculative position limit of no more than 1500 contracts in COMEX silver futures.

 

I also strongly urge you to restrict any exemption from that speculative position limit to the 

bona fide producers or consumers of the actual commodity, and not to those engaged in 

financial trading through aggregation. 

 

I would respectfully remind you that while the thrust of the hearings involved the enforcement 

of position limits to guard against excessive speculation on the long side, commodity law 

requires you to guard against excessive speculation or manipulation on the short side as 

well. No other market comes as close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you change that profile by establishing a 

speculative position limit of no more than 1500 contracts in COMEX silver and by restricting 

any exemption to that limit to the actual producers and consumers of the metal. 

 

Theodore Butler (attached from the note as above, from Edward Wisniewski, details above.) 

Once again, Thank you for your interest.
From: Germar Gerling

To: energyhearingcomments; 

cc: Gensler, Gary; Dunn, Michael; Chilton, Bart; Sommers, Jill; 

info@butlerresearch.com; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 5:09:29 PM

Dear Mr. Hon. Chairman Gensler,

As a long-time silver investor, I would like to ask you to pay sincere attention in your 

hearings to the remarks of silver analyst Mr. Ted Butler dated August 10, 2009 http://

www.investmentrarities.com/ted butler comentary08-11-09.shtml and enclosed 

hereafter.

I would like to ask you to immediately stop the silver price manipulation!

Thank you for all your efforts.

Yours sincerely

G. Gerling

Germar Gerling

 

 

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in energy and other 

physical commodities of finite supply. The hearings you conducted were of great public 

service. I will confine my comments to one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 5th. You 

said:
“I believe that position limits should be consistently applied across markets for physical 

commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do not 

become too concentrated.”

“The very important question becomes: how much concentration is too much? At what point 

of market concentration does a trader detract from liquidity instead of enhance it? I think we 

would all agree that if one party controls half the market, that party is more likely to lessen 

liquidity than enhance it. Position limits should enhance liquidity by promoting more market 

participants rather than having one party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of concentration on the 

short side of COMEX silver futures would appear to meet or exceed the level you imply 

threatens market integrity and liquidity. After published non-commercial and imputed 

commercial spreads are removed, the net short position of one or two US banks exceeds 

40% of the total net futures open interest. That same calculation indicates the net short 

position of the four largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market for physical 

commodities.

The only effective means of ensuring market integrity and enhancing liquidity is for the 

Commission to impose legitimate speculative position limits. This will increase the number of 

traders on the short side of COMEX silver, as you stated. The level of the current 

accountability limit of COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether in relation to 

actual production or as a percent of total open interest, would dictate that the Commission 

impose a speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position limit to the 

bona fide producers or consumers of the actual commodity, and not to those engaged in 

financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the enforcement 

of position limits to guard against excessive speculation on the long side, commodity law 

requires you to guard against excessive speculation or manipulation on the short side as 

well. No other market comes as close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you change that profile by establishing a 

speculative position limit of no more than 1500 contracts in COMEX silver and by restricting 

any exemption to that limit to the actual producers and consumers of the metal. 

Theodore Butler
From: Trabue Bland

To: secretary; Stawick, David; 

Subject: ICE"s Addition to the Energy Position Limits Hearing Record

Date: Wednesday, August 12, 2009 5:03:14 PM

Attachments: additiontorecord.pdf

Dave:

 Attached as a PDF is ICE's addition to the hearing 

record on energy position limits. 

 Thanks in advance.

 Trabue

Trabue Bland - Director of Regulatory Affairs and Assistant General 

Counsel

IntercontinentalExchange | ICE 

2100 RiverEdge Pkwy | 5th Floor | Atlanta, GA 30328 

Tel: 770.916.7832 | Fax: 770.857.4755 

trabue.bland@theice.com

24-hour ice helpdesk 770.738.2101

www.theice.com

This message may contain confidential information and is intended for specific recipients unless 

explicitly noted otherwise. If you have reason to believe you are not an intended recipient of this 

message, please delete it and notify the sender. This message may not represent the opinion of 

IntercontinentalExchange, Inc. (ICE), its subsidiaries or affiliates, and does not constitute a 

contract or guarantee. Unencrypted electronic mail is not secure and the recipient of this 

message is expected to provide safeguards from viruses and pursue alternate means of 

communication where privacy or a binding message is desired. 
ICe 

Mr. David Stawick 

Secretary 

August II, 2009 

Commodity Futures Trading Commission 

1155 21st Street, NW 

Washington, DC 20518 

RE: Energy Hearing Comments 

-=~__,_,.Oo.,v<~J. ; Dear Mr:- ~taw1ck: 

At the Commission's July 28 hearing on Energy Markets, Jeffrey Sprecher 

testified for the IntercontinentalExchange, Inc, (ICE), Pursuant to the release of the 

Commission's request for subsequent comments, ICE would like to add the following to 

the heming record: 

Applicability of a Designated Contract Market (DCM)'s Position Limits to a 

Linked Contract Traded on a Foreign Board of Trade or on a Significant Price 

Discovery Contract 

In the Question and Answer session following ICE's testimony, a panelist stated that 

ICE could set its own position limits for Significant Price Discovery Contracts (SPDC) 

listed on its Exempt Contract Market and for Linked Contracts listed on ICE Futures 

Europe, This statement was incorrect as referenced in the Commission rules and no 

action letter listed below: 

1) A SPDC listed on ICE is subject to the CME's position limits and 

accountability under Core Principle IV: 

(3) Limitations on spot-month positions. 

Spot-month limits should be adopted for significant price discovery contracts to minimize 

the susceptibility of the market to manipulation or price distortions, including squeezes 

and comers or other abusive trading practices. 

(i) Contracts economically equivalent to an existing contract. An electronic trading 

facility that lists a significant price discovery contract that is economically-equivalent 

to another significant price discovery contract or to a contract traded on a designated 

colltract market or derivatives transaction execution facility should set the spot-month 
ICe 

limit (or its significant price discoverv contract at the same level as that specified (or 

the economicallv-equivalent contract. 1 (bold, italicized emphasis added) 

2) ICE Futures Europe is subject to CME's position limits and accountability 

under CFTC's 2008 revision to the no-action letter: 

"ICE Futures Europe will impose on IFE Linked Contracts, by rule or otherwise, position 

limits or position accountability levels (including related hedge exemption provisions) 

that are comparable to the existing position limits or position accountabilitv levels 

(including related hedge exemption provisions) as adopted bv: (i) the DCM, DTEF or 

ECM (or the contract against which the IFE Linked Contract settles or (ii) the DCM, 

DTEF or ECM for a financially-settled equivalent of such contract; .... "

2 (bold, italicized 

emphasis added) 

Both the SPDC rulemaking for ICE's ECM and ICE Futures Europe's no action 

Jetter require each to adhere to a DCM's position limits. In each case, this would be the 

Chicago Mercantile Exchange. This fact is important to note because one of!CE's core 

arguments that the CFTC set aggregate position limits is that ICE does not have any 

transparency into the way the CME sets its position limits. 

A few examples of the lack of transparency: 

Prior to 2006, CME (formerly the New York Mercantile Exchange) treated 

physical and financial contracts similarly. In November 2006, the CME began to treat 

physical and financial contracts differently. For example, CME's flagship crude product 

is the physically-delivered WTI contract ("CL"). CFTC guidelines call for fungible or 

economically equivalent contracts to be aggregated for position limit purposes. For the 

cash-settled WTI Calendar Swap ("CS"), in which customers typically have positions that 

are hedged and therefore offset by opposing CL positions, CME indeed aggregates the 

two contracts for position limit purposes. However, for the WTI Financial Swap ("WS"), 

in which customers typically have positions that are on the same side as and therefore do 

not offset CL positions, CME does not aggregate. This unsupportable inconsistency in 

position limit implementation is further highlighted by the fact that CME nonetheless 

provides a margin credit of 99% to WS positions offsetting CL positions. Thus, for 

position limit setting and risk management purposes, the CFTC and CME deem the 

1 74 Fed. Reg. 12177 (March 23, 2009). A discussion on the points raised on this issue by commentators 

can be found at 12814. 

2 Letter from Richard Shilts, Director, Division of Market Oversight to Dee Blake, Director of Regulation, 

ICE Futures Europe (July 17, 2008). 

http: /\VW\v.cftc.£ov/;,tellent/groups/public/(dnewsroomidocuments/file/icefutureseuropeamendment06170. 

QQf 

2 
ICe 

physical and financial contracts equivalent, yet for position aggregation purposes, the 

contracts remain completely unlinked. ICE could find no publicly available reason for 

disaggregating these contracts. As noted in our testimony, ICE believes that physically 

delivered and cash-settled contracts differ in nature and purpose, especially during the 

month of expiration. Accordingly, not only should positions in each not be aggregated, 

but different critetia should detennine the setting of different position limits for each. 

In October 2008, the CME converted its 3,000 position accountability level to a 

2,000 lot hard position limit on its WTI Financial Swap. This coincided with the CFTC 

requiring that ICE Futures Europe place position limits on its WTI contract comparable 

to CME's WTI contract (financial or physical was not specified). This was the only 

change to a CME financially settled product and again there was no public justification 

for this change, even though- against the weight of logic-- the position limit for the 

cash settled contract is now lower than the physically delivered contract. 

Similarly, until recently, the CME aggregated positions in many of its natural gas 

basis swap contracts (AECO, Southern California, others) into the Henry Hub natural gas 

contract for position limits. Over the last several weeks, CME began disaggregating 

these swaps from the Henry Hub position limits, again, with no public justification. 

Because it is likely that these measures were taken for commercial, rather than 

regulatory, reasons, ICE would like to reiterate the following pro-competition suggestions 

that were made in its original submission: 

1. Position limits should be set and administered by the Commission; 

2. Position limits should be aggregate in nature (single limit collectively 

applicable to any and all venues); and 

3. The Commission should be agnostic as to the venue(s) each trader chooses 

to maintain its position so long as aggregate compliance is met. 

Financially Settled Contracts and Physically Deliverable Contracts Should be 

Treated Differently in a Revised Position Limit Regime 

In its oral and written testimony, ICE recommended that the Commission treat 

financially-settled and physically-deliverable contracts differently. As ICE stated, 

currently, the CFTC is encouraging exchanges to adopt hard position limits for 

financially settled contracts that are equal to the position limits for physically deliverable 

contracts. The Commission should closely examine this practice, as market participants 

primarily use the financially settled contract to gain exposure to the final settlement price 

of the physically delivered contract, and may not be able to obtain a "perfect hedge" 

through exposure to the physical contract due to the need to trade out of such contracts 

prior to the final settlement price being established. This is shown by the charts below: 

3 
ICe 

3.5 

• "' 3.0 • 0 

"' 0 

'0 

~ 2.5 ,._ 

0 

"' 0 a; .2 >- 2.0 w ~ ..J ·a. 

-UJ 0 " ., ~ w 1.5 

., 

w- " w 

.E"' 

... 1.0 e 

~ 0 

w 0.5 c. 

0 

0.0 

90 

Physically Delivered versus Cash-Settled Contracts 

Henry Hub Average Open Interest For Most Recent 6 Month Expirations 

(Feb through Jul '09) 

Expiration Month 

-ICE Cash-Settled Contract 

- NYMEX Physically-Delivered Contract 

80 70 60 50 40 

Physical Positions Rolled to 

the Following Month 

30 20 

Trading Days Before Expiration 

10 

The charts show that open interest increased in the expiration month for the 

financially settled Henry Hub contracts; this represents participants that need exposure to 

the final settlement price. Contrast this with the physically deliverable contract, where 

participants exit the contract in the expiration month and roll their position to the second 

month. Imposing limits on cash-settled contracts that are the same as those for 

physically-delivered contracts will be problematic for those trying to hedge the settlement 

p1ice, and may create a convergence problem for the physically deliverable contract. 

Further, it might force participants to seek alternatives off exchange in order to get 

exposure to the final settlement price. 

4 
ICe 

Thank you again for the opportunity to express our views on this important topic. 

~ely, 

~~~~ R. Trabue Bland 

Director of Regulatory Affairs 

Assistant General Counsel 

5 
From: Sweeney, R. Michael

To: energyhearingcomments; 

cc: McIndoe, David; Menezes, Mark W.; 

Currier, Patrick T.; 

Subject: Energy Hearings Comments

Date: Wednesday, August 12, 2009 5:01:09 PM

Attachments: HW CFTC Working Group comments.pdf

Good afternoon:

 Hunton & Williams LLP, on behalf of the Working Group of Commercial 

Energy Firms, hereby submits the enclosed transmittal letter and comments 

addressing certain issues discussed at the hearings on “Speculative Position 

Limits in Energy Markets” held by the Commodity Futures Trading Commission 

on July 28-29, 2009, and August 5, 2009. 

 If you have any questions, or if there is further correspondence regarding 

this proceeding, please contact the following persons:

R. Michael Sweeney, Jr. David T. McIndoe Patrick T. 

Currier 

(202) 955-1944 (202) 955-1947 (202) 419-

2001 

rsweeney@hunton.com dmcindoe@hunton.com 

pcurrier@hunton.com

 Thank you very much.

 Regards, Michael Sweeney

 

<<HW CFTC Working Group_comments.pdf>> 
HUNTON & WILLIAMS LLP 

1900 K STREET, N.W. 

WASHINGTON, D.C. 20006-1109 

TEL 202 • 955 • 1500 

FAX 202 • 778 • 2201 

E-MAIL: mmenezes@hunton com 

dmcindoe@hunton.com 

rsweeney@hunton.com 

August 12, 2009 

David Stawick 

Secretary of the Commission 

Commodity Futures Trading Commission VIA ELECTRONIC MAIL

Three Lafayette Centre 

1155 21st St., NW 

Washington, DC 20581 

Re: Energy Hearing Comments 

Dear Mr. Stawick: 

 Hunton & Williams LLP, on behalf of the Working Group of Commercial Energy 

Firms (the “Working Group”), hereby submits the enclosed comments that address certain 

issues discussed at the hearings on “Speculative Position Limits in Energy Markets” held by 

the Commodity Futures Trading Commission on July 28-29, 2009, and August 5, 2009. The 

Working Group is a diverse group of commercial firms in the domestic energy industry whose 

primary business activity entails the physical delivery of one or more energy commodities. 

The Working Group, which includes energy producers, energy marketers and utilities, 

considers legislative and regulatory developments with respect to the trading and hedging of 

energy commodities, including those involving derivatives and other contracts that reference 

energy commodities. 

 If you have any questions, or if we can be of further assistance, please contact the 

undersigned at (202) 955-1500. 

Sincerely, 

/s/ Mark W. Menezes 

Mark W. Menezes 

David T. McIndoe 

R. Michael Sweeney, Jr. 

Counsel for the 

Working Group of Commercial Energy Firms

Enclosure 

ATLANTA AUSTIN BANGKOK BEIJING BRUSSELS CHARLOTTE DALLAS HOUSTON LONDON LOS ANGELES 

McLEAN MIAMI NEW YORK NORFOLK RALEIGH RICHMOND SAN FRANCISCO SINGAPORE WASHINGTON 

www.hunton.com 
POSITION PAPER OF

WORKING GROUP OF COMMERCIAL ENERGY FIRMS

WITH RESPECT TO THE

COMMODITY FUTURES TRADING COMMISSION’S

PROPOSED APPLICATION OF FEDERAL POSITION LIMITS

IN ENERGY COMMODITY MARKETS

The Working Group of Commercial Energy Firms (the “Working Group”) is a group of 

commercial firms in the energy market whose primary business activity entails the physical delivery of 

one or more energy commodities (each, an “Energy Provider”). Members of the Working Group consist 

of energy producers, marketers, and utilities. The Working Group considers legislative and regulatory 

developments with respect to the trading of energy commodities, including derivatives and other contracts 

that reference energy commodities. 

Executive Summary 

1. Federal position limits for energy commodity transactions could increase costs 

for Energy Providers and, ultimately, American consumers.1

 If not precisely 

established, position limits will reduce liquidity and price discovery in otherwise 

efficient commodity markets. As energy markets become less efficient, Energy 

Providers will incur higher costs when hedging commodity prices. These costs 

are subsequently reflected in higher and more volatile prices paid by American 

consumers for energy products. Accordingly, the Commodity Futures Trading 

Commission (“CFTC” or the “Commission”) must exercise the highest level of 

diligence in considering federal position limits for energy commodity 

transactions. Careful study and deliberation is needed to assure the benefits of 

federal position limits are not overwhelmed by the associated costs. 

2. The Commission should establish federal position limits under the Commodities 

Exchange Act (the “CEA”) in a manner that does not burden trading by Energy 

Providers, particularly with respect to hedging activities. Energy Providers use 

trading activities to eliminate price volatility in producing and delivering 

electricity, heating oil, natural gas, gasoline and other energy commodities to 

American consumers. This trading activity does not present the type of market or 

systemic risks that position limits are designed to minimize. Accordingly, given 

the limited risk profile associated with the hedging activities of Energy Providers, 

new federal position limits should not be set at levels that could burden or 

otherwise adversely affect such activities. 

3. Swap dealers perform a core function in the efficient operation of the energy

markets and their current exemptions from position limits should be maintained. 

Energy Providers rely on swap dealers to facilitate their trading activity. If swap 

dealers are constrained by position limits and cannot offer Energy Providers with 

efficient access to energy markets, then Energy Providers will incur additional 

costs in the normal course of their business. These additional costs will 

ultimately adversely affect the pricing of energy commodities for American 

consumers. 

 

1

 As used herein, “federal position limits” is distinguishable from position limits that may be separately 

established and maintained by various exchanges on which transactions for energy commodities may trade. 
2 

4. Commodity investors are necessary for the efficient operation of energy markets. 

The imposition of federal position limits should not reduce the benefits these 

traders provide. Similar to swap dealers, commodity investors help bring 

liquidity and price discovery in energy markets. Their trading helps to converge 

prices between producers and consumers of energy commodities. Unnecessary 

restraints on trading by commodity investors will harm the efficient operation of 

energy markets. 

5. Energy markets are different from markets for other commodities, such as 

agricultural commodities. Energy markets are often highly liquid and currently 

are subject to other federal and state regulation. The Commission should be 

mindful of the distinctions when adding further regulation to such energy 

markets. In particular, the Commission should delegate the day-to-day 

operational aspects of position limits to exchanges. By doing so, the 

Commission can efficiently leverage the expertise possessed by the exchanges, 

while preserving its scarce resources for more prudential activities. 

6. The Commission should not seek the authority to impose position limits in the 

over-the-counter (“OTC”) markets for highly customized transactions or 

transactions that involve physical delivery of energy commodities. Energy 

Providers require a market in which they can trade to offset unique risks 

associated with their businesses. Energy Providers typically execute trades in the 

OTC market to mitigate such risks. This market should remain as robust as 

possible to promote trading efficiency. 

7. The Commission should consider the dampening effect on competition in the 

energy market that new federal position limits could have. If not precisely 

established, position limits will increase the cost of doing business for most 

Energy Providers. However, the abilities of any Energy Provider to absorb or 

meet such costs may be better or worse than its peer firms. Energy Providers that 

cannot incur such costs will be forced to exit the business. 
3 

I. INTRODUCTION. 

The Commission recently concluded three hearings on federal position limits in energy markets 

and exemptions from such limits. The Commission sought a diversity of views, which included, but not 

limited to, the following: 

• Whether the CFTC should apply federal position limits consistently across all markets and 

participants, including index traders and managers of exchange traded funds; 

• Whether federal position limits would enhance the integrity and efficiency of energy markets; 

• Whether the CFTC needs additional statutory authority to fully accomplish these goals; 

• Should federal position limits apply only to speculative transactions; 

• What roles should the CFTC and/or the exchanges have in implementing federal position 

limits; and 

• What formulation the CFTC should use to determine levels for federal position limits for each 

distinct energy commodity market. 

The imposition of federal position limits on energy commodities would represent a substantial 

change in the regulation of trading in energy commodity markets. Presently, certain energy markets are 

subject to position limits established by exchanges, but not the Commission itself. Annex A provides an 

overview of the Commission’s current authority to impose federal position limits and to regulate 

manipulative trading activities. 

As discussed herein, if federal position limits for energy commodities are not thoughtfully and 

carefully developed and implemented by the CFTC, this action could adversely impact such energy 

markets and, particularly, Energy Providers that produce physical energy commodities or are obligated by 

contract, regulatory compact or otherwise to deliver physical energy commodities and, ultimately, 

American consumers. If federal position limits are established at unreasonable levels, they likely will: 

• Restrict the ability of Energy Providers to effectively and efficiently manage and transfer price 

risk associated with purchases and sales of underlying physical commodities and, thereby, 

increase the tangible cost of doing business; 

• Decrease liquidity in futures and the OTC markets for energy commodities; 

• Create market volatility that could adversely affect the value of underlying physical 

commodities held by Energy Providers; and 

• Harm American consumers through increased prices for physical energy commodities. 

This position paper identifies and discusses the specific concerns of the Working Group regarding 

the proposed application by the CFTC of federal position limits in energy markets. 
4 

II. DISCUSSION. 

A. The Cost of Federal Position Limits May Hurt the U.S. Economy, the Energy 

Markets and American Consumers. 

Energy Providers transact futures and energy-related derivatives on a daily basis to remove price 

risk associated with their core business of keeping the lights on, the car’s gas tank full, or the stove lit for 

millions of citizens. The imposition of federal position limits will add costs to the transaction of energy 

commodities. These costs will be borne across the market and by American consumers. The 

Commission should be mindful of these costs when establishing federal position limits. 

Position limits, if not implemented properly, will result in costs borne by the market and 

consumers. The Working Group is particularly concerned about the loss of liquidity and price discovery. 

Without sufficient liquidity and price discovery, bid/ask spreads will widen and the pricing of hedges will 

become more expensive as firms account for greater actual or potential volatility. As position limits 

hinder a firm’s ability to hedge efficiently, Energy Providers may account for risks in other ways, such as 

increased reserve funds, which may be more costly. The increase in hedging costs will be reflected in: (1) 

higher consumer prices; or (2) the fact that consumers will bear the risk of fluctuating commodity prices. 

Even if the level of prices were unchanged, the increase in volatility would increase the costs consumers 

would have to pay to obtain flexibility (e.g., to acquire the right to purchase extra natural gas in particular 

days during the winter). Further, if hard position limits are applied across all contract months, the ability 

of commercial end users to hedge long term exposure, and in turn offer longer term pricing to customers, 

will be stifled. 

Energy commodities are intimately linked with the entire U.S. economy. Thus, the entire U.S. 

economy will be affected by the costs associated with new federal position limits. Chairman Gensler 

recognized this fact in his statement opening the series of hearings on federal position limits in energy 

markets and hedge exemptions: 

Gasoline prices, for example, can determine whether a family takes a summer 

vacation. Natural gas futures contracts can affect utility bills, and lack of 

convergence in the wheat market can shorten a grocery list.2

 In light of the foregoing, the Commission must ensure that its regulation of energy markets does 

not have the unintended consequence of unnecessarily increasing costs to American consumers and, 

ultimately, harming the U.S. economy. The Working Group believes that federal position limits can be 

created and administered in a manner that avoids unnecessary costs. To avoid such costs, the 

Commission must strike a balance between effectively preventing manipulation in the energy markets and 

preserving the ability of Energy Providers to effectively and efficiently manage price risk.3

 

2

 Opening Statement of Chairman Gary Gensler, Hearing of the Commodity Futures Trading Commission, at 1 

(July 28, 2009) (“Gensler July 28 Statement”). 

3

 Sense of Balance, Speech of CFTC Commissioner Bart Chilton before the American Public Gas Association 

Annual Meeting, at 3 (August 4, 2009) (addressing the need for balance between the amount of commercial hedging 

and the amount of speculation in energy commodity markets). 
5 

B. Federal Position Limits in Energy Markets Should Be Set Only at Levels Designed 

to Protect Against “Systemic Risk.” 

The discussion of federal position limits arises in the broader debate about the use of derivatives 

and the related “systemic risk” concerns in the financial system.4

 Among the many ideas in the larger 

debate about systemic risk is that firms that create such risk should be subject to additional regulation. 

The corollary principal, though not often stated, is that firms that do not create systemic risk should not be 

subject to such additional regulation. To that end, the Commission should appreciate and understand that 

the trading activity of Energy Providers, particularly with respect to hedging, does not create systemic 

risk. Thus, when establishing federal position limits, the Commission should be careful not to set them at 

levels that could burden the normal trading activity of Energy Providers. 

In support of this position, the Working Group notes that the hedging activities of Energy 

Providers do not create the systemic risk that financial institutions create. Major financial institutions act 

as intermediaries in the flow of credit and payments throughout the financial system. Energy Providers 

do not perform an analogous intermediary role in energy markets. Instead, Energy Providers tend to act 

as “end users” without the same chain of transactions. As a consequence, there tends not to be significant 

concentrations of risk. Outside of market manipulation concerns, for which the Commission already has 

broad jurisdiction, energy markets typically are highly liquid and, in such liquid markets, the ability of a 

firm to exercise abusive market power is quite small. 

Moreover, the operation of assets and related hedging activities of one Energy Provider are 

largely independent of other Energy Providers in the same product markets. Unlike the events that took 

place in the market for credit default swaps, where a default by a single firm led to a domino-like, cascade 

of defaults by other institutions in the financial system, a default by an Energy Provider is typically 

limited to a single firm. For instance, if a particular Energy Provider experiences financial distress, 

energy assets can continue to operate and physical delivery obligations can be met. Accordingly, the risk 

that a default by an Energy Provider results in a total collapse of a particular energy market is very low (if 

existent at all).5

 Enron and Amaranth are examples of this. 

Given the limited degree of systemic risk presented by the trading activities of Energy Providers, 

there does not appear to be any discernible public policy benefit from subjecting their hedging activities 

to the same degree of regulation that is otherwise appropriate for minimizing systemic risk created by 

financial institutions. If anything, the imprecise establishment of federal position limits may actually 

create more risk in energy markets by, among other things: (1) limiting opportunities for Energy 

 

4

 There is no widely accepted definition of “systemic risk.” In general terms, “systemic risk” refers to potential 

harm to an entire system due to the actions or inactions by one or a small group of firms. It is characterized by interlinkages and inter-dependencies in a system or market, which could potentially cause the entire implosion of that 

system or market. 

5

 For example, exposures in energy markets that are secured by assets or are unsecured do not present systemic 

risk. From the standpoint of an Energy Provider, the ability to pledge asset-backed collateral in energy markets is 

very favorable, as it allows them to efficiently enter into risk management transactions using their own non-cash 

assets with no disruption to their core businesses and without draining liquidity used for working capital. From the 

stand-point of their counterparty (typically swaps dealers), in asset backed transactions, exposure to an Energy 

Provider is favorable in that exposure moves in the same direction as the value of the asset-backed collateral or the 

overall business. Similarly, in situations involving unsecured exposure, a counterparty is more likely to extend 

unsecured credit because the energy provider’s overall creditworthiness tends to improve as exposure grows. See 

Testimony of Blythe Masters, Managing Director & Head of Global Commodities Group, J.P. Morgan, Hearing of 

the Commodity Futures Trading Commission, at 5-6 (July 29, 2009) (“Masters Testimony”).
6 

 

Providers and other commercial participants to hedge physical commodity positions; and (2) forcing them 

to take less efficient hedges in order to comply with the position limits. 

C. Federal Position Limits Should Not Constrain the Business of Energy Providers. 

Federal position limits should be fashioned by the Commission in a manner that allows Energy 

Providers to operate without additional trading costs. To this end, the Commission should impose federal 

position limits only with respect to prompt month contracts, when price volatility and potential for market 

abuses are the greatest. The Commission also should not impose hard position limits based upon an 

Energy Provider’s percentage of open interest in a particular contract. 

The Working Group believes that it is important that the Commission recognize that Energy 

Providers often need to hedge prices for commodity prices for several months, or even years. Such longterm hedging activities effectively reduce potential price volatility, allow Energy Providers to enter long 

term agreements to procure and develop physical assets, and in turn offer their customers stable pricing 

options for extended periods. The imposition of position limits beyond the prompt month contracts 

would greatly increase the cost of doing business for Energy Providers, but without effectively alleviating 

any identifiable market risk.6

 

Hard position limits should not be imposed by the Commission based upon an Energy Provider’s 

percentage of open interest in a particular contract. Energy Providers often operate in physical locations 

for which there is little trading activity. These firms typically hedge out price and basis risk related to 

their physical delivery requirements in such locations. Although exchange-traded contracts in certain 

products or locations can be illiquid (e.g., electricity contracts), they are still vital hedging tools to Energy 

Providers with applicable exposures. Position limits based upon a percentage of open interest could 

profoundly impact the ability of Energy Providers utilize to these important hedging tools, and in turn 

Energy Providers will incur significant price risk and associated costs in providing energy commodities to 

end users at such locations. 

Energy markets can change rapidly and federal position limits might be quickly rendered 

unnecessary or, worse, constraining to natural and proper market developments. Thus, the Commission 

should implement federal position limits in a manner that is responsive in real time to changes in the 

energy markets. To this end, the Commission should provide market participants with a procedure for 

petitioning for and receiving relief from any federal position limits on a rapid basis. 

D. The Bona Fide Hedge Exemption for Swap Dealers Should Be Continued. 

Swap dealers play an important and unique role in the energy markets. New CFTC regulation of 

swap dealers should recognize the benefits to the energy markets that swap dealers provide. Federal 

position limits and other regulatory measures should be carefully tailored to not hinder the role of swap 

dealers in such markets. 

Specifically, swap dealers make markets for energy commodities. In this role, swap dealers 

provide Energy Providers with efficient access to the broader energy markets. Because swap dealers 

make it easier for firms to access the markets, more firms can participate in the market which, in turn, 

enhances price discovery and liquidity. 

6

 See Testimony of John D. Arnold, Managing Partner, Centaurus Advisors, LLC, Hearing of the Commodity 

Futures Trading Commission, at 1 (August 5, 2009). 
7 

 

Without swap dealers, a market participant must rely on another participant being in the market at 

the same time and looking for the opposite end of any trade. Finding such a counterparty may be difficult 

and expensive. Swap dealers bridge this gap, and provide Energy Providers with a counterparty with 

which it can trade and put on tailored hedges in an efficient manner, driving its trading costs down. Swap 

dealers accomplish this by trading with its customer on the terms requested by the customer, and then 

using its expertise and market access to offset that trade in the market. 

 New regulation by the CFTC should provide swap dealers with sufficient exemptions from the 

CEA that will allow swap dealers to continue providing value and efficiency to Energy Providers. For 

example, with respect to federal position limits, a swap dealer should be permitted to use the “bona fide 

hedge” exemption when offsetting a trade with an Energy Provider. This “look-through” exemption 

recognizes the role of swap dealers as intermediaries between their clients and the market. To utilize the 

“look-through” exemption, swap dealers should maintain adequate documentation that identifies certain 

counterparties as Energy Providers. This documentation can be subject to CFTC review by request.7

 

The Commission should not, however, eliminate on a blanket basis hedging exemptions currently 

available to swap dealers merely because they have the ability to trade energy commodities in a 

proprietary manner. The wholesale elimination of hedge exemptions will likely result in harm to Energy 

Providers and other commercial firms that transact with swap dealers for hedging purposes. The Working 

Group takes the position that any new regulation of swaps dealers should be tailored to precisely and 

effectively address perceived risk associated with the proprietary trading activities of swap dealers 

without harming their role as market markers for Energy Providers and limiting the efficiencies they bring 

to energy markets in that role. 

Finally, any new CFTC regulation with respect to swap dealers should carefully define which 

market participants are “swap dealers.” If this term is defined too broadly, many Energy Providers could 

be inadvertently included and, thus, subjected to unnecessary regulation. For example, some Energy 

Providers actively buy and sell similar contracts in the market. These firms engage in such trading for 

several reasons, including hedging. However, if an Energy Provider were inadvertently swept into the 

definition of a swap dealer, it could materially hinder its business and its ability to hedge. 

E. The Commission Should Not Limit the Integral Role That Commodity Investing 

Plays in Well-Functioning Energy Markets. 

The imposition of federal position limits by the Commission should not reduce the benefits to the 

energy market provided by sophisticated commodity investors.8

Many sophisticated participants in energy markets trade to profit from price movements, but are 

not commercial users or swap dealers. The for-profit trading activities of these sophisticated participants 

perform a legitimate and necessary role in helping to ensure the operation of well-functioning energy 

markets. Specifically, they: (1) provide a depth of views regarding energy market fundamentals; (2) 

enhance liquidity in energy markets; and (3) perform a critical and reliable price discovery function.9

 

Continued on Next Page 

7

 This approach is similar to the Federal Energy Regulatory Commission’s approach to compliance and 

enforcement matters which effectively places the burden on market participants to demonstrate compliance with the 

applicable regulatory requirements. 

8

 “Commodity Investing,” as used in this section, refers to active trading activity by non-commercial market 

participants. The Working Group has not adopted a position with respect to passive trading activity, such as index 

trading. 

9

 See Testimony of Donald Casturo, Managing Director, Goldman, Sachs & Co., Hearing of the Commodity 

Futures Trading Commission, at 2 (July 29, 2009) (“Casturo Testimony”) (stating that “speculators attempt not only 
8 

 

They also allow commercial firms, particularly Energy Providers, to effectively and efficiently offset 

price risk. Such trading activity ultimately benefits American consumers by helping to converge pricing 

between producers and end users. 

Regulators, academics and market participants have recognized the beneficial role that 

commodity investing by such sophisticated participants plays in energy markets. For example, in the 

Commission’s hearings about federal position limits, Chairman Gensler observed: 

The CFTC recognizes the importance of speculators to the effective operation of 

futures markets – markets that benefit the American public. They allow farmers, 

grain elevator owners, oil producers and oil users to hedge their risk and have a 

marketplace where prices are determined in a fair and orderly way. Speculators 

who do not necessarily grow the wheat or store the oil provide necessary 

liquidity by being on the other side of the trade with the farmer and the oil 

producer. If a wheat producer or an oil producer wants to be certain of the price 

that they will get, or if a utility company wants to be certain of the price of 

natural gas they will purchase, they need speculators. Speculators have been at 

the heart of the futures markets for more than a century.10 

 Consistent with testimony received by the Commission, large increases and decreases in 

commodity prices might occur for reasons other than the trading activity of commodity investors.11 For 

example, price movements are traditionally explained by the intersection of supply and demand. For 

energy commodities, these elements can change dramatically due to global events that are entirely 

unrelated to profit motive. Inversely, it is possible to have an almost unlimited number of speculative 

trades for a commodity which, if roughly balanced between long and short, would not result in a material 

change in price. 

 The Commission also should be mindful that, regardless of a trader’s motivation, for every trade 

there must be an inherent balance between parties with opposite views. Given these objective market 

forces, it is not clear whether commodity investing adversely affects the operation of energy markets. 

The Working Group is concerned that the adoption of federal position limits will require the Commission 

to take a position in that debate before it has a high degree of certainty and understanding regarding actual 

market impacts of commodity investing. 

 If federal position limits are designed to prevent manipulative trading, then they should be 

imposed only when such manipulative trading is observed. As noted in testimony before the 

Commission, commodity investing by sophisticated participants is distinctly different from market 

manipulation and should be treated as such.12 In contrast to the legitimate and beneficial role that 

commodity investing plays in well-functioning energy markets, market manipulation offers no benefits to 

to assess the price relative to its current fundamentals, but assess the commodity price relative to its forward supply 

and demand fundamentals as well.”). 

10 Gensler July 28 Statement at 2. See also Opening Statement of Commissioner Jill Sommers, Hearing of the 

Commodity Futures Trading Commission, at 1 (July 28, 2009) (explaining that “. . . speculation is a necessary 

component of healthy markets. It is speculators who take on the risk that hedgers seek to shed and provide the 

liquidity that is the lifeblood of futures trading.”). 

11 Testimony of Elliot Chambers, Chesapeake Energy Corporation’s Corporate Finance Manager, Hearing of the 

Commodity Futures Trading Commission, at 5 (August 5, 2009). 

12 Masters Testimony at 2; Casturo Testimony at 2. 
9 

 

the market. Manipulation, by definition, impairs the operation of well-functioning markets by distorting 

or dictating prices in defiance of market fundamentals. 

Therefore, to avoid impairing the operation of well-functioning markets, the Commission must 

follow Chairman Gensler’s statements that objectively recognize the real and legitimate role that 

commodity investing plays in energy commodities markets and refrain from adopting policies that would 

limit the participation of sophisticated participants in such markets. 

F. A One-Size-Fits-All Regulatory Approach For Imposing Federal Position Limits 

Across Commodity Markets Is Not Appropriate. 

In his opening statement, Chairman Gensler asserted that a one-size-fits-all approach to 

regulating futures markets was appropriate. In relevant part, he stated: 

I believe that the CFTC’s mission is to protect the interest of the American public, 

and it should be this agency that sets the rules and regulations on our futures 

markets. As we move forward in considering position limits, I believe that we 

should apply consistent, across-the-board regulations to all futures market 

participants. With competing exchanges, regulations must be applied equally to 

similar contracts in different markets. The CFTC is in the best position to apply 

limits across different exchanges, and we are most able to strike a balance 

between competing interests and the responsibility to protect the American 

public.13

Subsequently, Chairman Gensler stated that, in his view, the CFTC was the appropriate body for setting 

federal position limits in energy markets: 

As I stated at yesterday’s hearing, I believe that the CFTC has a duty to protect 

the American public from fraud, manipulation and excessive speculation. Thus, it 

should be the CFTC that sets position limits on energy market participants. We 

have the statutory authority, and we are the most able to strike a balance between 

competing interests and the public interest.14

The Commission’s actions to prevent excessive speculation and manipulation in energy markets 

are consistent with its statutory obligations under the CEA.15 However, in fulfilling these obligations, the 

Commission must acknowledge the unique nature and characteristics of energy markets. It should not 

assume that the purported benefits of imposing federal position limits in one market (e.g., for agricultural 

commodities) will be the same if such limits are applied consistently across different markets (e.g., for 

energy commodities) for the following reasons. 

First, with regard to the adoption of a one-size-fits-all approach to federal position limits, energy 

commodities currently are regulated differently from other commodity markets of finite supply, such as 

wheat. This reflects, in large part, that markets for certain underlying physical energy commodities, and 

Energy Providers participating in such physical markets, are already subject to regulation at the federal 

and/or State levels. For instance, in addition to the broad anti-manipulation and anti-fraud provisions of 

13 Gensler July 28 Statement at 4. 

14 Opening Statement of Chairman Gary Gensler, Hearing of the Commodity Futures Trading Commission, at 1 

(July 29, 2009). 

15 7 U.S.C. § 1 et seq.
10 

 

the CEA, Energy Providers are generally subject to other regulatory requirements prohibiting similar 

conduct.16

Second, many energy markets are highly liquid. Given the liquidity of most energy markets (as 

evidenced by the volume of trading and open interest in such markets), the size of a particular position in 

energy markets should not cause prices to become more volatile or adversely affect market fundamentals. 

Third, the Commission must evaluate whether it has the adequate resources to effectively monitor 

compliance with such limits. As noted in the closing statement of Commissioner Michael Dunn, the 

CFTC arguably does not have sufficient resources.17 Exchanges such as the New York Mercantile 

Exchange (“NYMEX”) or IntercontinentalExchange Inc. (“ICE”) have such resources to perform this 

function. Therefore, to ensure that scarce resources available to the Commission are allocated efficiently 

and effectively as possible, responsibility for administering federal position limits should be delegated to 

the exchanges. 

Through delegation, the Commission can leverage the existing expertise of exchanges to impose 

and monitor compliance with position limits. Exchanges possess significant in-house expertise regarding 

the nature and characteristics of energy markets, the energy commodity contracts traded within such 

markets, and the major participants in such markets. Further, delegation would conserve CFTC resources 

for more prudential matters and not diminish the CFTC’s role to set and enforce position limits. 

G. The CFTC Should Not Seek Statutory Authority to Impose Federal Position Limits 

in the OTC Market for Certain Transactions. 

Federal position limits should not be imposed on the OTC markets for transactions that are highly 

customized or entail physical delivery. Position limits also should not be imposed for contracts where 

there is no significant price discovery or the related market is not liquid.18 Energy Providers must have 

markets where they can enter into such trades. Such markets allow each firm to efficiently tailor its 

trading to address circumstances and risks that are unique to such firm. Any diminution of the OTC 

markets due to new regulation will hurt the day-to-day business of Energy Providers. As discussed 

above, the inability of Energy Providers to trade in a robust, efficient market will ultimately hurt 

American consumers. Thus, the CFTC should not seek the authority from Congress to impose such 

position limits in the OTC markets. 

The imposition of position limits in the OTC market will result in less liquidity in the market. 

Position limits, by their nature, limit the extent to which a market participant can express a view with 

respect to the value of a commodity. For exchange markets, this may be appropriate for speculative 

trades. However, the OTC market currently allows a market participant to take such a view (and, 

16 For example, the wholesale natural gas and electricity trading operations of Energy Providers are subject to 

broad anti-manipulation authority granted to the Federal Energy Regulatory Commission under Section 4A of the 

Natural Gas Act, 15 U.S.C. § 717c-1 and Section 222 of the Federal Power Act, 16 U.S.C. § 824v. Similarly, other 

Energy Providers are subject to the recent final rule prohibiting fraud or deceit in wholesale petroleum markets and 

omissions of material information that are likely to distort petroleum markets issued by the Federal Trade 

Commission on August 6, 2009. See Prohibitions On Market Manipulation in Subtitle B of Title VIII of The Energy 

Independence and Security Act of 2007, Final Rule, RIN 3084-AB12 (Aug. 6, 2009)(as yet unpublished in the 

Federal Register); Codified at 16 C.F.R. § 317 (2009). 

17 Closing Statement of Commissioner Michael V. Dunn, Hearing of the Commodity Futures Trading Commission, 

at 2 (Aug. 5, 2009) 

18 The Working Group does not hold a view regarding the propriety of the CFTC seeking authority to impose 

position limits on highly standardized contracts that trade in the OTC markets. 
11 

importantly, one or more other market participants to take the opposing view). The execution of each 

such trade, regardless of size, promotes price discovery and liquidity. The CFTC would be prudent in 

maintaining one market in the United States where unique trades can be executed without any shaping by 

regulation. 

The U.S. economy benefits from having a robust OTC market. Prices for energy commodities 

can be easily established for the very markets in which such commodities are delivered and consumed. In 

addition, the trading markets provide thousands of jobs to American consumers. Regulation of the OTC 

markets by the CFTC will provide trading firms with incentives to trade in markets where trades are not 

subject to shaping by regulation. As firms trade in foreign markets, the local markets will lose 

participants and liquidity will suffer. 

The CFTC should not seek additional authority from Congress to regulate the OTC markets for 

energy commodities with respect to highly tailored contracts, transactions that involve physical delivery, 

or for which there is not significant price discovery or liquidity. The enforcement powers of the CFTC 

are already sufficient to police such markets. 

H. Federal Position Limits Will Not Have a Uniform Effect in Energy Markets. 

When setting federal position limits in energy markets, the Commission should be mindful that 

not all Energy Providers are similarly situated and the burden of regulation may be disproportionate. 

Some firms rely more than others on hedging transactions in energy commodities markets to prudently 

manage cost risk. There are sound and legitimate reasons why some Energy Providers hedge more than 

others, including business strategy and capital structure. To effectively hedge, these Energy Providers 

rely on such markets being liquid. If the markets are not liquid, then the cost of hedging for a firm goes 

up. Consequently, if one firm hedges more than its competitor and new regulation increases the cost of 

hedging, then that firm is disproportionately affected by the regulation. 

The Working Group is concerned that Energy Providers could be disproportionately affected by 

federal position limits. The imposition of such increased costs will not only disadvantage these firms 

vis-à-vis their competitors, it will ultimately harm competition in wholesale energy markets, which, in 

turn, could result in increased energy prices. Unless a segment of the market is putting the entire market 

in jeopardy, there is little reason to impose position limits that will affect market participants differently. 

To do otherwise could (1) distort competition among commercial users, particularly Energy Providers, 

(2) impair the competitiveness of physical energy markets, and (3) increase prices for physical energy 

commodities. Increased costs for physical energy commodities will ultimately be borne by American 

consumers. 

III. CONCLUSION. 

The energy markets are complex and touch almost all aspects of the U.S. economy. Thus, the 

Commission must exercise a high degree of care in introducing new regulatory requirements into such 

markets. Without question, federal position limits in the energy markets will result in costs to Energy 

Providers, the energy markets as a whole and, ultimately, on American consumers. The Commission, 

therefore, must strike a balance between the perceived benefits of federal position limits and the 

inevitable costs. 

Energy providers are significant participants in energy commodities markets where they trade to 

remove risks associated with their core business of delivering electricity, heating oil, natural gas, propane, 

gasoline and other energy commodities at affordable prices to American consumers. These firms do not 

present the market and system risks that federal position limits will be designed to prevent. Accordingly, 
the Commission should be careful to assure that the costs of imposing federal position limits do not 

adversely affect the day-to-day operations of Energy Providers. 

12 
ANNEX A 

CFTC AUTHORITY TO IMPOSE FEDERAL POSITION LIMITS

1. Existing Authority. 

Federal position limits have been a tool for the regulation of the U.S. futures markets since the 

adoption of the Commodities Exchange Act in 1936, as amended (“CEA”).19 To protect futures markets 

from excessive speculation that can result in “unreasonable or unwarranted price fluctuations,” CEA 

Section 4a(a) provides the CFTC with the authority to fix limits on the amounts of trading which may be 

done or positions which may be held by any person under contracts for sale of such commodity for future 

delivery.20 Under Section 4a(a), the CFTC may only impose position limits on contracts that are on, or 

subject to the rules of any contract market or derivatives transaction execution facility, or on an electronic 

trading facility with respect to a significant price discovery contract. 

The statutory framework providing for position limits was supplemented with the passage of the 

Futures Trading Act of 1982, which added CEA Section 4a(e). Section 4a(e) expressly recognizes the 

role of exchanges in setting their own speculative position limits and provides that limits set by exchanges 

and approved by the CFTC would be subject to CFTC enforcement. More recently, the Commodity 

Futures Modernization Act of 200021 established designation criteria and core principles with which a 

designated contract market (“DCM”) must comply to receive and maintain designation. Among these, 

Core Principle 5 states as follows: 

Position Limitations or Accountability -- To reduce the potential threat of market 

manipulation or congestion, especially during trading in the delivery month, the 

board of trade shall adopt position limitations or position accountability for 

speculators, where necessary and appropriate. 

In addition to the CFTC and DCMs, exempt commercial markets (“ECMs”) with contracts that 

serve a significant price discovery function (“SPDCs”) are responsible for setting and enforcing position 

limits. Specifically, pursuant to CEA Section 2(h)(7), ECMs on which SPDCs are traded must comply 

with certain enumerated “core principles,” including the adoption of position limits for SPDCs. The 

CFTC has adopted “Acceptable Practices” for the establishment of ECM-established position limits 

which are set forth in Appendix B to Part 36 of its regulations.22 With the exemption of SPDCs traded on 

ECMs, the CEA does not provide the CFTC with the authority to impose federal position limits with 

respect to OTC derivatives contracts traded in private markets. 

 

19 7 U.S.C. § 1 et seq.

20 7 U.S.C. § 6a(a). Specifically, CEA Section 4a(a) provides that excessive speculation in any commodity under 

contracts of sale of such commodity for future delivery made on or subject to the rules of contract markets or 

derivatives transaction execution facilities, or on electronic trading facilities with respect to a significant price 

discovery contract, causing “sudden or unreasonable fluctuations or unwarranted changes in the price of such 

commodity, is an undue and unnecessary burden on interstate commerce in such commodity.”

21 H.R. 5660; P.L. 106-554. 

22 17 C.F.R. § 38, Appendix B (2009). 

1 
 

2. CFTC Authority to Prevent Market Manipulation. 

A key issue associated with concerns regarding excessive speculation in energy markets in 2007-

2008 is whether the lack of federal position limits for energy commodities created opportunities for 

manipulation. At present, several energy commodities transacted in futures markets and in SPDCs 

transacted on ECM-based OTC markets are subject to exchange mandated positions. However, 

legislators, regulators, and consumer groups have raised concerns that excessive speculation took place in 

energy markets for purposes of manipulating and distorting/dictating prices in defiance of market 

fundamentals. To date, however, the CFTC has not established that manipulation, through the form of a 

classic “corner” or “squeeze,” was behind such run-ups in 2007-2008 energy prices or that the affected 

energy commodity market fundamentals were flawed. 

The CFTC has broad and well-established statutory authority to address, prohibit, and penalize 

both alleged and attempted manipulation and fraud in futures and OTC markets. Specifically, under 

Section 9(a)(2) of the CEA, it is unlawful for “any person to manipulate or attempt to manipulate the 

price of any commodity in interstate commerce, or for future delivery . . . or corner or attempt to corner 

any such commodity or knowingly deliver or cause to be delivered . . . false or misleading or knowingly 

inaccurate reports concerning . . . market information or conditions that affect or tend to affect the price of 

any commodity in interstate commerce.”23

Pursuant to Sections 2(h) and 2(g) of the CEA, entities transacting on OTC derivatives and swaps 

markets are subject to the CFTC’s anti-manipulation and anti-fraud authority. Any attempts by market 

participants to corner or squeeze energy commodity markets to distort or dictate prices in defiance of 

market fundamentals are clearly subject to the provisions of Section 9(a)(2) of the CEA. The potentially 

substantial civil penalties that may be imposed for violations of Section 9(a)(2) are and continue to be a 

significant deterrent to manipulative conduct. 

Importantly, where appropriate, the CFTC has not been hesitant to use its anti-manipulation and 

anti-fraud authority in energy markets. Although the CFTC’s enforcement efforts have generally focused 

on price reporting and natural gas trading practices, the agency has also prosecuted members of the 

electric industry for market manipulation.24 For example, through mid-2007, the CFTC brought 

enforcement actions against 55 companies and energy traders for wash trading, false reporting, attempting 

to manipulate, or actually manipulating wholesale energy markets. The CFTC takes the position that 

these cases should put traders on notice that physical, financial, and futures markets can be interrelated, 

and any illegal off-exchange conduct that tends to affect energy markets will not be tolerated.25

Accordingly, under Section 9(a)(2) of the CEA, the CFTC has broad existing authority to protect 

against potential manipulation and fraud in OTC derivatives markets for energy commodities. 

23 7 U.S.C. § 13(a)(2). 

24 See, e.g., CFTC v. Valencia, 394 F.3d 352 (5th Cir. 2004) (defendant indicted for charges that, in violation of the 

CEA, she knowingly reported to Inside FERC the volume and price data on natural gas trades that never occurred); 

CFTC v. Diplacido, CFTC No. 01-23 (2004) (market manipulation action against Avista Energy and NYMEX floor 

broker charging that broker manipulated NYMEX power futures contracts to profit on OTC options); and CFTC v. 

Amaranth Advisors, LLC, No. 07-Civ-6682 (S.D.N.Y. 2007) (CFTC alleges that the defendants attempted to 

manipulate the natural gas market on NYMEX by “hammering the close”). 

25 See CFTC News Release, No. 5300-07 (Mar. 14, 2007). 

2 
From: Mary.Irwin@ubs.com

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 5:00:12 PM

Attachments: final EH Comment Letter.doc

disclaim.txt

<<final EH Comment Letter.doc>> 

Attached please find the comments of UBS with respect to the recent energy 

trading hearings. 

If you have any questions, please feel free to contact me at (312) 525-6643.

Regards, 

Mary Irwin 

Executive Director, Futures Counsel 

UBS Securities LLC
1αβχ UBS Investment Bank 

677 South Washington Boulevard 

Stamford, CT 06901 

UBS Securities LLC 

Greg Morris, Managing Director 

(203) 719-4207 

 

June 18, 2009 

 

Mr. David Stawick 

Secretary 

Commodity Futures Trading Commission 

1155 21st Street, NW 

Washington, DC 20581 

RE: Energy Hearings Comments 

“Whether to Eliminate the Bona Fide Hedge Exemption for Certain Swap Dealers and 

Create a New Limited Risk Management Exemption from Speculative 

Position Limits” 

Dear Mr. Stawick: 

UBS AG and UBS Securities LLC (collectively “UBS”) appreciate the opportunity to submit 

comments on the above-referenced Commission Hearings on Speculative Position Limits in 

Energy Futures Markets. UBS is a provider of a wide array of commodity index investment 

products to its clients. Many of these products reference the UBS Bloomberg Constant 

Maturity Commodity Index (CMCI) and the Dow Jones-UBS Commodity Index (DJ-UBS CI, 

formerly DJ-AIG CI)). DJ-UBS CI and CMCI are broad-based commodity indices comprised 

of 19 futures contracts and 26 futures contracts respectively, and they trade on all of the 

major U.S. exchanges as well as some non-US exchanges. DJ-UBS CI is a widely used 

commodity index and an internationally referenced economic benchmark for commodities 

prices. The index is governed by rules which cover diversification by sector and allowed 

concentration/weighting for individual commodities. CMCI further diversifies contract 

exposure by spreading individual commodity weighting in the index across the available and 

liquid futures contracts for each commodity (from three months to as long as three years 

depending on the specific commodity). Both of these commodity indices are highly 

transparent, with intra-day and daily closing levels available via reporting channels such as 

Reuters and Bloomberg. Information on the daily closing and settlement prices of the 

futures contracts that make up the index is available on the websites of the respective futures 

exchanges, and other sources of real time data on the contracts is available by subscription 

from several real-time quotation vendors. 

Energy futures are a key component of these indicies. As our attached comment on the 

Concept Release on Bona Fide Hedging sets out, and as discussed during the recent CFTC 

hearings, there are many reasons for the CFTC to continue to study the impact of those 

using energy futures markets to hedge financial exposures, including index swaps dealers. 
βχ Page 2 of 11 

The same is true of those in the non-energy commodities markets; as we stated in our 

comment, the demand for diversification into commodities generally within investment 

portfolios is large, defined and growing. We agree with those who testifed at the recent 

hearings who believe that disallowing the hedging of financial exposures by barring or 

limiting related hedge exemptions would not significantly change the market. Investors make 

a fundamental decision to diversify their investment portfolios by investing in commodity 

futures indices; they do so through dealers because it is the most efficient way for them to 

implement their decision. The proposed change could very well (i) force this business onto 

non-U.S. markets without direct Commission oversight or (ii) cause most of these investors to 

seek alternative, more expensive ways to access this exposure. 

The other points we would like to emphasize with respect to financial hedging in general, and 

commodity index investing in particular, follow below: 

1) Empirical evidence does not indicate an adverse impact on commodity prices; in fact, in 

many cases, the reverse is true. 

2) The Commission has recognized the legitimate need of index dealers to hedge 

exposures taken on as a result of providing diversification to individuals, mutual funds, 

pension plans, endowments, etc. Such dealers, who are merely passively passing on 

their exposures to the futures markets, are neutral to market direction. Their hedge 

exemptions do not extend into the final month of trading prior to expiration, thus greatly 

reducing any impact on physical market prices. 

3) Likewise, ETF providers also merely transfer exposures resulting from their customers’ 

risk transfers to the futures markets. The testimony demonstrated that these exposures 

did not push up energy prices during the recent volatile market period under review. 

4) Before proposing any new rules, we suggest that the CFTC release the data that it has 

been collecting since September 2008 under its Special Call, so that market participants 

and any others who are being asked for comments on any new rules may have a chance 

to perform their own analysis of this raw data from their perspective . 

We support additional routine reporting requirements that would allow the Commission and the 

public greater transparency with respect to these types of trading activities, so that Commission 

decisions in this area can continue to reflect sound judgment based on empirical findings. 

I have attached our previous comment letter on the Commission’s Concept Release on Bona 

Fide Hedging for further information about our position on these issues. 

Very truly yours, 

Greg Morris 

Managing Director 

UBS Securities LLC 
βχ Page 3 of 11 

Enclosures: UBS Comment Letter, dated June 18, 2009 
βχ Page 4 of 11 

Mr. David Stawick 

Secretary 

Commodity Futures Trading Commission 

1155 21st Street, NW 

Washington, DC 20581 

RE: Response to CFTC Request for Public Comments: “Whether to Eliminate 

the Bona Fide Hedge Exemption for Certain Swap Dealers and Create a 

New Limited Risk Management Exemption from Speculative Position 

Limits” 

Dear Mr. Stawick: 

UBS AG and UBS Securities LLC (collectively “UBS”) appreciate the opportunity to submit its 

comments on the above-referenced Concept Release. UBS AG is a provider of commodity 

index trading vehicles to its clients, specifically, the UBS Bloomberg Constant Maturity 

Commodity Index (CMCI) and the recently acquired Dow Jones-UBS (formerly American 

International Group (“AIG”)) Commodity Index (DJ-UBS CI (previously DJ-AIG CI)). The DJUBS CI and the CMCI are broad-based commodity indices comprised of 19 futures contracts 

and 26 futures contracts respectively, and the respective exchanges where they are traded 

include all of the major U.S. exchanges as well as some non-US exchanges. The DJ-UBS 

is a widely used commodity index and an internationally referenced economic benchmark 

with rules regarding diversification by sector and individual commodity. The CMCI was 

launched in early 2007 and further diversifies contract exposure by time from three months to 

as long as three years depending on the specific commodity. These indices are highly 

transparent with intra-day and daily closing levels of the index available on reporting 

channels such as Reuters and Bloomberg. Information on the daily closing and settlement 

prices of the futures contracts that make up the index is available on the websites of the 

respective futures exchanges, and other sources of real time data on the contracts is 

available by subscription from several real-time quotation vendors, including Reuters and 

Bloomberg. Any adjustments to the indices are published on the Dow Jones and UBS 

websites. 

The demand for pension plan diversification is large, defined and growing. Private sector 

pension plan investments are governed by ERISA. Although public sector pension plans are 

governed by state law, many states have adopted standards similar to ERISA. Under ERISA 

regulations, a pension plan fiduciary must observe a “prudent man” standard of care and, 

among other things, must diversify plan investments to minimize the risk of large losses. It 

has become acceptable under this diversification requirement for pension plan managers to 

invest in commodity index vehicles. Therefore, there is a sizable and growing need for 

diversified risk management vehicles for pension plans. 

Similarly, this current economic crisis has also given rise to increased demand for 

diversification of investments for endowments and foundations. 

The Commission’s Recognition of Hedging (Or Risk Management of) Financial Risks 
βχ Page 5 of 11 

As the hedging of financial risks has increased over the past 20 years, we believe that the 

CFTC’s recognition of the legitimate nature of such hedging has been appropriate.1

 Swaps 

market participants as well as swap dealers holding positions on behalf of their swaps 

customers have been eligible for exemptions from speculative position limits when hedging 

the associated financial risks. 

The Definition of “Hedging” with Respect to Financial Risk Mitigation 

In order to determine whether an applicant for an exemption is justified, the Commission has 

had to make a determination about the definition of “hedging” in many different contexts.2

 

In its 1987 Federal Register release on hedging3

, the CFTC recognized financial exposures 

as risks that could legitimately be mitigated by utilizing futures markets and deserving of an 

exemption from speculative limits. (We suggest terming this “financial hedging” (or 

warranting a “risk management exemption”) as opposed to “commercial hedging.”4

 

Consistent with the CFTC’s treatment of the mitigation of risks arising from commercial 

activities, the CFTC allows exemptions from speculative position limits for the mitigation 

of financial risks (or “risk management exemptions”). These investors are not speculators 

they have net long positions in financial markets and are using those positions to hedge 

inflation and financial risk that exists elsewhere in their portfolios. Like traditional commercial 

hedgers, these futures market participants are using futures for risk mitigation. 

– 

 

Commodity Index Futures Trading 

1 We suggest that the Commission consider changing its terminology with respect to the terms “bona fide 

hedging” and “risk management.” The definition of “bona fide” is “1. characterized by good faith and lack of fraud 

or deceit; 2. valid under or in accordance with the law; 3. made with or characterized by sincerity; or 4. being real 

or genuine. (“bona fide.” In Webster’s Revised Unabridged Dictionary. Source location: MICRA, 

Inc. http://dictionary.reference.com/browse/bona fide>. ) Since the activity of mitigating risk with respect to 

physical market exposures is also actually ‘risk management’ and the financial exposures mitigated by hedging 

financial exposures are real, ‘bona fide’ risks, we suggest using the terms “commercial hedging and “financial 

hedging.” 

2

 Pursuant to Section 4a(a) of the Commodity Exchange Act (“CEA”), the Commission is charged with establishing 

and enforcing speculative position limits for futures and options contracts on some agricultural commodities. 

Those limits are listed at § 150.2 of the Commission’s regulations. Section 150.3(a) of those regulations provides 

that certain positions may exceed the limits, including bona fide hedging transactions, as defined in Regulation 

1.3(z). Section 1.3(z)(3) provides that, in addition to certain enumerated hedging transactions listed in § 1.3(z)(2), 

the Commission may recognize other transactions and positions as bona fide hedging in accordance with 

requirements set out in § 1.47 of the regulations. 

3 The Commission’s 1987 interpretation clarified the hedging definition “to include certain investment strategies of 

institutional investors, such as through acquiring a long position in Treasury bond futures to hedge against interest 

rate exposure.” 52 FR 27195 (July 20, 1987). 

4 Commercial hedging could be defined as the mitigation of risks arising from a market participant’s management of 

a commercial enterprise, arising from: 1) The potential change in the value of assets which a person owns, 

produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, 

processing or merchandising; 2) The potential change in the value of liabilities which a person owns or anticipates 

incurring; or 3) The potential change in the value of services which a person provides, purchases or anticipates 

providing or purchasing. 
βχ Page 6 of 11 

Another way in which financial risk is mitigated is through long positions in a wide range of 

commodity futures. These types of instruments are used to diversify portfolios and hedge 

against inflation. There are several ways in which these participants mitigate their risks. 

They may choose to create a basket of commodity exposures, which they trade as individual 

futures positions, with concomitant rollover issues. However, pension funds, endowments 

and other institutional investors, as well as individuals are much more likely to trade 

commodity index swaps directly with a swaps dealer or through commingled vehicles such as 

commodity index mutual funds. 

As shown in many empirical studies (discussed later in this letter), these index investors, 

either directly or through a swaps dealer, have been proven to promote market stability by 

increasing liquidity, thus enabling more efficient hedging by commercial hedgers. These 

index traders, as well as their intermediaries, should be granted exemptions from speculative 

position limits. 

In 2006, recognizing that commodity index trading could provide an effective hedge against 

inflation and other portfolio risks, the CFTC’s Division of Market Oversight issued two 

interpretive letters in response to hedge exemption requests relating to index trading. 

The Commission granted no-action relief from the speculative position limit provisions of § 

150.3 of the regulations based on the Commission’s finding that these passive index trading 

activities (similar to those of an index provider) constituted hedging transactions in that they 

were “economically appropriate to the reduction of risks in the conduct and management of a 

commercial enterprise.”5

 In that case, like an index provider, the petitioner’s only objective 

was to track the index over time (through acquiring long futures positions), using a 

nondiscretionary methodology, with no investment objective to “achieve capital appreciation.” 

These investors are not seeking to take a view on one specific market. Therefore, the 

Commission agreed that the petitioner should be viewed as “akin to a commercial enterprise 

that is in the business of investing and reinvesting in long futures positions in the index 

commodities with no intent to speculate in the futures market and which poses no “danger of 

excessive speculation.” ‘6

In these two letters, CFTC staff stated that the use of the futures markets by funds to provide 

their investors with a commodity-index exposure represented a legitimate and potentially 

useful investment strategy. 

Based on the Commission’s determination that this index trading was indeed bona fide 

hedging as defined in Reg. 1.3(z), no-action relief was granted under the following 

conditions: 

1. The futures trading activity passively tracks a widely recognized commodity index. 

2. The futures trading activity is unleveraged. 

3. The futures trading profits/losses are passed along to investors. 

4. Positions in excess of the speculative limits are not carried into the spot month. 

 

5 This determination is consistent with the Commission’s 1987 interpretation clarifying the hedging definition “to include 

certain investment strategies of institutional investors, such as through acquiring a long position in Treasury bond futures 

to hedge against interest rate exposure.” 52 FR 27195 (July 20, 1987). 

6 CFTC Interpretive letter 2006-09? 
βχ Page 7 of 11 

In today’s futures markets, commodity index trading, which is commonly subject to the above 

conditions, has been studied extensively to determine whether there is an adverse impact on 

commodity futures market prices. More recently, given the run-up in prices of a broad range 

of physical commodities since mid-2008, the impact of index trading has also become the 

subject of public debate. 

One of the issues that has arisen in conjunction with these studies is the relative paucity of 

publicly available data on trading done for the purpose of ‘financial hedging’ or pursuant to 

“risk management exemptions.” We support the Commission’s efforts to differentiate 

between these risk management activities and speculation by creating a new category of 

trading for inclusion in its Commitments of Traders (“COT”) reports. We also encourage the 

Commission to continue to use its Special Call capabilities to review the underlying data and 

further examine its impact. 

In late 2008, the GAO was commissioned to, among other things, review these empirical 

studies. As reported by the GAO in its December 2008 Briefing to the House Committee on 

Agriculture,7

 

“Although not included in the enclosed briefing slides, we also are providing 

information on the results of our review of studies analyzing the impact that 

index traders and other futures speculators have had on commodity prices. 

Through our literature search, we identified eight empirical studies and three 

qualitative studies. ..Unlike the empirical studies, the qualitative studies do 

not use experimental or statistical controls to evaluate the causal relationship 

between speculative trading and commodity prices and, thus, do not provide 

a systematic way to assess the empirical veracity of the causal relationship. 

Importantly, the eight empirical studies we reviewed generally found limited 

statistical evidence of a causal relationship between speculation in the futures 

markets and changes in commodity prices – regardless of whether the 

studies focused on index traders, specifically, or speculators, generally. Four 

of the studies used CFTC’s publicly available Commitments of Traders (COT) 

data in their analysis, and their findings should not be viewed as definitive 

because of limitations in that data. For example, the public COT data are 

issued weekly, and analyses using such data could miss the effect of daily or 

intraday changes in futures positions on prices. Also, these data generally 

aggregate positions held by different groups of traders and, thus, do not allow 

the effect of individual trader group positions on prices to be assessed. Two 

of the studies we reviewed involved CFTC staff and used non-public COT 

data that included positions reported more frequently and separated positions 

held by different trader groups. However, similar to the studies that used the 

public COT data, the studies using the non-public data also found limited 

evidence that speculation was affecting commodity prices. In addition, all of 

the empirical studies we reviewed generally employed statistical techniques 

that were designed to detect a very weak or even spurious causal 

relationship between futures speculators and commodity prices. As [a] result, 

the fact that the studies generally did not find statistical evidence of such a 

 

7 GAO Report Number GAO-09-285R, “Issues Involving the Use of the Futures Markets to Invest in Commodity Indexes,” 

released February 5, 2009. 
βχ Page 8 of 11 

relationship appears to suggest that such trading is not significantly affecting 

commodity prices at the weekly or daily frequency.”8

Again, while these studies could be more conclusive had the requisite data been 

more granular, the conclusion of one of the more detailed studies cited by GAO9

 is 

illustrative of the general trend of all cited studies: 

“While the analysis in this report does not test [for] directly for price impacts, 

it does provide some pertinent evidence in this regard. First, if there is a 

market impact from index fund activity, it seems likely that it would have 

occurred during the period of most rapid growth: 2004-2005. Second, the 

stabilization of the index funds’ percent of total open interest may suggest 

that other traders have adjusted their strategies to better cope with this 

relatively new market participant. Third, Working’s speculative index 

suggests that long-only index funds may in fact be beneficial in markets 

dominated by short hedging pressure. That is, they improve the adequacy of 

speculation by helping the market to “carry” unbalanced short hedging. 

However, the traditional notion that hedging begets speculating may need to 

be revisited. The relatively normal level of speculation over the sample 

period raises some doubt as to whether index funds are behind recent 

commodity price increases.” 

“Much like in the last major episode of structural change in commodity 

markets in 1972-1975, some are blaming speculators for the recent increase 

in commodity prices. Proposals are once again surfacing to increase 

margins in an effort to curb ‘harmful’ speculation in futures markets. Such 

policy decisions aimed at curbing speculation may well be counter-productive 

in terms of price levels or market volatility. In particular, these policy 

initiatives could severely compromise the ability of futures markets to 

accommodate hedgers and facilitate the transfer of risk.” 

Another way of examining the impact of commodity index trading on futures market 

pricing is to compare the futures markets which are included in indexes with those 

that are not: 

“There are additional reasons to be skeptical about the assertion that 

speculation has led to bubbles in agricultural futures prices over the last two 

years. First, the research presented in this report shows that the level of 

speculation in agricultural futures markets....is not outside of historical 

norms. If speculation is driving prices above fundamental values, it is not 

obvious in the level of speculation relative to hedging. Second, recent price 

increases do not neatly fit a bubble explanation. As shown in Figure 14, 

price increases are concentrated in the grain and oilseed markets. Yet, the 

highest concentration of long-only speculative positions is often in the 

livestock futures markets (Table 3), which generally did not participate in the 

 

8 Id, pp. 5-6. 

9 Sanders, D.R., S.H. Irwin, and R.P. Merrin. “The Adequacy of Speculation in Agricultural Futures Markets: Too Much 

of a Good Thing?” Marketing and Outlook Research Reprot 2008-02, Department of Agricultural and Consumer 

Economics, University of Illinois at Urbana-Champaign, June 2008, at pp. 17-18. 

[http://www.farmdoc.uiuc.edu/marketing/morr/morr_archive.html] 
βχ Page 9 of 11 

price increases and for which index funds are rarely mentioned as 

problematic. It is difficult to rationalize why speculation by index funds would 

only impact particular agricultural futures markets. Third, very high prices 

have been observed for commodities without futures markets (e.g., durum 

wheat and edible beans) and in agricultural futures markets that are not 

included in popular commodity indices (e.g., rice and fluid milk). To assert 

that the commodity markets are being driven higher by a speculative bubble 

ignores historically low world grain inventories and other market 

fundamentals that are broadly driving commodity prices higher. Fourth....if 

speculators create a bubble in futures prices for storable commodities, this 

also creates an incentive to store commodities because prices in the future 

exceed levels normally required to compensate inventory holders for storage. 

We should therefore observe an increase in inventories when a bubble is 

present. In fact, inventories for grains and oilseeds have fallen sharply over 

the last two years.”10

The conclusion that futures contracts which are not included in a traded commodity 

index experience the same or increased upward price movement, while some 

futures contracts that are included in indexes may have declining prices certainly 

detracts from claims that commodity index trading leads to increased futures 

prices. 

Swaps Dealers’ Exemptions 

When index investors, such as pension plans, endowments or individuals, choose to mitigate 

their risks through the use of over-the-counter swaps based on commodity indices, their 

intermediary index swaps dealers absorb their risks and should be granted similar relief from 

speculative position limits. These swap dealers are engaged in the commercial enterprise of 

providing OTC commodity index exposure to their clients and, their resultant risks are very 

similar to those of a ‘commercial’ hedger. Swap dealers should be allowed to mitigate their 

risks with exemptions based the same conditions, above, (i.e., passive, unleveraged trading 

that does not take place in the delivery month) as applied to index traders themselves. 

Index swaps dealers should be able to rely on the representations of their clients for 

purposes of regulatory reporting. 

Pension Plan Commodity Index Exemptions 

The demand for pension plan diversification is large, defined and growing. Private sector 

pension plan investments are governed by ERISA. Although public sector pension plans are 

governed by state law, many states have adopted standards similar to ERISA. Under ERISA 

regulations, a pension plan fiduciary must observe a “prudent man” standard of care11 and, 

 

10 Id, at 15. (For purposes of this study, commodity index trading is included in the “speculative” category.) Charts and 

tables available at: [http://www.farmdoc.uiuc.edu/marketing/morr/morr_archive.html] 

11 ERISA Section 404(a)(1)(B) provides that a fiduciary must act “with the care, skill, prudence and diligence under the 

circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the 

conduct of an enterprise of a like character and with like aims.” 
βχ Page 10 of 11 

among other things, must diversify plan investments to minimize the risk of large losses.12 It 

has become acceptable under this diversification requirement for pension plan managers to 

invest in commodity index vehicles. Therefore, there is a sizable and growing need for 

diversified risk management vehicles for pension plans. 

This current economic crisis has also given rise to increased demand for diversification of 

investments for the public at large, including pension funds of corporations, state and local 

government retirement plans that cover retired public service employees, endowments, 

charitable foundations and retail investors, among others.

Therefore, given recent market events and public discussions, this is an appropriate time for 

the Commission to re-examine the underlying issues with respect to the proposed new risk 

management exemption. In particular, we suggest that the Commission include an 

examination of the economic value of promoting price discovery and risk management needs 

of disparate market participants whose trading and transactions flow through the over-thecounter and exchange-traded markets to provide necessary market liquidity, balance and 

efficiency. Additionally, the Commission should examine reporting requirements to make 

trading associated with this new risk management category as transparent as other 

categories. 

Furthermore, in the absence of evidence of adverse impacts of this type of trading and 

pending the outcome of further analysis, the CFTC should continue to issue exemptions from 

speculative position limits for market participants wishing to utilize futures markets to mitigate 

risks from financial exposures. Futures positions already held for the purpose of hedging 

swaps and commodity index exposures should be grandfathered into any new requirements 

so as to cause as little market disruption as necessary.

The amount of risk management trading allowed to swap dealers (and, therefore, the size of 

their hedge exemption) should be commensurate with the demand for index swaps by their 

clients. Commodity index swaps customers should be free to select the most desirable 

commodity index swap counterparty based on the creditworthiness of the swaps dealer, its 

pricing and trade efficiency. Since the ability of a commodity index swaps dealer to service 

its customers is directly related to the size of its futures hedge exemption, there should not 

be an overall limit on a swap dealer’s futures and option positions in any one market 

regardless of the commercial or noncommercial nature of their clients. 

A failure to grant this risk management exemption to or to limit positions of commodity index 

dealers would most probably not limit this index trading in futures markets. UBS agrees with 

the assessment that the result would be a greater number of smaller swaps dealers, rather 

than a dimunition of commodity index trading itself, since commodity index trading is an 

accepted method of diversifying portfolio risk for pension funds, endowments and other types 

 

12 29 C.F.R. § 2550.404a-1(b)(1) (a fiduciary must give “appropriate consideration” to the facts and circumstances that 

the fiduciary knows or should know are relevant to the particular investments, including the role that the investment plays 

in the plan’s investment portfolio; 

29 C.F.R. §2550.404a-1(b)(2) (with respect to investment decisions, the concept of “appropriate consideration” includes a 

determination by the fiduciary that a particular investment or investment course of action is reasonably designed to further 

the purposes of the plan, taking into consideration the risk of loss and the opportunity for gain associated with such 

investment; consideration should also be given to (1) the diversification of the investment portfolio; (2) the liquidity of 

the investment in relation to the liquidity needs of the plan, and (3) the projected investment return in relation to the 

funding objectives of the plan). (Emphasis added.) 
βχ Page 11 of 11 

of institutional investments. Granting risk management hedge exemptions to index swaps 

dealers benefits pension plans in that their managers will have a wider, more creditworthy 

and more efficiently priced range of index swap dealers from which to choose. 

UBS appreciates this opportunity to comment on the Concept Release and commends the 

Commission for taking a leadership role in comprehensively examining issues related to 

financial hedging. We believe the CFTC’s evolving record with respect to its treatment of 

commodity index trading has been thoughtful, detailed, comprehensive and fact-based. We 

urge the Commission to continue this process by structuring reporting requirements so that it 

has the requisite data to determine the most efficient way to regulate commodity index 

trading. If CFTC Commissioners or staff have any questions about our comments, please 

contact me or Mary Irwin, our Senior Futures Counsel, at (312) 525-6643. 

Very truly yours, 

Greg Morris 

Managing Director 

Head of US Equities 

Structured Products Distribution 

Via: Email 

Via: Overnight Mail 
From: Ben Lilliston

To: energyhearingcomments; 

cc: Steve Suppan; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:55:40 PM

Attachments: Full CFTC Comments.pdf

Thank you for considering the attached comments on the trading of energy and 

energy derivatives, submitted by Steve Suppan of the Institute for Agriculture and 

Trade Policy. If you have any questions, or need the testimony in a different 

format, please contact Steve directly at: 612-870-3413, or ssuppan@iatp.org

Best –

Ben Lilliston

Communications Director

Institute for Agriculture and Trade Policy

612-870-3416

ben@iatp.org

www.iatp.org

Follow IATP on Twitter!

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2105 First Avenue South | Minneapolis Minnesota 55404-2505 USA | (612) 870-0453 | FAX (612) 870-4846 | iatp.org

Comments for the U.S. Commodity Futures Trading Commission Hearings on the Trading of Energy and Energy 

Derivatives, (“Energy Hearing Comments”)

Steve Suppan, Senior Policy Analyst, ssuppan@iatp.org

Institute for Agriculture and Trade Policy

August 12, 2009

Time is probably our greatest threat. The longer it takes for the recovery to begin, the greater the likelihood of serious 

damage to US strategic interests [...] Statistical modeling shows that economic crises increase the risk of regimethreatening instability if they persist over a one to two year period.

Dennis Blair, Director of National Intelligence, Testimony to the Senate Select Committee on Intelligence, 

February 12, 2009

The Institute for Agriculture and Trade Policy (IATP) is a 501c3 organization headquartered in Minneapolis, 

Minn., with an office in Geneva, Switzerland. IATP, founded over 20 years ago, works locally and globally to 

ensure fair and sustainable food, farm and trade systems. IATP is grateful for the opportunity to comment on 

CFTC rulemaking, enforcement actions and legislative recommendations to enable commodity futures exchanges 

to contribute to the orderly functioning of markets that are crucial to food and energy security. In order for 

global economic recovery to be sustainable, and not a repeat of the bubble and bust economy of the past decade, 

fundamental reform of CFTC rules and futures trading practices is urgent. To avoid the political instability about 

which Director Blair testified, the economic recovery must not be threatened by another round of excessive 

speculation and extreme price volatility in commodity futures markets.

On February 2, IATP submitted testimony to the U.S. House of Representatives Committee on Agriculture 

concerning the Derivatives Markets Transparency and Accountability Act of 2009, (Derivatives Act) subsequently 

passed by the Committee1

. We noted that excessive speculation and the resulting extreme price volatility in 

agricultural futures contracts made it difficult for many farmers and ranchers to forward contract, as rural bankers 

were unable to assess price risks with enough certainty to loan money to country elevators and other first points of 

sale. By June 2008, when commodity futures prices began their historic collapse, agricultural supply chains were 

facing a financial crisis and many farms and ranches suffered a cash flow crisis that endangered their ability to plant 

crops and feed livestock. Food and energy riots, due to unaffordable or unavailable food and energy commodities, 

broke out in at least two dozen developing countries, already suffering from skyrocketing food and energy import 

bills and less than the critical three month minimum of hard currency reserves.2 

We supported Section 3 of the Derivatives Act, which would close the “swaps loophole” by requiring the CFTC to 

establish aggregate speculative position limits in concert with the recommendations of the Position Limit Advisory 

Groups stipulated in Section 6. We reiterate here our support for aggregate position limits applied to all trading 

venues and for the Advisory Groups. These position limits, together with the measures proposed in Section 3 

to prevent regulatory arbitrage, if enforced by an adequately budgeted and staffed CFTC, will help reverse the 

deregulation and de-supervision that has lead to systemic violations of the Commodity Exchange Act.

Since the House passage of the “American Clean Energy and Security Act” (ACES) on June 26, it has become all 

the more urgent for the CFTC to establish and enforce aggregate speculation position limits. Sections 340–360 of 
ACES provide the legislative authority for the CFTC to regulate the trading of carbon emissions permits and offset 

credit derivatives. Although the CFTC has said that it is committed to “ensuring emissions market integrity,”3

without aggregate speculative position limits on carbon futures, the carbon market “weight of money” from 

unlimited speculator positions will induce extreme price volatility that could dissuade investments towards a low 

carbon economy. 

The legislative design of primary carbon trading assumes that carbon prices will trend upward as government 

reduces the number of pollution permits granted and annually increases their initial legislated price. According to 

the U.S. Congressional Budget Office (CBO), “the price increases would be essential to the success of a cap-andtrade program because they would be the most important mechanism through which businesses and households 

would be encouraged to make economically motivated changes in investment and consumption that reduced 

CO2 emissions.”4

 The cap-and-trade legislative provisions of ACES suffer from short comings too numerous 

and complex to analyze here. To take but one example, as Michelle Chan testified on March 26 to the House 

Committee on Ways and Means5

, the difficulty of verifying the GHG reduction claims of offset project developers 

could allow carbon derivatives investors to take profits well in advance of verification. And, we would add, there is 

nothing in ACES to prevent offset project developers from trading carbon derivatives—a conflict of interest similar 

to the many that have plagued financial markets for more than a decade. 

 The short-selling of carbon derivatives alone, anticipated in ACES (Section 352) and unrestricted by position 

limits, would tend to undermine the legislated structure to increase carbon prices. “Successful” short-selling 

could drive down carbon prices sufficiently to prevent cap and trade from making any demonstrable contribution 

to the ACES-mandated reduction of Green House Gasses. In light of ACES, the Derivatives Act and the Obama 

administration proposal to regulate Over the Counter Trading, the CFTC should organize hearings in the fall to 

consider the issues involved in regulating primary and derivative carbon markets and CFTC’s capacity to regulate 

such markets.

In May, IATP joined the Commodity Markets Oversight Coalition (CMOC). We have helped draft and signed on 

to June 3 and August 5 letters to the Congressional leadership and an August 5 letter to CFTC Chairman Gary 

Gensler.6 We wish to draw attention to two related issues in the August 5 letter to Congressional leadership.

Under the subtitle, “‘Dark Market’ Trading Is A National Security Risk,” the CMOC points out that the “dark 

markets” of private party to private party trades not only expose the financial system to unreported counterparty 

risks, but to malevolent trading practices that could disrupt U.S. energy supplies and pose a national security 

threat. Continued regulatory and legislative inaction to allow OTC trading in these “dark markets,” makes the 

U.S. vulnerable, in a way—not unlike the vulnerability of at least 40 developing countries—to political instability 

due to the economic crisis. Director of National Intelligence Dennis Blair, in his February 12 presentation to the 

Senate Select Committee on Intelligence emphasized that the economic crisis, triggered in part by financial services 

industry deregulation and de-supervision, had displaced Al-Qaeda as the number one U.S. national security threat.7

It has been suggested that greater transparency in the reporting of OTC trades will enable the CFTC to effectively 

regulate the “dark markets” that compete with the standardized trades of publicly regulated commodity exchanges. 

The CFTC is currently debating criteria for the “customization” of OTC trades, which together with a return 

to prudential capital requirements for all parties involved in the OTC trade, would make the “dark markets” 

somewhat less opaque. We fear that while CFTC and financial services industry lawyers debate whether a new 

financial product fits CFTC “customization” criteria, continued OTC trading in the “dark markets” could give 

rise to further rounds of excessive speculation, and in the case of malevolent traders, expose the United States to a 

national security threat in its energy markets.

We agree with Michael Masters, in his June 4 testimony to the Senate agriculture committee: “Wall Street will try 

to shift the debate to standardized vs. customized in order to avoid clearing [trades on transparent and publicly 

regulated derivatives clearing organizations]. Congress has the responsibility to make clearable vs. non-clearable 

the right standard.”8 Masters rightly proposes a high regulatory burden of proof and a much higher margin 

requirement for a trader to justify the need for an OTC contract. He poses the question that we believe that 

Congress and the CFTC should pose and answer: What kind of financial product has price risks so opaque and 
difficult to assess that not one derivatives clearing organization would accept the product for trading? Transparency 

is a good disinfectant for the design of toxic assets that many banks still carry on their books. But that transparency 

should not be the mere reporting to the CFTC of the opaque financial products of “dark markets.” Instead 

regulation should put a heavy burden of proof on those traders to show the market efficiency and social utility of 

products whose risks are so difficult to assess.

Satyajit Das, a financial market analyst, has written, “Relatively simple derivative products provide scope for 

risk transfer. But increasingly complex and opaque products are used to raise risk and leverage and circumvent 

investment restrictions, bank capital rules, securities and tax legislation.”9

 Das doubts that U.S. and EU regulatory 

and legislative remedies proposed thus far to regulate OTC derivatives trading will be effective. We hope that his 

well-documented and reasoned grounds for skepticism will not be further supported by weak CFTC reforms.

As Director of Intelligence Blair observed in his testimony to the Senate, time is not on our side, not just for 

economic recovery, but for financial services reform to make the recovery sustainable. Reform proposals that 

prevent the trading practices that have lead to excessive speculation and its economic and social consequences 

are much preferred over regulatory priorities that result in prolonged litigation. Hence, we welcome Chairman 

Gensler’s support for establishing and enforcing aggregate speculative position limits.10 However, we doubt that 

his proposal to focus CFTC resources to investigate the market share of commodity futures market participants 

will yield timely results for regulatory reform. And because time is of the essence, it is essential to prioritize—

for implementation and enforcement—the most efficient means for preventing excessive speculation. Setting 

and enforcing aggregate speculative position limits should take priority over CFTC studies on market share 

concentration and referrals to the Department of Justice for possible violations of anti-trust laws.

The U.S. government does not have a good track record of enforcing anti-trust laws and laws governing anticompetitive business practices. Indeed, in 2006, the Inspector General of the U.S. Department of Agriculture 

reported that the USDA had lacked the capacity for more than a decade to investigate and refer cases to the 

Department of Justice for violations of the Packer and Stockyards Act and other laws on anti-competitive 

agribusiness practices.11 The new head of the Department of Justice division on anti-trust matters has indicated a 

willingness to prosecute commercial law violators. However, over the past decade many such cases have perished 

due to the increasing use by the courts of summary judgments, verdict set-asides and rules of procedure that 

exclude relevant evidence. Given the overwhelming political and legal war chests of the financial services industry, 

pursuit of a market concentration framework for regulating the commodities futures markets does not seem to be a 

cost-effective strategy nor the best regulatory tool to prevent excessive speculation. 

IATP recommends that Chairman Gensler focus CFTC resources on the prevention of excessive speculation and 

extreme price volatility. Neither the CFTC nor physical hedgers nor public interest groups have the luxury of time 

to fight the financial services industry on a legal battlefield where it has overwhelming advantages. 

The Institute for Agriculture and Trade Policy wishes to thank the CFTC for the opportunity to comment on the 

complex issues addressed by this hearing. We look forward to working with the CFTC to restore the price risk 

management and price discovery functions of commodity futures markets, while allowing speculators to provide an 

optimal amount of liquidity needed to clear the trades among physical hedgers. 

Notes

1 Testimony for the U.S. House of Representatives Committee on Agriculture, Subcommittee on General Farm Commodities and Risk 

Management hearing on the draft “Derivatives Markets Transparency and Accountability Act of 2009” http://www.agobservatory.org/library.

cfm?refid=105090 

 2 “Commodities Market Speculation: The Risk to Food and Agriculture,” Institute for Agriculture and Trade Policy, November 2008, at “ensuring 

emissions market integrity,” at http://www.iatp.org/iatp/publications.cfm?accountID=451&refID=104414

 3 Rafael Martinez, “CFTC Market Surveillance of CO2: We are committed,” Energy and Environmental Markets Advisory Committee, U.S. 

Commodity Futures Trading Commission, May 13, 2009 at http://www.cftc.gov/stellent/groups/public/@aboutcftc/documents/file/eemac051309_

martinez2.pdf

 4 Douglas W. Elmendorf, “The Distribution of Revenues from a Cap-and-Trade Program for Co@ Emissions,” Congressional Budget Office, 

Testimony before the Committee on Finance, United States Senate, May 7, 2009 at 8.
 5 http://waysandmeans.house.gov/media/pdf/111/chan.pdf

6 http://www.tradeobservatory.org/library.cfm?refID=106535; http://www.tradeobservatory.org/library.cfm?refID=106619; http://www.

tradeobservatory.org/library.cfm?refID=106620 

 7 http://www.dni.gov/testimonies/20090212_testimony.pdf 

 8 “Testimony of Michael Masters before the Committee on Agriculture, Nutrition and Forestry, United States Senate,” June 4, 2009 at 8. http://

agriculture.senate.gov/ 

 9 Satyajit Das, “How to design derivatives that dazzle and obfuscate,” Financial Times, July 8, 2009. 

10 “Opening Statement of Chairman Gary Gensler, Commodity Futures Trading Commission Hearing of the Commodity Futures Trading 

Commission,” August 5, 2009 at http://www.cftc.gov/stellent/groups/public/@newsroom/documents/speechandtestimony/genslerstatement080509.pdf

 11 http://www.usda.gov/oig/webdocs/30601-01-HY.pdf
From: Tessa Gorrens

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:53:52 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Gunter Gerard Isidoor Augusta Maria Mertens 
From: ISAPAT

To: energyhearingcomments; 

Subject: Comment on Commodity Futures Trading limits

Date: Wednesday, August 12, 2009 4:52:02 PM

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581 

Dear Chairman Gensler: 

l strongly urge you to restrict any exemption from that speculative position limit 

to the bona fide producers or consumers of the actual commodity, and not to 

those engaged in financial trading through aggregation. 

The CFTC should bar manipulation by shorts, not just longs. 

Also, I wish to support the conclusions of these two gentlemen, Theodore Butler, 

Butler Research LLC, and Adrian Douglas of the Market Force Analysis Letter as 

expressed in their letters to you Chairman Gensler, dated August 10, 2009, from 

Mr. Buttler and August 11, 2009 from Mr. Douglas. 

Sincerely yours, 

Paul A. Taipale 
From: Lisa.Elmore

To: energyhearingcomments; 

cc:

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:46:26 PM

Attachments: Testimony of Peter Krenkel-suppl-aug09-final.doc

Attached please find supplemental comments from Natural Gas Exchange Inc. 

Kind regards, 

Lisa 

Lisa Elmore, Legal Assistant 

Natural Gas Exchange Inc. 

Suite 2330, 140 - 4 Avenue SW 

Calgary, AB T2P 3N3 

Phone: (403) 974-4332 

Fax: (403) 234-4326 

Email: lisa.elmore@ngx.com 

www.ngx.com 
 
Peter Krenkel

President 

Natural Gas Exchange Inc. 

Suite 2330, 140 4th Avenue S.W. 

 Calgary, AB, Canada T2P 3N3 

T (403) 974-1705 

F (403) 974-1719 

peter.krenkel@ngx.com 

August 12, 2009 

Office of the Secretariat 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, NW 

Washington, DC 20581 

Re: Energy Hearing Comments 

Dear Commissioners: 

Thank you for the opportunity of testifying before the Commission on July 29, 2009. The issue 

of position limits in U.S. energy markets impacts Natural Gas Exchange Inc. (NGX) as the 

Canadian operator of a cross-border exempt commercial market (ECM) in natural gas, oil and 

electricity contracts, and as a Canadian and U.S. regulated clearing organization for screentraded and over-the-counter (OTC) energy products. 

NGX also appreciates this opportunity to expand on two points raised in the July 29th hearing. 

SCOPE OF POSITION LIMIT REGULATION FOR EMERGING MARKETS

As outlined in our July 29th opening statement, we are supportive of prompt month position 

limits being set by the Commission for those contracts that settle against a futures market 

contract price and that are economically equivalent or interchangeable with another regulated 

futures market. This helps ensure fairness and transparency for position limit setting over 

“significant” contracts. We also support the setting of spot-month limits for a physical delivery 

market in energy commodities with finite supply at a percentage of the estimated deliverable 

supply. 

However, we emphasized the importance of the Commission recognizing the risks of CFTCmandated position limits being inappropriately applied to emerging and illiquid markets. We 

identified this risk in our July 29th opening statement by highlighting the need for a clear and 

consistent approach being applied to the scope of significant price discovery contracts (SPDCs) 

under the expanded rules for ECMs. An overly broad interpretation of what constitutes a SPDC 

and the application of DCM level regulation, including hard position limits, could have the 

damaging effect of driving liquidity to the less transparent OTC markets and away from ECMs 

who bring highly desirable benefits to the energy markets. 
2

This concern has been heightened by our recent understanding that a 2(h)3 contract may be 

designated a SPDC if it trades as little as on average 5 times per day over a calendar quarter and 

meets certain other criteria as outlined in the Commission’s guidance to the SPDC rules. We 

believe the 5 trades per day materiality threshold for liquidity was adopted based on the “early 

warning” rules for reporting put in place for ECMs. While NGX appreciates that some 

benchmark for liquidity must be set, the 5 trades per day standard is an unjustifiably low 

threshold when used as one of the fundamental markers dividing the exempt markets from those 

deserving full DCM-level regulation (including position limits). 

If 5 trades per day becomes entrenched as the standard for material liquidity in determining 

SPDCs, NGX submits that position limits will be applied inappropriately to many developing 

products and will stifle liquidity. NGX would suggest that a more appropriate measure of 

liquidity would be something considerably higher, recognizing that exceptions may be necessary 

in some circumstances considering the complexity of products traded through a wide variety of 

ECMs. A substantially higher standard would help guard against the risk that an overly broad 

interpretation of the scope of SPDCs inadvertently weakens the important protections in place to 

ensure the ongoing development of new liquid transparent markets. 

CROSS-BORDER HARMONIZATION 

At the July 29th hearing the Commission inquired about regulatory harmonization and whether 

NGX had any concerns about making regulation work cross-border between Canada and the U.S. 

NGX is a recognized exchange and clearing agency in Canada, with oversight by its lead 

Canadian regulator, the Alberta Securities Commission (ASC). As regulation in Canada is 

currently a provincial matter, NGX’s model is one where most provincial regulators, in 

jurisdictions where NGX has a sufficient nexus, exempt NGX from regulation based on lead 

oversight by the ASC, and subject to any additional terms and conditions. In the U.S., NGX is 

an ECM with respect to certain of our contracts and is also a registered DCO. 

To expand on NGX’s comments at the July 29th hearing, in our view harmonization between our 

lead jurisdiction in Canada and U.S. laws has worked well. As a fully regulated exchange in 

Canada, NGX is subject to a regulatory regime that may be different from, but not in direct 

conflict with, ECM rules (including those applicable to SPDCs). As a fully regulated clearing 

agency in Canada and DCO in the U.S., NGX is subject to an almost identical principles-based 

regulatory regime in both countries. The principles-based regime on both sides of the border has 

been flexible enough to accommodate our successful application of multiple laws across 

provinces, and across countries. 

Although differences between Canadian and U.S. laws could conceivably create substantial 

challenges when managing their impact on our Canadian and U.S. participant base, these 

difficulties have not been encountered to date. This is largely as a result of having substantial 

regulatory alignment, the recognition by our lead Canadian regulator of NGX’s need to operate 

in a harmonized environment and on a level regulatory playing field with its North American 
3

competitors, and the cooperative relationship between the ASC and the CFTC. 

However, greater regulatory oversight of the OTC markets (and specifically encouraging OTC 

clearing), does warrant special attention. We would like to reiterate our support for increased 

OTC oversight but take this opportunity to emphasize the need for a harmonized Canadian and 

U.S. approach. Canadian and U.S. energy markets are inextricably linked, and if the two 

countries do not move in tandem with harmonized rules that impact both our Canadian and U.S. 

participants in a similar manner, we would encounter significant challenges in applying one 

regime with respect to our U.S. participants and another for our Canadian participants. 

Therefore, to the extent the CFTC determines that a new position limit regime requires more 

authority over the OTC markets, we would highlight the importance of the Commission taking 

into account the interconnectedness of the OTC markets on a North American basis before 

imposing a regime that impacts us as a Canadian entity but is applicable to only a portion of our 

participants. 

I thank you for the opportunity to share our additional views. 

Peter Krenkel 

President, Natural Gas Exchange Inc. 
From: jwhite4479

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:40:36 PM

Chairman Gensler,

I'd like to add my voice to the comments already submitted by Ted Butler 

regarding the silver market. Specifically, to request:

● that the Commission impose legitimate speculative position limits, 

such as a speculative position limit of no more than 1500 contracts 

in COMEX silver futures 

● restrict any exemption from that speculative position limit to the 

bona fide producers or consumers of the actual commodity, and not 

to those engaged in financial trading through aggregation 

● make sure that these limitations apply to the short side of the 

market as well as to the long

Thank you,

Jay White
From: Chris Dyer

To: energyhearingcomments; 

Subject: commodity position limits

Date: Wednesday, August 12, 2009 4:40:26 PM

Dear Sirs,

As a small commodity futures trader, I feel that I have been constrained 

for participating in the gold and silver ( Comex ) markets by my 

knowledge that an inordinate portion of the short sales in both markets 

are, and have been, dominated for many years by the major "4 or less" 

traders.

Since both the total size as well as the relative percentages of these 

precious metals short positions exceed those of any other commodity 

futures item or product, one has to question the advisability of speculating 

in these "dominated" markets. I have stayed away from them but would 

like to participate in the future. That participation will depend entirely on 

the elimination by the CFTC of this gross imbalance and a setting of 

reduced position limits that more accurately reflect the actual needs of 

non-commercial ( that is companies that do not use/consume the actual 

commodity) speculative particpants.

In light of the events of the past 18 months, where one government 

agency/regulator after another has been identified as being asleep at the 

switch when the entire financial and banking system cratered, there is still 

hope that at least one agency, the CFTC, will break this sorry string and 

do the right thing to protect the public and the small futures market 

participants.

Sincerely yours,

Chris Dyer
From: glennkinney

To: energyhearingcomments; 

Subject: my comments

Date: Wednesday, August 12, 2009 4:40:07 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler 

here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Glenn kinney
From: wdgaga

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:38:42 PM

In addition to energy I hope you will address the same issue (position 

limits) in the silver market. 3-4 large firms routinely make up more than 

50% of the short interest in this commodity. This is certainly not in the 

interest of a fair market. It doesn't make sense to address the issue in one 

market (oil) but not in another market where the imbalance and 

appearance of manipulation is even greater. Thank you.

Bill Gmiterko
From: jrogers549

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:33:31 PM

"Oil is unique in that it is so strategic in nature... Energy is truly fundamental to 

the world’s economy. It is the basic, fundamental building block of the world’s 

economy. It is unlike any other commodity." ~Dick Cheney, 46th US VicePresident (speaking as the CEO of Halliburton (HAL) in 1999)~ 

This quote says it all when it comes to this author's opinion of how much 

regulation ought to be imposed on Oil Futures. Let's take it a step further and 

regulate oil like other utilities are regulated. Any reasonable person will tell you 

that oil is as important to them as water, electricity & natural gas. Here's a 

message for you CFTC: wake up and protect us from those who everyday make 

their fortunes preying upon us and our progeny and our country's economy. Put 

limits on how big ALL commodities markets can be relative to a reasonable share 

of reasonable hedging. Which from your own admission is the reason these 

markets exist in the first place. 

So why hasn't the government stepped in to impose consumer protection on oil 

as it has for these other utilities. The answer is greed & corruption has kept oil 

out of the spotlight since the world hit the roads using cars instead of animal 

power. The hay-day for oil-based products research was in the post WWII-era 

through the 1960's. Oil-based products are so pervasive in our daily lives that 

most people are oblivious. It would be interesting for someone to study the 

historic per-capita cancer rates in relation to the oil-based consumables 

increased presence in the average person's life; but I digress. 

In the 1970's the world gluttony for oil was rocked to the core when OPEC 

decided it wanted greater wealth for their precious commodity. We did not learn 

our lesson. Over the coming decades, MPGs did not make significant head way 

and the heavy steel cars of yesteryear yielded to the massive demand for highaerodynamic profile and gas-guzzling SUVs. 

In my lifetime the price per gallon of gasoline in Missouri went from 70 cents a 

gallon to four dollars last summer. Why? Dollars invested in oil futures was 3.3 

Billion dollars in 2006. By June 2008 there was 333 billion dollars invested. The 

price of a barrel of sweet crude hit $147, gasoline per gallon in KC, MO hit $4. 

This would be fine if demand over the same period had increased or if supply 

was somehow down. But the truth is demand over the same period was down, 

even here in the good old U.S. of A. It would appear that commodities in general 

have become the haven for quick money making schemes of the upper echelon 
in society. It comes at the expense of the majority of average hard-working 

Americans. 

Before the attack of 911, gasoline was $1.13 per gallon. Since that time it 

appears all the oil companies and the 60 levels of middlemen who trade the 

same barrel over and over again have used any miniscule piece of Middle East 

news to hike the price. Or production cuts come when news isn't available. 

Why does it take a crisis? Until public outrage peaks no one in Washington gives 

a rip! Regulate all commodities to stave off the culture of greed that plagues our 

"free" markets. Because if you don't the next oil bubble will be just around the 

corner. Americans are outraged now at the oil industry but it has been peacful 

dissent. How long do you think people will sit by and watch as lack of action 

opens up other commodities for exploitation without themselves taking drastic 

action? 
From: Beasley, Emelda

To: secretary; 

cc: Jeffers, John; Loya, Javier; Valles, Maggie; 

Subject: Comments on the Hearings Regarding Speculative Position Limits

Date: Wednesday, August 12, 2009 4:27:58 PM

Attachments: CFTC Letter 8-12-09.pdf

Dear Secretary, 

Please find attached a letter on behalf of E. Javier Loya, Chairman and CEO of OTC 

Global Holdings. 

Thank you, 

Emelda Beasley

Executive Assistant 

OTC Global Holdings LP

5718 Westheimer Rd., Suite 1330

Houston, TX 77057

(713) 358-5458 direct

(979) 292-5049 cell

(713) 358-5449 fax

beasley.e@otcgh.com
 

E. JAVIER LOYA

CHAIRMAN AND CEO 

(713) 613-0511 TEL

(713) 613-0599 FAX

5718 Westheimer Road, Suite 1330 

Houston, TX 77057

August 12, 2009 

Secretary of the Commission 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street NW 

Washington, DC 20581 

Dear Secretary: 

I write you following the Commodity Futures Trading Commission’s hearings regarding 

speculative position limits in energy futures markets to share an industry perspective on the 

potential effects of the current proposals. 

OTC Global Holdings owns and operates fifteen commodity brokerage firms in the United 

States. Our inter-dealer brokerage firms participate as intermediaries in the agricultural and 

energy commodity markets, both over-the-counter and exchange-traded, and are substantial 

liquidity providers to the major derivatives clearing organizations in these markets. 

We whole-heartedly support the Commission’s stated goals of stemming volatility, increasing 

transparency and reporting and bringing greater efficiency to these markets. As an intermediary 

that takes no positions, we are at the forefront of an industry that has made great strides in 

moving transactions to electronic trading platforms well in advance of regulatory requirements 

for this very purpose. 

We believe the Commission should establish position limits on all energy commodity contracts 

that require actual delivery of the underlying physical commodity. We also believe that clearing 

of energy commodity contracts through a derivatives clearing organization should be mandatory 

whenever such clearing is available. Today a large percentage of over-the-counter trades are 

submitted to such an organization for clearing and the percentage has grown steadily over the 

past five years. Bilateral trades in standardized contracts have become the exception rather than 

the rule, meaning that requiring clearing of this minority of trades should increase transparency 

without having a significant impact on the market. 

However, while we support position limits in physical markets, we believe imposing these limits 

on the financially settled contracts in energy commodities is unnecessary. As the Commission 

seeks to curb the price volatility the energy markets have seen during the past year, it is 

important to remember that retail energy prices are driven by spot market prices, not the long 

term futures market. Financial contracts settle based on the price of the underlying commodity, 
 2 

as set by the physical-delivery contracts at the delivery date; they do not drive the spot market 

prices. 

What can lead to price swings unrelated to traditional supply and demand forces is excessive 

trading in physical contracts by participants not intending to take delivery. The risk of market 

manipulation and excessive speculation lies in the physical market because of its finite 

deliverable supply. With financially settled contracts, no delivery of the underlying commodity 

ever takes place. Accordingly, the risks associated with a finite commodity supply are not 

present in the financially settled contract market. For these reasons, it is our belief that if 

position limits in the financial markets are imposed, it can only be on the last day of the contract 

in order to maintain integrity between the physical market, financial hedgers and speculators. 

Limiting speculative positions in physical contracts, if properly implemented and enforced, 

should achieve the Commission’s goal of preventing any one participant or group of participants 

from amassing undue influence. 

Throughout the hearings, the Commission and many experts have drawn parallels between the 

position limits in effect in several agricultural commodities markets and those being proposed in 

the energy markets. Based on our experience in both of these markets, we believe these asset 

classes cannot be compared as equals. Though both have limited deliverable supplies, many of 

the similarities end there when it comes to defining position limits in these respective futures 

markets. Where agricultural producers work on a short-term cycle of crop planting, growth and 

harvest, the energy industry is focused on long term, expensive capital projects such as the 

creation of new power plants or offshore production platforms. Crude oil and natural gas 

producers, power plant developers, refinery owners and many others rely heavily on the futures 

market to mitigate the long-term risk that comes with these capital-intensive projects. Many 

other institutions employ the energy futures markets to offset risks associated with other assets, 

including corporate equity and debt holdings, inflation-sensitive assets, and equipment that 

consumes fuel. The many risk management uses of energy futures by global business require a 

robust and liquid financially settled energy futures market. 

The agricultural futures markets also have financially settled contracts, but it is worth noting that 

the Commission has only imposed position limits in the physical agricultural markets. We 

believe the Commission should adopt a similar approach in regulating the energy markets. 

Regardless of the Commission’s decision on position limits, enforcement of the resulting policy 

and the decision to grant exemptions must be seriously considered. Lax enforcement of current 

limits set and enforced by exchanges makes their effectiveness questionable, while the numerous 

exemptions granted to market participants are often used inappropriately. We believe the 

Commission should set and enforce position limits and should do away with the hedge 

exemption in physical markets, as it is too difficult to administer and police. 

Further, the suggestions by some during the hearings that certain classes of investors, like index 

funds, be prohibited from participating in the energy commodity markets is counter to the 

Commission’s objective of reducing volatility. Limiting or eliminating the participation of these 

retail investors will simply drive them to invest in the same markets through other vehicles. The 
 3 

strict enforcement of position limits on the physical contract markets would achieve the 

Commission’s objectives without the need to artificially suppress the “buy side” of the market. 

Ultimately, the widespread application of position limits across physical and financial energy 

futures markets may discourage participation and free market competition in what is today a 

highly liquid energy futures market. With fewer trading counterparties, energy markets may 

become much more fragmented and susceptible to manipulation. We believe comprehensive 

position limits will be a disruptive market force that may foster inefficiency and volatility. 

Businesses that rely on the futures markets to mitigate risk are likely to find that it is no longer 

an effective hedging tool given the dearth of counterparties. This stands to have two critical 

results. First, businesses are likely to pass additional costs on to their customers, increasing rates 

to accommodate risk and volatility. Secondly, these businesses will look for markets elsewhere, 

driving business overseas. 

I raise these suggestions and concerns in a spirit of collaboration with the hope that we can work 

together to achieve the vital goals of less volatility and increased transparency in a manner that 

also protects the fair, open and efficient functioning of the energy futures markets. I look 

forward to participating in an open dialogue to achieve the mutual goals OTC Global Holdings 

shares with the CFTC. 

Sincerely, 

E. Javier Loya 

Chairman and Chief Executive Officer 

OTC Global Holdings 
From: Ernest Wilson

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:26:04 PM

To the CFTC: 

I encourage the Commission to establish a clear definition of hedging 

that excludes the use or interpretation of any economic theory or use 

of theoretical relationships between markets as as description of 

hedging. Any definition of hedging that invites the use or creation 

of new market theories or places financial institutions in a category 

by themselves will result in massive speculation conducted by 

speculators masquerading as hedgers. Long and short hedging should be 

treated equally. Please be clear about this. 

I want to thank Chairman Gensler for his efforts in cleaning up what I 

consider poorly supervised rules in this regard. 

Very Sincerely, 

Ernest J. Wilson 
From: George Green

To: energyhearingcomments; 

Subject: CFTC Comment

Date: Wednesday, August 12, 2009 4:25:53 PM

Dear Commissioners,

Please act to stop the artificial suppression of the price of silver.

Best regards,

George Green, FSA, MAAA
From: glennh10

To: energyhearingcomments; 

Subject: Comment for Hearings

Date: Wednesday, August 12, 2009 4:09:57 PM

Dear CFTC Commissioners: 

Please be aware that through large position purchases, commodity market prices 

can be manipulated lower as well as higher. You seem to be concerned about 

large-concentration speculators whose actions push prices higher, yet there 

seems to be a lack of interest in addressing large-concentrated positions that 

push prices lower. This is particularly endemic concerning gold and silver. 

You must be aware that both gold and silver prices have been kept artificially 

low for decades. That the price of gold is manipulated is a matter of public 

record. However, you can't make a claim that gold (and silver) operate as 

commodities in a free market while their price behavior is subject to 

manipulation, covert or otherwise. 

At least concerning silver, be aware that its historically artificial price has had 

serious consequences. It has encouraged consumption and waste, discouraged 

investment in finding new sources, and discouraged investment in finding 

alternatives. In 1945, The U.S. Silver Strategic Stockpile contained at least 4 

billion ounces of silver. A few years ago, the stockpile was depleted. 

Concerning gold, I probably don't have to remind you that a lower gold price is 

maintained to artificially inflate confidence in a debauched fiat dollar that today 

is created with reckless abandon for the sake of political gain. 

If you're going to address the presence of commodity manipulation, please be 

complete and do it across the board. 

Regards, 

Glenn Haugen 
From: Anita Herrera

To: energyhearingcomments; 

cc: Paul Cusenza; Ann Sacra; 

Subject: Nodal Exchange

Date: Wednesday, August 12, 2009 4:09:50 PM

Attachments: 8.12.09 CFTC Hearings .pdf

Dear Mr. Stawick: 

Attached are Nodal Exchange's comments to the Commission's hearing 

conducted on July 28th, 29th, and August 5th regarding position limits and 

hedge exemptions on energy commodities. Let me know if additional 

information is requested. 

Respectfully submitted, 

-- 

Anita Herrera 

Chief Compliance Officer 

Nodal Exchange, LLC 

8065 Leesburg Pike, 7th Floor 

Vienna, VA 22182 

703.962.9835 
2 NODAL. 

( () EXCHANGE 

8065 Leesburg Pike, 7'" Floor 

Vienna, VA 22182 

Phone {703) 962 9800 

Fax {703) 962 9850 

www.nodalexchange.com 

August 12, 2009 

VIA ELECTRONIC MAIL 

Office of the Secretariat 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, NW 

Washington, DC 20581 

energvhearingcomments(aicftc.gov 

Re: Energy Hearing Comments- CFTC Hearings on Speculative Position Limits in Energy 

Futures Markets 

Dear Chairman Gensler and Commissioners Chilton, Dunn and Sommers: 

Nodal Exchange, LLC submits these comments in response to the Commission's comments 

and witness testimony presented at the CFTC's hearings conducted on July 28th, 29th, and August 

5th to address how to set position limits in energy commodities. The testimony at these CFTC 

hearings focussed on oil and natural gas. Nodal Exchange offers financially settled electric power 

contracts which are central counterparty cleared through LCH.Clearnet. 

Nodal Exchange is a new central counterparty cleared exchange for trading electric power 

futures contracts that commenced trading as an Exempt Commercial Market in April of 2009. 

Nodal Exchange is the first exchange to offer contracts on many locations for trading electric 

power, which has been a market dominated by off-exchange contracts. Electric power is unlike 

other energy commodities in that power generally cannot be stored, and given the impact of 

transmission congestion and loss on its Locational Marginal Price (LMP), power is priced on a 

locational basis (e.g., location of generation, zone of usage). Thus, in order to allow power market 

participants the ability to manage the locational risk inherent in power, participants must have the 

ability to trade contracts settling against many locations, which Nodal Exchange provides on a 

cleared market. 

The design of Nodal Exchange promotes transparency by offering standardized power 

contracts that are central counterparty cleared and that settle on the average Day-Ahead LMP for 

each month on about 1,800 locations within four Regional Transmission Organization/Independent 

System Operator markets (ISO/RTO): ISO-NE (ISO New England), NYISO (New York ISO), PJM 

(PJM Interconnection), and MISO (Midwest Independent Transmission System Operator). Less 

than 100 of the ~ 1 ,800 locations offered by Nodal Exchange are offered on other central 

counterparty cleared exchanges; however, these <1 00 locations are expected to have the most 

significant volume. Positions held on the other> 1, 700 locations available on Nodal Exchange have 

historically only been available through off-exchange markets prior to Nodal Exchange. 

Letter from Nodal Exchange to the CFTC; August 12, 2009 

Page 1 of2 
Given that positions in electric power exist across multiple exchanges and in off-exchange 

markets, related position limits need to be set in the context of the overall aggregate net positions 

market-wide including on- and off-exchange in order to be effective. For example, a trader may 

have positions on PJM Western Hub Locational Marginal Price from trading on ICE, NYMEX and 

Nodal Exchange in addition to any off-exchange positions. Position limits based solely on open 

interest on a particular exchange would create an unfair competitive disadvantage for smaller 

exchanges thereby limiting innovation and competition while also not being representative of the 

true market situation which prompted the desire to set position limits. Any rules or regulations 

should account for the situations in which a participant's position on PJM Western Hub could 

appear significant when viewed solely on a relatively small exchange such as Nodal Exchange, but 

is actually quite insignificant when viewed in the context of the participant's aggregate positions on 

NYMEX, ICE and off-exchange markets in addition to Nodal Exchange. The aggregate view is 

most relevant. 

In implementation, it is important to note that trader positions should be viewed on a net 

basis across venues. A trader might have both long and offsetting short positions on the same 

contract on different venues, so it is important to look at the trader's net position in reviewing any 

position limits. Without this netting, position limits could have the unintended effect of not 

permitting the trader to reduce their overall net exposure by conducting new offsetting trades. In 

addition, geographic or basis netting should also be considered when looking at position limits (e.g., 

locational spreads which are common in electric power trading). 

We believe the CFTC is best able to determine the need for and extent of any position limits. 

We suggest that in setting any position limits, the CFTC carefully consider the matters of physical 

versus financial markets and spot versus futures markets. We also believe that the CFTC should 

oversee the implementation, as no commercial or other private entity would be as capable of 

appropriately handling the highly confidential information about traders and exchanges needed to 

set aggregate limits. 

In summary, Nodal Exchange supports the view that position limits are best determined by 

the CFTC based on aggregate market positions, which promotes market integrity, fairness and 

transparency. Nodal Exchange commends the Commission on the success of the hearings and for 

seeking input from the public on how these issues impact our markets. We would be happy to 

discuss our comments in more detail with the staff. Please feel free to contact me at 703-962-9812, 

or Anita Herrera, our Chief Compliance Officer at 703-962-9835. 

~~, Paul J. Cusenza 

Chief Executive Officer 

Letter from Nodal Exchange to the CFTC; August 12, 2009 

Page2of2 

Nodal Exchange. LLC I 8065 Leesburg Pike, 7"' Floor I Vienna. VA 22182 I Phone: (703) 962 9800 I Fax: (703) 962 9850 1 www.nodalexchange.com 
From: robert bringleson

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:08:43 PM

I support position limits in all markets ,energy and Precious metals on both the 

long and short side. Excessive positions by a few traders unfairly influence prices 

for small traders and consumer alike. 

 Thank You 

 Robert Bringleson 

 
From: Bob Rice

To: energyhearingcomments; 

Subject: Energy hearing comments

Date: Wednesday, August 12, 2009 4:06:53 PM

ENERGY HEARING COMMENTS

August 12, 2009

Mr. Gary Gensler

Chairman, CFTC

Dear Chairman Gensler;

I am CEO of small business that manufactures on line control hardware and 

software. We export many of our products to countries on four continents. I have 

diversified my personal portfolio to include some stock in companies producing 

commodities, and to some precious metals.

I applaud your hearings on imposing speculative position limits on futures 

contracts.

Market integrity is threatened, and manipulation of a commodity made possible by 

allowing a concentration, either long or short, of futures contracts by only several 

organizations. A monopoly of any kind is not good for consumers or other 

businesses.

Although not your area, I believe the concentrated naked shorting of large 

volumes of stock of financial companies and banks was responsible for the 

precipitous fall in the value of the stocks of these institutions, and in the near 

collapse of our financial system. Prohibiting naked shorting might have prevented 

this near disaster.

On the long side, I believe the speculative long concentration in energy stocks and 

oil caused the price of oil ( and oil stocks) to rise to double what the market price 

would have been if position limits were in effect. 

Please put in reasonable position limits on all commodities, and only allow 

exemptions to these limits to the actual producers and consumers of the 

commodity.

Sincerely,
Robert G. Rice

President 

Boscop, Inc.
From: MICHAEL MANLEY

To: energyhearingcomments; 

cc: Mike; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:06:19 PM

Attachments: GaryGenslerLetter02.pdf

Dear CFTC,

I already send this letter direct to the CFTC chairman Gary Gensler about 

a month ago (before the hearings started). I am now sending my letter to 

you in PDF file format to make sure you receive this information.

Sincerely,

Mike Manley
Gary Gensler, CFTC Chairman 

US Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st St, NW 

Washington, DC 20581 

Re: Fine-Tuned Repeat of Original Dec 19, 2008 Letter 

Dear Gary Gensler: 

Dee 19, 2008> July 19, 2009 

I saw your acceptance speech when you were selected to be the next chairman of the 

CFTC. In your speech you committed yourself to stop corruption, fraud, and 

manipulation in the commodity markets. I hope you succeed so I may applaud you. 

But if you fail through bad action or inaction, this letter will give you ghastly glimpses 

of how much destruction will be inflicted upon the population of this country. 

But before I can tell you anything, you must have some idea of my credentials. The 

only thing important is that I have spent the last two years writing a now 300+ page 

book on a Science that is now under review for publication, probably after my death. 

On, to the main topic of this letter! In May 2008 I produced a poorly written thirteen 

page paper on "Capital" and its mandated affects upon this nation. That paper 

indicated with a 0.3 probability (30%) that there will be a one in three population 

reduction occurring within the next five to fifteen years. This means that the total 

United States population would drop from 300 million to 200 million. Unfortunately, 

due to stupid actions during this fall's financial crisis's by the Treasury Department 

and Federal Reserve, this probability has increased to 0.4 (40%)> 0.5 (50%). 

Now, here is why I am writing you. In June 2008, I wrote a brutal letter to the CFTC 

about their complacency by allowing fraud-manipulation in the futures markets. As 

expected this letter was ignored; so now, since you are still untouched with their 

corruption, I will now hand you its horrible highlights. Once the ONE in three 

population reduction above starts, the CFTC's actions on the corruption issue will 

directly trigger a second even greater population reduction of TWO in three. So far 

projections are that there is a 0.1 (10%)> 0.25 (25%)> 0.20 (20%) probability within 

the next twenty years that America's population will drop from 300 to 100 million. 

If you have any questions about the validity of my projections into the future, or wish 

copies of my papers showing details of future events, you may contact me below. 

Sincerely, 

Michael Manley 

- 1 -
From: Ryan Ullman

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 4:05:26 PM

Attachments: Energy Hearing Comments Letter 8-12-09.PDF

To Whom It May Concern:

Please find attached comments regarding energy hearing comments.

Please feel free to contact me with any questions or concerns regarding this email 

or attachment.

Sincerely,

Ryan Ullman

Legislative Assistant

Independent Petroleum Association of America

202-857-4722

rullman@ipaa.org
August 12, 2009 

Office of the Secretariat 

Commodity Futures Trading Commission 

1155 21 51 Street, NW 

Washington, DC 20581 

RE: Energy Hearing Comments by the 

Independent Petroleum Association of America 

Dear Mr. Secretary: 

Barry Russell 

President & CEO 

The Independent Petroleum Association of America (IP AA) represents the thousands of 

independent producers of American natural gas and oil. IP AA supports the recent efforts to 

increase the transparency and oversight of derivatives markets. However, we strongly oppose 

any efforts to restrict access by energy producers to the over-the-counter (OTC) market. 

The ability to hedge is critical for independent producers. By using reserves as collateral 

in the OTC market, IP AA's members use cash for finding and producing natural gas and 

oil, rather than tying up large cash resources to meet margin requirements through trading 

on a regulated exchange. 

IP AA is encouraged by the Administration's and CFTC's recognition of the vital role of 

the OTC market for many end users. IP AA strongly supports efforts to improve 

transparency in the OTC market while keeping it as a viable hedging forum. 

When considering position limits, IP AA respectfully suggests the following: 

I 

• Exclude commercial end users who enter into OTC derivative positions for longterm risk management and business-planning purposes. The amounts and 

durations of such contracts, which are necessary to manage risk, vary by industry 

and company and should not be regulated for commercial users. Some industries 

and companies are more capital intensive and require longer lead time and longerterm cash flow predictability to raise capital. 

• For energy markets, focus on the prompt three-month period. Longer-term 

energy hedges inherently tend to entail end users protecting their commercial 

interests. 

Independent Petroleum Association of America • 1201 15th Street, N. W. • Suite 300 Washington, D.C. 20005 

202-857-4722 • Fax 202-857-4799 • www.ipaa.org 
In the testimony presented during the three days of hearings, opinions varied dramatically 

on the role of speculation. IP AA views speculation as an important component of a wellfunctioning market but appreciates the need to prevent excessive speculation. IP AA 

commends the CFTC for taking interim steps. However, such interim steps should avoid 

placing burdens on commercial end users and their efforts to manage risks. IP AA supports 

the testimony presented by Elliot Chambers, Corporate Finance Manager for Chesapeake Energy 

Corporation, before the CFTC on August 5. 

Sincerely, 

. 

~ ~ 

Barry Russell 

President and CEO 

Independent Petroleum Association of America 
From: E. W. Chappell, Jr.

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 4:04:46 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.\

E.W. Chappell, Jr.
From: Thomas Paulson

To: energyhearingcomments; 

Subject: Energy Hearing Comments from the Public

Date: Wednesday, August 12, 2009 4:02:50 PM

I would like to add this comment to this public hearing on energy position limits. 

You have received comments on the technicalities, concerns, and whyfors of 

position limits by experienced traders and brokers on Wall Street. You should 

also take note of the public who are on Main Street. 

It has been said that the business of America is business. To that I must 

comment that speculation is not the business of the American public. Excessive 

concentrated speculation, done by bankers, traders, and risky gamblers, is not in 

the greater public's good because it is selfish, greedy, and unstable in taking 

undue advantage of position with criminal motives of defrauding and stealing 

that which they should not have an advantage to convert to their property. The 

public's good lies in fairness, regulation, and growth in business that motivates 

public benefit. Speculation by oil companies that results in boosting the price of 

oil regardless of whether it is actually in short supply is a travesty against public 

justice. Speculation by banks in the silver trading market to profit from 

manipulating by managing to make a market, in suppression of silver market 

prices, disregards the basic function of a commodities market to allow supply 

and demand to 

 impact the distribution of commodities in very short supply such as silver. These 

types of speculation are fueled by maladjusted position limits including the 

excessive limits, or exemptions to limits, which effectively operate to deny any 

regulation whatsoever. 

I request the CFTC to reform position limits in energy and metals that will 

protect the public good. 

 
From: JButler

To: energyhearingcomments; 

Subject: Position limits in Commodity Markets

Date: Wednesday, August 12, 2009 4:00:15 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed the comments 

made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration. 

John C. Butler, III 

 

 
From: margo bentsen

To: energyhearingcomments; 

Subject: Silver Limits

Date: Wednesday, August 12, 2009 3:58:44 PM

We recognize that the focus of your hearings was on energy, but that you 

are also aware of concentration and position limit issues in other 

commodities. 

We would ask that you address, in any rule makings, the silver market, 

and specifically the short side (we're pretty sure you'll address the long 

side, which is not historically the problem in this market). 

From Ted Butler last month: 

"the level of accountability limits in silver is too large, by a factor of five or 

more compared to any other commodity (including gold). Even though the 

current limit needs to be reduced drastically from 6,000 contracts to 

between 1000 and 1500 contracts, the big shorts now hold a lot more 

than 6000 contracts each. One or two US banks hold a minimum of more 

than two and half times the obscene 6000 contract limit. If silver position 

limits were reduced to 1500 contracts, the big banks would be holding 

more than ten times that limit. That’s insane." 

We can not say it better than Ted Butler did, but we CAN ask you to act 

expeditiously to fix this problem of many years: 

The first step is to immediately enforce the current [ridiculously high] limit 

of 6000 contracts. 

The second step is to re-regulate down to a maximum of 1500 contracts 

for any long or SHORT position. 

Thank you for your current and future efforts, with much appreciation for 

your work, 

Margo Bentsen 

Margo Bentsen 
From: Semrani, Jack N. (DC)

To: energyhearingcomments; 

cc: Wiggins, Dena E. (DC); 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 3:58:26 PM

Attachments: Energy Hearing Comments of AF&PA.pdf

Dear Mr. Stawick,

Please find attached the Comments of the American Forest & Paper Association 

on the Hearings Regarding the Application of Position Limits and Exemptions 

from Position Limits in Energy Markets. If you have any questions, please 

contact me.

Thank you and best regards.

Jack Semrani, Esquire 

Ballard Spahr Andrews & Ingersoll, LLP 

601 13th St., N.W. 

Suite 1000 South 

Washington, D.C. 20005-3807 

(202) 661-7640 (phone) 

(202) 626-9039 (fax) 

semranij@ballardspahr.com

<<Energy Hearing Comments of AF&PA.pdf>> 
LAW OFFICES

BALLARD SPAHR ANDREWS & INGERSOLL, LLP

601 13TH STREET NW, SUITE 1000 SOUTH 

WASHINGTON, D C 20005-3807 

202-661-2200 

FAX: 202-661-2299 

WWW. BALLARDSPAHR . COM

ATLANTA, GA 

BALTIMORE, MD 

BETHESDA, MD 

DENVER, CO 

LAS VEGAS, NV 

LOS ANGELES, CA 

PHILADELPHIA, PA 

PHOENIX, AZ 

S A LT L A K E CIT Y, UT

VOORHEES, NJ 

WASHINGTON, DC 

WILMINGTON, DE 

DMEAST #11703405 v1

DENA E. WIGGINS 

DIRECT DIAL: (202) 661-2225 

PERSONAL FAX: (202) 626-9003 

E-MAIL: WIGG NSD@BALLARDSPAHR.COM

August 12, 2009 

VIA ELECTRONIC MAIL

Mr. David Stawick 

Secretary 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, NW 

Washington, DC 20581 

energyhearingcomments@cftc.gov 

RE: Energy Hearing Comments

Comments of the American Forest & Paper Association on the Hearings 

Regarding the “Application of Position Limits and Exemptions from Position 

Limits in Energy Markets”

Dear Mr. Stawick: 

The American Forest & Paper Association (“AF&PA”) would like to thank the 

Commodity Futures Trading Commission (“CFTC” or “Commission”) for allowing participants 

in the commodity futures markets to submit comments regarding the application of position 

limits and exemptions from position limits in energy markets. 

1. INTRODUCTION 

The American Forest & Paper Association (“AF&PA”) is the national trade 

association of the forest products industry, representing pulp, paper, packaging and wood 

products manufacturers, and forest landowners. Our companies make products essential for 

everyday life from renewable and recyclable resources that sustain the environment. The forest 

products industry accounts for approximately 6 percent of the total U.S. manufacturing GDP, 
DMEAST #11703405 v1 2

putting it on par with the automotive and plastics industries. Industry companies produce $200 

billion in products annually and employ approximately 1 million people earning $54 billion in 

annual payroll. The industry is among the top 10 manufacturing sector employers in 48 states. 

Members of AF&PA own and operate facilities that consume natural gas and they use futures 

contracts on the exchanges and on the over-the-counter market (“OTC”) to hedge the risks 

inherent in their physical natural gas transactions. 

AF&PA is concerned about the recent unprecedented volatility in commodity 

markets and the resulting harm to consumers of natural gas such as AF&PA members. Prices are 

increasingly appearing to bear little or no connection to the market fundamentals of supply and 

demand. AF&PA notes that commodity market volatility and spikes in commodity prices may 

also result in the erosion of public confidence in commodity markets and may have dire effects 

on the economy as a whole. 

Therefore, to the extent that excessive speculation is a cause of price volatility in 

the natural gas market, AF&PA fully supports the Commission in its proposal to impose position 

limits on speculation.1

 The Commission should be cognizant that such limits should only be 

imposed through cost effective structures that preserve liquidity in commodity futures markets 

and avoid overly burdensome reporting requirements that negatively affect commercial market 

participants. 

2. COMMENTS 

(a) Position Limits Must Not Adversely Impact Liquidity in The 

Commodities Futures Market 

Any position limits that may be implemented in the commodity futures markets, 

should be appropriately adjusted so as to avoid the unintended consequences of adversely 

impacting liquidity in those markets. 

In a properly functioning market, speculators take on the risk that commercial 

hedgers try to discard and they provide necessary liquidity by being on the other side of the 

trade. However, liquidity can also be enhanced through position limits which have the effect of 

expanding the market and creating a greater number of market participants. Therefore, the 

balance between a limit that is too high, allowing for market disruption, and a limit that is too 

low, allowing for dearth of liquidity, is a delicate one. Position limits should be fine-tuned to 

 

1

 AF&PA is taking no position as to whether excessive speculation causes price volatility given that there are 

valid arguments on both sides of this issue. Speculative investment in the futures markets resulting in 

excessively large speculative positions may be putting upward pressure on prices and increasing the costs 

and risks of hedging. In situations where supplies are relatively high, demand is relatively low, and price 

increases are accompanied by surges of funding from non-commercial investors and speculators, volatility 

appears to be linked to speculation. However, where non-commercial investors and speculators are on both 

sides of the market, i.e. the buy side and the sell side, their activities may enhance liquidity and reduce 

volatility. Therefore, as mentioned above, AF&PA supports the Commission’s establishment of position 

limits insofar as such limits would decrease volatility. 
DMEAST #11703405 v1 3

promote liquidity without artificially restricting access to markets. Thus, if the Commission 

decides to limit the share of non-commercial speculators in the total energy futures market so 

that they do not overwhelm commercial hedgers, it should do so at a level that allows sufficient 

and plentiful liquidity in the marketplace for the efficient functioning of the market. 

Further, the Commission should not place any position limits on commercial 

hedgers in commodity futures markets. These markets were designed to allow commercial 

hedgers to manage the risks that result from their legitimate commercial activities and to provide 

for informed price discovery for physical supply agreements. Any unintended restriction to such 

risk management and price discovery endeavors would defeat the purpose of commodity futures 

markets. The Commission should also exempt swap dealers, trading companies, and any other 

intermediaries from position limits to the extent necessary to avoid hindering the risk 

management activities of commercial hedgers. However, swap dealers and other intermediary 

exemptions should ensure that the reported positions look through the swap dealer/intermediary 

to the end user/counterparty level in applying any aggregate positions limits to non-commercial 

speculators as the CFTC deems appropriate to limit excessive speculation. 

Additionally, the Commission should be cognizant that many commercial hedgers 

use only the OTC market to hedge significant risks. These entities often have little or no 

capability of transitioning into the futures exchanges despite their critical needs for risk 

management. Therefore, any measures that could have the unintended consequence of restricting 

or in any way negatively impacting commercial hedgers’ ability to procure risk management 

tools on the OTC market or any other market may threaten the financial health of these 

legitimate hedgers.2

Further, any proposals that would require OTC derivatives to be cleared through a 

clearinghouse or transacted on an exchange may have the unintended effect of reducing liquidity 

in the market due to the cash requirements of clearinghouses. AF&PA members that use OTC 

contracts for risk-management would likely be subjected to a liquidity drain if they are required 

to post cash margins on an exchange. Furthermore, OTC contracts are capable of being 

customized to the needs of the commercial hedger whereas exchange-traded derivatives are 

standardized contracts. If OTC derivatives are required to be cleared, these contracts would have 

to be standardized. This would likely eliminate the possibility of contract customization and 

may have a negative effect on market liquidity. 

Therefore, in order to avoid these negative unintended consequences, the 

Commission should be cognizant of these potential threats to market liquidity when deciding 

how to set position limits 

 

2

 Consumers of natural gas often need the ability to pledge non-cash collateral or to transact risk 

management contracts on an unsecured basis in order to avoid draining their liquidity or disrupting their 

normal business activities. Any measures that could have the effect of restricting this ability would 

negatively impact market liquidity and could be detrimental to the businesses of many AF&PA members. 
DMEAST #11703405 v1 4

(b) Any New Reporting Requirements Must not Place Burdensome 

Obligations on Commercial Market Participants 

To the extent that the Commission decides to create additional reporting 

requirements to increase transparency in the commodity futures markets, such requirements 

should be tailored in a way to avoid placing burdensome obligations on commercial market 

participants. The Commission should realize that any information-gathering and reporting 

process may be time consuming and expensive. As explained above, commodity futures markets 

are designed to serve the risk management and price discovery needs of commercial hedgers and 

such hedgers should not be discouraged from entering these markets by burdensome 

requirements. 

Also, any reporting requirements that may be placed on the exchanges, the OTC 

market, or market intermediaries, should be tailored to avoid the burden being passed on to 

commercial hedgers. 

Ideally, only minimal changes in reporting requirements would be necessary and 

the Commission would continue to rely on reports that are currently being produced. 

(c) Position Limits Must Not Raise The Cost of Hedging For 

Commercial Hedgers 

If the Commission decides to implement position limits, AF&PA urges the 

Commission to appropriately design such limits to avoid raising the cost of hedging for end users 

such as AF&PA members. 

If improperly set, position limits may have the unintended effect of distorting 

markets, distorting future production decisions, causing misallocation of resources of production, 

and constraining the ability of dealers to provide risk management measures. These unintended 

effects may cause an increase in costs for commercial hedgers and consumers alike. Further, 

since producers are essentially in the same situation as consumers in the risk management 

market, they could also be subject to the same cost increases which would likely be passed on to 

the consumers. 

Additionally, if OTC derivatives are required to be cleared and standardized or if 

the hedge exemption for swap dealers is limited or eliminated, such measures may also have the 

unintended consequence of increasing the cost of risk management. 

Therefore, clearing OTC derivatives should not be required and position limits 

should be carefully tailored so as to avoid the unintended effect of raising costs for commercial 

hedgers and consumers. 

3. CONCLUSION 

AF&PA supports regulatory efforts to prevent excessive speculation in the natural 

gas market to the extent that the Commission finds that speculation constitutes a potential cause 

of price volatility or a threat to market stability and integrity. Nonetheless, AF&PA members 

using risk-management tools may be negatively affected if overly stringent position limits are 
DMEAST #11703405 v1 5

imposed. Position limits should be set and administered in a way that does not reduce market 

liquidity or increase costs for commercial hedgers and consumers. Further, if additional 

reporting requirements are imposed, they should not be imposed on commercial hedgers and 

their burdens should not be passed on to commercial hedgers. 

Dated in Washington DC, this 12th day of August, 2009. 

Respectfully submitted, 

/s/ Dena E. Wiggins 

Dena E. Wiggins, Esq. 

Jack N. Semrani, Esq. 

Counsel for the American Forest & Paper 

Association 
From: Robert Moore

To: energyhearingcomments; Gensler, Gary; 

Subject: Hearings on Speculative Position Limits in Energy and Physical commodities

Date: Wednesday, August 12, 2009 3:49:59 PM

Chairman Gensler, and Distinguished Others,

Thank you for providing a public forum for comments on your continuing 

hearings on speculative position limits in the energy and physical 

commodity markets.

One point I would ask the commitee to focus on during these hearings is 

the presently enormous position limit allowed in the COMEX physical silver 

market. When compared to other physical commodities- particularly those 

commodities that are not nearly as scarce as silver, nor as difficult/

expensive to produce as silver, the current limit of 6000 contracts in the 

silver market seems patently excessive. 

The other point I ask for the commitee's dilligence on is confirmation that 

speculative positions can be disruptive not only on the long side-allowing 

prices to explode to excessive levels as we saw with crude oil in 2008, but 

they can be equally disruptive on the short side- preventing the natural 

process of price discovery from regulating itself.

I would hope that any dilligence in enforcing speculative position limits on 

the long side would be equalled in force by equivalent position limits on 

the short side. 

I thank you again for all your efforts to restore free (and fair) market 

practices to the US commodities trading sector.

Respectfully,

Robert Moore
From: Robert Chase

To: energyhearingcomments; 

cc: Ellen J. Chase; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 3:44:30 PM

Chairman Gensler,

Thank you for allowing us as informed individuals to give our opinion on 

the new regulations and limits we feel need to be placed on commodities 

to avoid reckless volatile trading in the marketplace and to avoid the 

possibility of manipulation and collusion to control prices. As taxpayers, 

we have had our fill of the financial crisis that has continued to now in 

many sectors. It appears when the seemingly free market operates in an 

unfettered mode with little regulation or oversight, greed and ambition 

appears to take over and likens the chance that activities will become 

illegal. We speak for many of our neighbors when we state we want 

all the financial markets to go back to the orderly mode it was in the past 

even if that requires other holistic changes like the reintroduction of the 

Glass-Stegall Act and the uptick rule. 

 

We have an important question on why no mention has been made by 

your regulatory group on the large short positions taken by a few (in 

sharp contrast to European banks) on gold and more so with silver 

commodities. You recall the silver short squeeze engineered by the Hunt 

brothers in Dallas when they controlled upward of 10% of the global 

market which moved the silver price to $50.00 . The price ultimately 

collapsed in 1981 and U.S. Senate hearings were conducted to investigate 

the situation and convict the guilty parties. Currently, according to the 

Commodities Futures Trading Commission public data on bank 

participation (please see your web site http://www.cftc.gov/

marketreports), these few banks have steadily increased their short 

positions to about 29% of all Comex participants. Can this much market 

concentration destroy free market movements and run counter to the 

predictions and trends you forecast (at least in the short term)? This is 

clearly not fair to the public to have such excessive speculation and 

possible manipulation. The insult to injury is the fact that we as the public 

see this public data and we know it is plainly a few participants and only 

You know how the big players are. Secondly, if we really suspect there is 

illegal manipulation,why has there not been any thorough investigation or 
willing government oversight to halt such large positions? Must we wait til 

something blows up or a major newspaper reporter gives enough clues 

that embarrassment takes over so the agency has no choice in the matter 

but to prosecute. (look at SEC with Madoff). Please consider our opinion 

when you formulate new rules and enforcement. My wife is an Election 

Judge and Democratic Precinct Chair for Tarrant County. We both chair 

legistative committee positions with our County Democratic Party to report 

on state and federal legislation. We wish you and you team well.

Robert and Ellen Chase,

 
From: Steven E. Kimmey

To: energyhearingcomments; 

Subject: Position limits etc

Date: Wednesday, August 12, 2009 3:38:30 PM

August 12, 2009

Ladies & Gentlemen,

Please thoughtfully consider the words of Gene Arensberg and Theodore Butler. 

The gravity of their concern centers upon the fairness and viability of the 

regulations governing the various American commodities exchanges. If it is 

found that commodities are allowed to be manipulated by excessive contract 

shorting, especially by a few well-connected, large commercial traders, capital 

will increasingly move away from our shores and be spent in other nations' 

exchanges that appear to be less fixed. 

There is a growing distrust among many investors, like myself, that view onesided, long-limits as only a means for our monetary policy makers to force their 

price-suppression agenda upon our system via commodity shorting. Genuine 

price discovery is prevented. Genuine price discovery is essential for a viable 

marketplace.

Either remove the long-limits or impose short-limits as well. If the perception of a 

manipulated market continues, the CFTC will suffer loss as a regulatory body. 

The reputation of the CFTC, as a fair arbiter of markets, will no longer exist; in its 

place will be the notoriety of a price-fixing agent. Who would want to invest their 

hard-earned capital in a market that is subject to the whim of forces beyond real 

supply and demand fundamentals? There would be no profit-incentive. This is 

the kind of moral hazard that creates future disasters and crises. Truly, fairness 

must prevail or investor interest will find another market.

Please consider that the reputation for managing genuine, market price 

discovery is much more valuable in the long-term than a short-term, quick-fix to 

the slow economic disaster we, as a nation, are brewing for ourselves. The 

CFTC can be part of the real solution rather than a pawn in the hastening of our 

demise.

If the value of the dollar is to diminish, what will we have left to transact business 

with other than raw materials and a fair system to distribute them?

Sincerely,
Steven E. Kimmey, CPCU

Account Executive

Cohen Partners LLC

New York & Philadelphia

(212)661-0465 x220; (215)568-8005 x220

1601 Walnut Street, STE 522

Philadelphia, PA 19102

Fax (215)568-1114 www.cpinsurance.com
From: Jeff Henry

To: energyhearingcomments; 

Subject: “Energy Hearing Comments

Date: Wednesday, August 12, 2009 3:37:34 PM

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market.

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities. 

gentlemen.we the small investors know the large central banks are RIGGING the 

gold and silver comex markets. please stand up for "all of us smaller investors. 

the cartels are killing the true nature of what a working market is supposed to do. 

thank you jeff henry 
From: Hoffmeister, Paul A

To: energyhearingcomments; 

Subject: Position limits

Date: Wednesday, August 12, 2009 3:31:21 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php 

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683 

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration.

Paul Hoffmeister 

 

 
From: Bob Payne

To: energyhearingcomments; 

Subject: A suggestion from an interested citizen

Date: Wednesday, August 12, 2009 3:30:25 PM

Ladies and Gentlemen on the Commission: 

I realize that the focus of your hearings is on energy, but I hope that 

you are also aware of concentration and position limit issues in other 

commodities, both agricultural and in minerals/metals. In particular, I 

would like you to address existing extreme short positions in the silver 

market. 

 From commentator Ted Butler's newsletter last month: 

"the level of accountability limits in silver is too large, by a factor 

of five or more compared to any other commodity (including gold). Even 

though the current limit needs to be reduced drastically from 6,000 

contracts to between 1000 and 1500 contracts, the big shorts now hold a 

lot more than 6000 contracts each. One or two US banks hold a minimum of 

more than two and half times the obscene 6000 contract limit. If silver 

position limits were reduced to 1500 contracts, the big banks would be 

holding more than ten times that limit. That’s insane." 

This issue has been swept under the rug in the past. I hope this will 

change. 

I can't say it any better than Ted Butler did, but I would ask you to 

act expeditiously to fix this problem which has existed for years, and 

has been getting worse all the time. 

The first step is to immediately enforce the current [ridiculously high] 

limit of 6000 contracts. 

The second step is to re-regulate limits down to a maximum of 1500 

contracts for any long or SHORT position. 

The third step is to prohibit any exemptions to the policy, now or in 

the future. 

The fourth step is to give notice to existing position holders that are 

above the limits that they have a limited time to correct their 

excessive positions. 

Thank you for your current and future efforts, with much appreciation 

for your work, 

Robert T. Payne 
From: Brian Alexander

To: energyhearingcomments; 

Subject: short selling

Date: Wednesday, August 12, 2009 3:27:40 PM

Dear regulators,

Would all of you please listen to the input of Mr. Butler and 

Douglas. They seem to have a valid point on looking at 

the shorting verses long side of the picture. Another expert 

makes his case well on diverting attention to evil speculators. I 

truly believe from articles I have read that you need to look 

into businesses in your back yard. Something does not smell 

right. It is time to investigate where the smell is originating 

from. It is time to clean up the mess and get America back on 

track!!

Concerned for the future

Brian Alexander
From: fmaier1

To: energyhearingcomments; 

cc: Ted Butler; 

Subject: Please Correct Unlawful Activity

Date: Wednesday, August 12, 2009 3:23:38 PM

Dear Regulators,

I am fully in agreement with Mr. Ted Butler's comment to your committee.

Additionally, I am a honest silver investor that feels that the silver prices are 

rigged. I am the guardian and take care of my 5 year old grandson that has CP, 

can not talk, can not walk, is blind, and has numerous other medical conditions. I 

am also close to 60 years old and can't out live my grandson hopefully.

I have been investing in silver bullion so that some day when my grandson has to 

go to a nursing home that my silver investments will have made a return high 

enough so that he can be taken care of in a nice nursing home and not one of 

the run down ones.

However, I feel cheated because in my opinion the silver price has been rigged 

and doesn't even reflect the price to mine the silver.

Those that cheat the system are dishonest and cause harm to the masses and 

honest people.

In summary, I fully agree with Mr. Ted Butler's comments and pray your 

committee will be honest and do the right thing. Honest investors are depending 

on you. Please set the proper short limits and other necessary regulations to 

stop the dishonesty.

Please feel free to contact me by phone to discuss this in person.

Farrell Maier 
From: Allen Munro

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 3:18:53 PM

Thank you for your efforts to ensure open and fair commodity markets. 

It is important that limits be placed on the percentage of world annual 

production that may be 'hedged' (or gambled on) by any one player. 

These limits should apply to ALL commodities, not only to energy 

commodities. 

Allen Munro, Ph.D. 

Professor of Research 

USC Rossier School of Education 

University of Southern California 
From: Ben.Jackson

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 3:10:18 PM

Attachments: Energy Hearing Comments - SunGard Kiodex.doc

Energy Hearing Comments

Dear Chairman Gensler and Commissioners,

Since much of the recent discussion around speculator activity in energy markets 

has been directed towards position limits, we believe a key objective in market 

regulation will be the creation of mechanisms that bring the greatest degree of 

market transparency in the form of timely and detailed information. This 

transparency will allow the Commission and other authorities to analyze, and 

quickly address trade activity deemed to be disruptive, manipulative, distortive 

and to the detriment of the greater good of the public. For these mechanisms to 

be effective, it is critical that they provide far greater reporting granularity and 

accuracy in classification of trading activity than is currently available. Also, the 

Commission and market participants must have the ability to understand, 

aggregate and report on position risk across all related domestic and foreign 

market venues. Contracts such as crude oil and natural gas trade on multiple 

exchanges and any new regulation in this area may in fact stimulate the creation of 

even more trading venues for these contracts. Understanding and managing 

position limits across exchanges will be an important underpinning to this initiative.

It is clear that position limits will be central to effective regulation. There are, 

however, legitimate concerns about the potential unintended consequences of 

improperly calibrated position limits. If not done correctly, the United States could 

end up with a policy that does not materially alter the overall level of market 

trading activity but that drives activity overseas or into less or unregulated physical 

markets; appropriate commercial hedging may be adversely affected by 

diminished liquidity; and the fracturing of existing businesses for the sole purpose 

of creating more trading entities, each subject to its own position limits, may 

create inefficiencies while diminishing the effectiveness of such an initiative. 

Assuming properly calibrated position limits are set, transparency will be critical to 

successful market regulation and will not exist unless adequate, accurate and 

current information is available. Many market professionals acknowledge that 

there are some deficiencies in the information available in existing CFTC reports. 

Large financial institutions classified as commercial hedgers engage in legitimate 

hedging activity; however, they are also among the markets most active 
speculators. Conversely, many commercial businesses also take large speculative 

bets in the market. 

SunGard’s Kiodex anticipates the role information technology will play in allowing 

market participants to segregate and accurately report on the nature of their 

activity. Also, we work with customers today to provide solutions to understand 

their cross-exchange position risk in real time. We are working on ways to create a 

truly global picture of the market and expect that this will be central to successful 

market regulation. We would be pleased to discuss with the CFTC methods of 

monitoring this activity. 

Respectfully,

Benjamin Jackson

Chief Operating Officer

SunGard Kiodex

 

 
From: .

To: energyhearingcomments; 

Subject: Re: Energy Hearing Comments

Date: Wednesday, August 12, 2009 3:07:46 PM

Re: 

Energy Hearing Comments

Speculative Position Limits in Futures Markets

Office of the Secretariat

Commodity Futures Trading Commission (CFTC)

1155 21st St., NW

Washington, DC 20581

Dear Ladies and Gentlemen:

I strongly recommend that the Commodity Futures Trading 

Commission be dissolved and all records turned over to the United 

States Attorney General and/or the FBI for prosecution of any acts of 

fraud.

I make this recommendation based on the obvious inability or 

unwillingness of the CFTC to follow their own rules on position limits, 

especially in gold and silver commodities.

Sincerely yours
From: Dean Wilde

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 3:00:25 PM

Attachments: 2009-04-12 DC Energy Holdings CFTC Energy Hearing Comments.pdf

Dear Chairman, Commissioners and Staff of the CFTC: 

Please find attached to this e-mail our comments regarding CFTC 

Hearings on Speculative Position Limits in Energy Futures Markets. It 

is in an Adobe PDF file. We are also forwarding a hard copy to your 

offices via FedEx. 

Sincerely, 

Dean Wilde 
DC E NERGY 

8065 LEE>Ill'RG Pt KE, 5T H FLo o R • Vt ENNA, Vm<dN tA 22182 -2733 • DmH:r 70 3.506.3902 • F Ax : 70 .\ .506.390 5 • \\"tl.nH[t D<.- t N I.IH,LtoM 

D EAN L. W iLDE, II 

MANAG ING DIRECTOR & 

CHIEF EXECUTIVE OFFICER 

August 12, 2009 

VIA EMAIL AND FED EX 

Office of the Secretariat 

Commodity Futures Trading Commission 

1155 21 51 Street, NW 

Washington, DC 20581 

RE: Energy Hearing Comments 

Dear Chairman, Commissioners, and Staff of the U.S. Commodity Futures Trading Commission: 

This letter is submitted as our "Energy Hearing Comments" with regard to the CFTC hearings on Speculative 

Position Limits in Energy Futures Markets. I am the Managing Director and CEO of DC Energy Holdings, 

LLC. DC Energy invests in the electricity and gas markets, and provides hedge products and liquidity to 

physical and financial participants. Our comments are summarized briefly into the following points. 

1. The decision to apply position limits and the limits themselves need to be based on facts and 

statistically valid analysis to ensure that they will have the desired effect. We are concerned that 

political pressure is creating a rush to enact limits without the backing of sound empirical analysis that 

details if speculation in the financial markets causes price bias or increases volatility. We have seen a 

number of studies that show speculation does not create price biases or increase volatility, and have 

only found anecdotal stories in support of the opposing view, but the anecdotes don ' t hold up to 

statistical scrutiny. Given the prevai I ing empirical assessments, new policies which I im it market 

volumes and financial activity must be carefully vetted to ensure they do not resu It in more harm than 

good. 

2. Price bias (or manipulation) and volatility is primarily a concern for physically deliverable 

contracts, rather than with financially settled contracts. The physical contracts affect the end user 

and define the settlements for financial contracts. Financial contracts on energy can no more affect 

physical energy settlements than can financial weather derivatives affect the actual weather. 

Therefore, it makes more sense to focus any attention on position limits to the physical market, or 

perhaps to apply limitations to the physical trading around settlement expirations to holders of 

excessively large financial contracts. 

3. Position limits, if they are instituted, should be applied to aggregate net positions. The 

aggregation should net positions across exchanges and bilateral agreements, so that participants would 

be accountable for their total net position . Without this provision, competition amongst exchanges will 

be severely harmed as new exchanges will not be able to compete because their independently 

measured open interests would result in prohibitively low limits for participants. 

4. Products that trade in different geographic areas for different prices (e.g. power hubs, natural 

gas basis) should be aggregated for purposes of netting as well. This is important because 

consumers and producers of power and energy are local. They produce power or energy at specific, 

granular locations and consumers buy it at specific locations. Correspondingly, they would lik e to 

hedge their positions at these specific locations because prices can vary from location to location. 

Financial investors providing hedges need to offer products at these locations and then often obtain 

some offsetting position at a more liquid hub. These geographic differences should be netted to 
capture th e full economic position, so that a "short" hedge at one location is meas ured in light of its 

" long" offsetting position at another location . Failure to perform this geographic netting will limit th e 

ava ilab ility of locational hedges for both consumers and producers, which will raise the cost of cap ital 

for producers and ultimately increase the price paid by the consumer. 

5. Position limits, if they occur, should be set and reviewed by the CFTC for each market with a 

view to the market size (current and desired), to promote liquidity, and encourage competition. 

Pric in g will be more efficient and hedge products will be cheaper, if there is more competitors and if it 

possible to transact without undue influence on price (i.e. liquidity). Larger financial markets enable 

this outcome. Consequently, the consumer benefits when the financial market is large re lative to the 

und erlying physical market. Unfortunately, there is a lingerin g myth that a commodity trad ed 

financially in curs higher cost because a "middleman" is taking a cut every time a commodity is traded. 

This is c learly not the case, as a financial trade creates a long and short contract by two parties th at is 

indexed to th e pri ce of the commodity - it is not part of the distribution system for th e physica l 

commodity. In fact, the opposite is true, and the consumer and economy benefit as more investors 

compete given their viewpoints on the commodity's future. Jfposition limits result in smaller less 

liquid markets they will have failed. Larger liquid markets provide robust prices discovery, more 

competition, and are much more resistant to price manipulation than small illiquid ones. 

6. Financial contracts should be cleared through clearinghouses, if exchange traded central 

counterparty clearing is available for the contract. Central counterparty clearing is based on 

making the co ntract viable independent of the company that buys or sells the contract, via the clearing 

process and cash marg ins. This allowed the contracts held by Lehman Brothers to remain viable, even 

when Lehman was not. Consequently, central counterparty clearing provides the lowest systemic risk. 

Cash requirements will tend to make financial participants less leveraged, and physical participants can 

borrow the cash requirements using their physical assets .. The end result is that entities' positions will 

be natura lly (and equitably) limited by the amount of direct financial backing prov ided (whi ch will 

serve to lessen the need for CFTC-imposed position limits). 

7. Price manipulation is best addressed with case-by-case efforts. Both financial and physical 

parti cipants are harmed by price manipulation, and we support aggressive efforts to elimin ate it. Whil e 

it is important to hav e regulations that require good conduct, it is difficult to eliminate bad conduct by 

remov in g all the tools that could enable it. Such drastic actions carry high probabiliti es of unintended 

and negative consequences, particularly in markets as complex as these. The most effective deterrent 

will be conscientious investigation of all suspicious trading activity. This will do more to enco urage 

proper behavior th an the promulgation of blanket rules that often have loo pholes or exemptions, and 

often carry some implicit cost to society through suppressed competition and liquidity. In the event 

new rules are adopted, they should contain sunset/renewal provisions so that they may be adapted with 

th e ex perienc e of implementation. 

8. Hedging exemptions should be allowed for financial participants. Properly hedged financial 

participants will be better able to provide liquidity to the markets, and will better withstand 

catastrophic market movements. 

We would be happy to elaborate further on these comments, if that would be he lpful. 

ou for considering our opinion when making your decisions. 

DC ENERGY 
From: WST

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 2:58:40 PM

August 12, 2009

Dear Chairman Gensler,

This comment is with regard to position limits in energy and other physical 

commodities. In particular, I would like to comment on the Comex gold and silver 

futures markets.

Because of the finite supply and the large positions in gold and silver by a few 

traders, this creates an unhealthy market environment subject to large 

speculative moves and a longer term detriment to these markets. I would 

encourage you to place much stricter open position trading limits, both long and 

short on the gold and silver markets.

Respectfully submitted,

Wm. S. Thomasma
From: gail vidrine

To: energyhearingcomments; 

Subject: comments on excessive shorts

Date: Wednesday, August 12, 2009 2:53:11 PM

Chairman Gensler,

As another voice in the crowd of commody investors, I strongly support 

your efforts to bring commody investing under regulation and parity for 

the average investor. 

Please look at the massive short positions against the major metals, e.g., 

gold and silver. These positions so massively alter the playing field as to 

unlevel it to an extent that the effect exceeds that the effects of longs and 

later shorts you noticed in oil last year. The impact of these shorts on 

average American citizens will eventually far outweigh the impacts of the 

longs on oil--here is an opportunity to prevent an absolute calamity in the 

'value of money.' 

My comments are a direct result of a detailed examination of Mr. Ted 

Butler's work--please refer to his work during your deliberations. 

Many thanks!

Malcolm F. Vidrine, Ph.D.

Professor of Biology
From: Legal

To: energyhearingcomments; 

cc: myoung@kirkland.com; 

Subject: Energy Hearing Comments - Futures Industry Association

Date: Wednesday, August 12, 2009 2:48:16 PM

Attachments: Energy Hearing Comments 081209.pdf

Attached please find the Futures Industry Association’s comments regarding the 

issues discussed at hearings held on July 28 and 29 and August 5.

legal@futuresindustry.org

Beth Thompson

Futures Industry Association

2001 Pennsylvania Avenue, NW

Suite 600

Washington, DC 20006-1823

(202) 466-5460 
August 12, 2009 

Commodity Futures Trading Commission 

Three Lafayette Center 

1155 21st Street, N.W. 

Washington, D.C. 20581 

Attn: Office of the Secretariat 

Re: Energy Hearing Comments 

Dear Secretariat: 

f"utures Industry Association 

2001 Penn~ylv:mia Ave. NW 

Suite 600 

Wa~hingtun, DC 20006-!823 

202466 5460 

202.296.'Hk4 f<1x 

www. fururesindusrry.(Jrg 

The Futures Industry Association greatly appreciates having had the opportunity 

to submit a written statement to the Commission and to provide oral testimony on the important 

issues of energy prices, price discovery and position limits. The Commission received a wealth 

of information on the many challenging subjects that are embedded in your review of these 

issues. [n the interest of completing the record, FIA is submitting the attached materials as a 

modest supplement. 

In our written statement (at 3), FIA addressed the criticism "that prices are too 

high and have been driven in that direction artificially by new kinds of market participants." 

Based on the then available information, we concluded "to date, no credible consensus has 

formed on this issue of causation." 

The record of the Commission's hearings further supports our conclusion. 

Professor Philip Verleger, Jr., Haskayne School of Management, University of 

Calgary, PKVerleger LLC, testified that, "The increase in crude prices between 2007 and 2008 

was caused by the incompatibility of environmental regulations with the then-current global 

crude supply. Speculation had nothing to do with the price rise." Further, he testified that 

"Commodity index funds act to stabilize oil price movements." Professor Verleger submitted 

considerable data to support his conclusion. 

John Hyland, Chief Investment Officer of United States Commodity Funds LLC, 

testified that his companies' data showed that when prices were rising his company's positions 

were essentially either flat or declining. His data illustrated why he concluded there is no casual 

relationship between his very large positions and price movement both with respect to natural 

gas and oil. 
August 12, 2009 

Page 2 

In contrast, Michael Masters, who appeared on the hearing panel with FIA, 

continued to claim that "passive investment" "has driven commodity prices higher" and relied on 

a chart on page 13 of his testimony. The chart is claimed to show that "as Index Speculators 

pushed money into the commodities derivatives markets and bought more WTI Crude Oil 

derivatives, WTI Crude Oil prices rose and when they pulled money out, prices fell." 

Data provided to us in chart form by an FIA member firm calls into question 

Mr. Masters' chart and its underlying methodology The charts are submitted for the record and 

the Commission's consideration. In sum, Chart 1 illustrates the difTerence in two correlation 

measures, one comparing all commodity index futures positions (both already established open 

positions and new positions) to the GSCI Spot Price Index (the Masters way on the rigbt side of 

the page) and the other comparing the flow of new commodity index futures buying to the GSCI 

Spot Price Index (the chart on the left side of the page). The result reflected in the chart on the 

left in Chart l: there is no sustained correlation for index traders' new futures huying and GSCI. 1 

Chart 2 depicts why the Masters approach is skewed. Comparing futures contract 

value to futures positions that are, like many index positions, estahlished and then held open 

shows, unremarkably, that the value of a single open crude oil futures contract is correlated 

perfectly with the price of the crude oil contract. That is the point. Mr. Masters seems to have 

set up a self-fulfilling prophecy by measuring the changing value of already open futures index 

trading positions. Those positions, by definition, must be correlated with price movements. But 

that just means they are open positions that are tied to current market prices. It doesn't mean 

those positions logically affect the price2 

As the Commission well knows, through the legitimate price discovery process, 

even the most innocent futures trading or commonplace trading strategies may have an 

immediate price impact. The question is whether new long futures positions established through 

index trading have a sustained, more than immediate price impact. Charts 3 and 4 are directed to 

that question. 

2 

The charts embedded on the left hand side of Charts 1, 3 and 4 include references to the net J-low of new long 

futures positions attributable directly to index trading. The charts do not include the OTC swaps activities of 

index traders or the net tlow of futures positions established by swaps dealers that enter into OTC swaps with 

these index traders. The dealers' futures positions surely play a role in futures price discovery. The 

Commission's economists may therefore find it useful to add the f-lows of dealers' positions to the analysis 

contained in the left-hand side of Charts 1, 3 and 4. 

A securities investment illustrates this concept as well. If we were dealing with a stock which \Ve bought fOr 

S60 a share, and a few days later the price jumped to $70 a share while we were sitting on the beach, it would be 

illogical to say that since the correlation between our holdings and the stock price was 100% that \Ve "caused" 

the price increase. But that kind of correlation is embodied in the Masters approach. 
August 12, 2009 

Page 3 

Charts 3 and 4 measure the long term price impact of index trading purchases of 

futures both for all physical commodities and crude oil. Both charts reveal a negative 

correlation, meaning that over the period shown, new futures purchases by index traders if 

anything were correlated with price declines. 

Chart 5 shows the relative size of commodity index trading when compared to all 

trading in commodity futures contracts. In 2008, the total notional amount of commodity futures 

trading was $60 trillion. The total of all index trading in 2008 was $1.3 trillion, including both 

initial purchases of new positions and the scheduled roll of positions (short and long) 

contemplated hy most index traders. The total of all new index trading positions in 2008 was 

$250 billion dollars, a nano-sliver ofthe total $60 trillion traded. 

FIA would welcome review of these charts by the Commission's economic staff 

and would he happy to discuss with the Commissioners any reaction they might have to these 

materials. 

Again, we applaud Chairman Gensler's leadership in convening the recent 

hearings and soliciting additional comments on these important issues. The Commission's 

hearings demonstrated well the wisdom of the congressional decision years ago to create an 

expert futures market regulatory body. These are challenging issues that require careful thought 

and attention to resolve appropriately. We look forward to assisting the Commission in its 

efforts in any way we can. 

Futures Industry Association 
New "Long" Flows (left) vs. Con1modity Index Levels (right) 

+ Michael Masters' analysis is depicted in the chart on the right below. He compares what he claims to be total commodity index 

speculation to the price levels of the S&P GSCI Spot Price Index. Masters asserts the strong correlation of these two data sets 

shows that "Index Speculator Demand is Driving Prices Higher." 

+ Masters' approach conflates both already open long futures positions and new long futures positions in trying to show that 

commodity index trading has a major sustained impact on futures prices. 

+ Futures prices, however, are affected when new long (and short) positions are established. Have the flows of new longs from 

index traders had a sustained impact on prices? The chart to the left below answers "no." 

+ Net new futures "long" flows and commodity price index levels are not correlated. 

65 

55 .. I Correlation of 0.01 

45 

m 35 • 0 

0: 

c 25 .2 

63 

~ 15 

(5) ·• 

(15) 

~~ ,~ <>' 

""' ,-, c;sc' 

Source: B!nomhcrg, Barr-Trr.P, i\fichaef J!asters 

.,~ 

cp .,~ 

""' "'' ""' 

S:v'' 

90G 

(l 

700 -

COMMODITY INDEX INVESTMENT COMPARED 

TO S&P GSCI SPOT PRICE COMMODITY INDEX 

X :s 600 +-----------------------

" 

~ 

0 

0 .500 t-------

LOOL------

~ I ~ 300 t---------------------1 

$300 

$250 

$200 ;:: '" 

:3 

8 

1150 ~ 

0 

0 

Q 

~ 

1-100 ~ 

a; 

$50 

1 
Crude Oil Contract Value in 2008 and 2009 

+ The chart below depicts the truism that a single open Crude Oil futures position will increase or decrease in value as the 

price changes. If this open position was held by an index trader, the Masters approach would treat this chart as showing a 

strong price correlation. 

+ But holding an open position will have no impact on price levels, just as holding 100 shares of IBM will not drive IBM's 

share price higher or lower. 

+ The Masters approach is skewed because he treats open positions being held by index traders as new positions that could 

have a price impact. 

$160,000 -

~ $140,000 

" c 

• g $120,000 ' 

N 

.s 

1l 

E 

§ 

" 

$100,000 

$80,000 

$60,000 -

$40,000 

$20,000 

) __ 

12/31/07 

$95,980 

so -

3/31/08 

$101,580 

6/30/08 

$140,000 

9/30/08 

$100,640 

12/31/08 

$44,600 

3/31/09 

$49,660 

6!30!09 

$69,890 

-·----~ 

~##¥#######~~#####~# ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ # ~ ~ ~ ~ ~ ~ ~ ~ 

Source: fl{(!(!m!Jag 

2 
Net New "Long" Flows (Left) vs. All Long Index Positions (Masters, Right) 

+ In the second half of 2008, at the same time that commodity prices were falling, the flow of new net long futures 

positions established by index traders rose. See the chart below to the left. 

+ Masters' approach as shown in the chart to the right below shows total long positions, both open and new. 

+ By breaking out only the flows of net "long" positions, the chart to the left below indicates the correlation of actual new 

index trading positions and price is negative. 

65 - SOD 

TOTAL LONG COMMODITY INDEX SPECULATION COMPARED 

TO S&P GSCI SPOT PRICE COMMODITY INDEX 

55 

45 -

3 35 0 

u: 

~ 25 

iii 

~ 15 

5 

(5) --

(15) 

Correlation of -0.08 

~ 

!};' 

0 

;; 

0 

C) 

::3 

cL 

~ 

Q_ 

t~ 

(j) 

l:) 

0 

\GC '/) 

0 

Source: Rfoom!Jcrg, Hm·rfa,p, i11iclwel Jfasters 

900 

X 

w 800 Q 

" >- 700 fi5 

0 600 

" " 0 500 (.) 

w 

(.) 400 

ii" 

"-

f- 300 

0 

a. 

if) 200 -- i3 

if) 

"' 100 a. 

"' if) 0 ------- 0 "' " ~ ~ 

~ ~ ~ ~ ~ 

~ ~ ~ ~ ~ 

- - - "''- "'_'li_ lE 

0 "' " ~ ~ 0 N " ~ ~ 0 "' " ~ ~ m ~ ~ ~ ro ~ m m m m m 0 0 0 0 0 0 

~ ~ ~ ~ ~ ~ m m m m 0 0 0 0 0 0 ~ ~ ~ ~ "' "' N N ~ ~ c c 0 0 ~ ~ 

$() 

3 
Net New "Long" Flows vs. All Long Index Positions (Crude Oil) 

+ This chart is the same as Chart #3 but focuses only on Crude Oil. 

+ The chart on the right follows the Masters approach of combining all index positions, both already open and 

new positions, and correlating those positions to price. 

+ The chart on the left breaks out only the new net long positions established through index trading. Those 

positions had a negative correlation with the price of Crude Oil. 

20 ·r-----------------· I Correlation of -0.18 I 

i:S 

- ~:?0 

:;:: 

0 _, 

GT5l -•- .~·- · 

Source: Bloomh('rg, Barclay~·. iHichael Jlfasters (pg. 13 o_fAugust 5, 2009 T('sfimoiiJ) 

WTI Cru\12' (l:l Pri·>:· vHsus lnrlt::-:.: SP8 1::u\.Jtors' ViTI 1>u<1e- 0'1 

StC•C kpil8 

] 

;,..> ~:;·) :YJ 

;; 

-~·) J'.F 

~· ,. ,. ·~ ,. '1: 

" 1 ~ " ,. .c. " .. ::_:.; 5 

, 9 " Q ;:; i~ 

" ,t 

~ < 

... 

~ 

s ·' 

i•JJ,:nx: -S: 

f CY).)lX: 1 

-.•, 

'• 

--;:; 

~;.>:Ul~~ -2J 

·;; ~(•).:>l'>; ( 

,, 

" 

4 
Total Commodity Futures Trading vs. Index Trading and New Long Flows 

+ All futures trading related to commodity index investment was less than 2% of total commodity futures 

trading in 2008. 

+ Futures related to net new long flows was less than 20% of commodity index trading in 2008 and 

represented a nano-sliver of total commodity futures trading. 

Source: FIA, Em-clays, B!oomhcrg 

Trading related to 

Total Commodity 

Index Investment 

($1.3 TT) Trading related to 

~~~ ~~~~·~~~~~·~~ Net Investment 

Flo'" ($250 BB) 

5 
From: ritch

To: energyhearingcomments; 

Subject: Yes On Enforcement of Limits

Date: Wednesday, August 12, 2009 2:47:17 PM

Please restore my faith in the CFTC. For years I have watched AIG, JP 

Morgan and others blatantly manipulate the silver price, and you guys have 

just stood on your hands despite excellent proof, undoubtly from orders 

from Treasury. 

I can understand how you need to manipulate the gold and silver price to 

protect ye old dollar which we all rely on so I am not totally 

unsympathetic to your plight. 

Just because this would have been a good move back in the 1980's according 

to the Fed chairman (Volker) at the time, doesn't mean it is a good move 

now. If gold and silver was allowed to move naturally, I think you would 

also see real estate move back up which is at the root of this economic 

malaise. Yes the dollar may sink some, but I think that is the lesser of 

evils now. A little faith in free markets might be good now, as it has 

worked for 233 years (1776-2009). 

Ritch McBride 
From: Bill Osborne

To: energyhearingcomments; 

Subject: CFTC Position Limits Review

Date: Wednesday, August 12, 2009 2:43:46 PM

Dear CFTC Commissioners:

During your review of position limits for the commodity 

futures markets I urge you to review the limits for short 

side positions as well as for long side positions. The 

Gold Anti-Trust Action Committee has uncovered substantial 

circumstantial evidence over the last ten years that the 

gold and silver markets are being manipulated by short side 

commercial and banking interests. The current highly 

concentrated short positions in gold and silver held by the 

large New York banks need to be looked into. In summary 

markets can be unfairly traded from both the long and the 

short side. No one should be allowed to have an unfair 

trading advantage in our markets.

Thank you for your considerations.

Bill Osborne 

 

 

 
From: Douglas Mica

To: energyhearingcomments; 

Subject: position limits on silver

Date: Wednesday, August 12, 2009 2:39:45 PM

 dear sir, No other market comes as close to fittings the profile of 

a manipulated market than does comex silver on the short side. I urge 

you to change that profile by establishing position limits of no more than 

1300 contracts in Comex silver and also restrict any exemption to that 

limit to the actual producers and consumers of the metal. Thanks, 

Douglas mica 
From: MicroCapMaven

To: energyhearingcomments; 

Subject: Gold and Silver Trading

Date: Wednesday, August 12, 2009 2:24:38 PM

Dear CFTC Commissioners:

I have written to you repeatedly about manipulation of the 

precious metals markets. There is no legitimate business 

case for the gigantic shorting of gold and silver. The 

perpetrators appear to be using their de facto, 

overwhelming monopoly to hold down and simultaneously 

exploit the market, through periodic takedowns.

I hope that you will remedy the situation.

Thanks for your consideration, 

George Miller 

~~~~~~~~~~
From: Kerry Bates

To: energyhearingcomments; 

Subject: Speculative Position Limits Hearing

Date: Wednesday, August 12, 2009 2:22:35 PM

Dear Sirs,

My interest is in seeing speculative position limits applied to all markets the 

CFTC oversee. Both long and short positions.

Why should a few large traders--Banks--Commercial positions be allowed to 

manipulate the markets?

I attach two letters below drafted by Ted Butler and Adrian Douglas, whose 

recommendations should be included in your process.

Thank you for your consideration and action.

Kerry Bates.

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 

5th. You said:

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do 

not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 
what point of market concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls half the market, 

that party is more likely to lessen liquidity than enhance it. Position limits should 

enhance liquidity by promoting more market participants rather than having one 

party that has so much concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities.

The only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will 

increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 

across all commodities of finite supply, whether in relation to actual production or 

as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not to 

those engaged in financial trading through aggregation.

I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal.

Theodore Butler
Butler Research LLC

Tuesday, August 11, 2009

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581

Dear Chairman Gensler:

Your hearings on position limits in the commodity futures markets have 

presupposed that the issue is speculation on the long side. You will not 

correctly regulate markets if your inquiries and hearings are being 

conducted from the conclusion you want to make and then work backwards.

The fundamental problem is not with finite resources but with infinite 

production of dollars. You are turning a blind eye to the manipulation of 

markets on the short side (and the massive OTC derivatives markets) that 

is undertaken to mask the uncontrolled creation of fiat dollars backed by 

nothing.

The price suppression is rampant and is making finite commodities even 

more finite as it becomes uneconomic to produce them. The paper promises 

to supply commodities from stocks that do not exist suppresses prices.

The CFTC has been investigating price manipulation in silver and gold for 

almost a year. The manipulators here will be drawing a pension before you 

recognize manipulation. Meanwhile the U.S. Senate can apparently 

recognize long-side manipulation of wheat and even crude oil in a flash.

Why have your hearings focused on how oil rose to $147 per barrel and not 

equally how it fell to $35 per barrel and how the dollar made a magnificent 

rise in the middle of a credit crisis, a feat never before achieved?

Federal Reserve Chairman Ben Bernanke testified in response to U.S. Rep. 

Alan Grayson that the rise in the dollar was a total coincidence even though 

it occurred even as half a trillion dollars of currency swaps were executed 

with foreign central banks. Really? And was it an equal coincidence that as a 

result of the dollar's rising from the dead the entire commodity complex 

cratered, including the most time-honored safe-haven asset, gold?

Any limits you put on trading must be applied equally to short sellers. But 
the CFTC's investigation needs to dig into how markets are being 

manipulated at the behest the U.S. government to maintain dollar 

hegemony so that imports can be purchased for free and so the United 

States doesn't have to compete in the global marketplace to manufacture 

anything anymore except a torrent of greenbacks.

My guess is that you will aid and abet the continuation of this Ponzi scheme 

because that is so much easier than doing what is right and what you are 

paid to do as a servant of the American people.

Regards,

Adrian Douglas
From: Greg Mathews

To: energyhearingcomments; 

Subject: Hearings

Date: Wednesday, August 12, 2009 2:20:48 PM

Dear Sirs,

I am in 100% agreement with the position of Ted Butler regarding CFTC position 

limits that he discusses in his letter below. You are urged to make a fair playing 

field for all.

Regards,

Greg Mathews

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in energy and other 

physical commodities of finite supply. The hearings you conducted were of great public 

service. I will confine my comments to one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 5th. You 

said:

“I believe that position limits should be consistently applied across markets for physical 

commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do not 

become too concentrated.”

“The very important question becomes: how much concentration is too much? At what point 

of market concentration does a trader detract from liquidity instead of enhance it? I think we 

would all agree that if one party controls half the market, that party is more likely to lessen 

liquidity than enhance it. Position limits should enhance liquidity by promoting more market 

participants rather than having one party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 
Participation Reports, both for positions held as of August 4, the level of concentration on the 

short side of COMEX silver futures would appear to meet or exceed the level you imply 

threatens market integrity and liquidity. After published non-commercial and imputed 

commercial spreads are removed, the net short position of one or two US banks exceeds 

40% of the total net futures open interest. That same calculation indicates the net short 

position of the four largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market for physical 

commodities.

The only effective means of ensuring market integrity and enhancing liquidity is for the 

Commission to impose legitimate speculative position limits. This will increase the number of 

traders on the short side of COMEX silver, as you stated. The level of the current 

accountability limit of COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether in relation to 

actual production or as a percent of total open interest, would dictate that the Commission 

impose a speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position limit to the 

bona fide producers or consumers of the actual commodity, and not to those engaged in 

financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the enforcement 

of position limits to guard against excessive speculation on the long side, commodity law 

requires you to guard against excessive speculation or manipulation on the short side as 

well. No other market comes as close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you change that profile by establishing a 

speculative position limit of no more than 1500 contracts in COMEX silver and by restricting 

any exemption to that limit to the actual producers and consumers of the metal. 

Theodore Butler

Butler Research LLC
From: Srichlee

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 2:15:42 PM

Although these comments ore not on energy per se, I'd like to state that I feel all 

commodities should be governed by the same rules, especially on short sales.

Richard Stearns
From: Michael Rank

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 2:10:33 PM

CFTC Commissioners: 

I strongly applaud your efforts to reign in excessive speculation on 

energy futures. Please remember, however, that speculation per se is 

neither good nor evil and that speculators indeed do provide necessary 

liquidity to futures markets. I also urge you to broaden your review 

of position limits to include all physical commodities, both long and 

short. 

Of particular interest to me, an individual investor, is the Comex 

silver market. COT and Bank Participation reports strongly suggest 

that an illegal concentration exists that is highly detrimental to the 

existence of a free market. All I ask is that CFTC enforce existing 

law to ensure an even playing field for those of us seeking to invest 

in commodities, like silver, that theoretically should provide a hedge 

against the probable decline in the value of the USD. Substantially 

reducing silver position limits would be a welcome re-leveling of that 

playing field. Thank you. 

Michael P. Rank 
From: Horst Von-Eiff

To: energyhearingcomments; 

Subject: Energy hearings comments

Date: Wednesday, August 12, 2009 2:05:13 PM

Chairman Gensler,

thank you for the oportunity to give a short statement concerning the COMEXmarket of silver futures.

To set a limit of maximum 1000 til 1500 silver-short-contracts would be a first 

step to reduce the criminal manipulation of the silver market.

Friendly greetings

Horst Von - 
From: thelmajones

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 1:46:10 PM

Aug 12 2009 

Chairman Gensler: 

Please see that reasonable speculative position limits are 

instituted for both long as well as SHORT futures contract 

positions. I have no quibble with bona fide commodity hedges 

made by a commodity-producing companies. 

However, there is a real problem when speculative positions by a large bank or a 

handful of investors are large enough to cause manipulative price movements. 

Keep speculative limits to 1500 contracts or less. 

Thank you, 

Thelma Jones 
From: Jorge Barba

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 1:41:04 PM

To Whom It May Concern,

I am writing to applaud the CFTC for investigating the abusive practices of Wall 

Street speculators. I am the average, run of the mill middle class American that’s 

fed up of being victim of the greed of a small handful. I wish, hope and pray the 

CFTC will listen to the pleas of these victims such as myself and place limits on 

the abuse these speculators have had on our wallets and economy. I firmly believe 

the current out of touch oil prices are the result of de-regulation beliefs of the 

Bush administration.

As a consumer at the hands of this recession, I do not spend my disposable income 

freely. Whatever money I have left over after rent, utilities and outrageous gas 

prices, I save in the bank. I refuse to spend my money freely by injecting it into 

other areas. Retail businesses for example will not see my money while gas prices 

are absurdly high. At the rate things are going, I wouldn’t be surprised to see $4 

per gallon gas again. It’s for this complete disgust and distrust in Wall Street that 

I will remain tightfisted with my income. I will not be counted on to do my part 

of injecting money into the economy while oil speculator run amuck. 

It disgusts me to no end how a few speculators can have so much power over 

energy prices. Their justification to cause these huge price swings are fairy tales. 

I’m not an economist but even I can see a complete disconnect between Wall 

Street and Main Street. Wall Street speculators are justifying these upward oil 

swings by claiming all the data says the recession is over and that demand will be 

up. Meanwhile, here on Main Street I see the complete opposite. The recession is 

not over and demand is not up. The numbers clearly show that demand is down, 

even for the summer. The numbers also show oil supplies swelling. Speculators 

are justifying their actions on events that haven’t even occurred. 

The economy was thriving under Bill Clinton’s presidency. Yet gasoline was in 

the $1 range. Currently the economy is nowhere near as good shape as it was 

then, yet gasoline is $3 per gallon. I’d hate to see what oil and gas would cost if 

the economy truly were healthy. This is a clear abuse of Wall Street speculators 

that have no restrictions and have free rein to do whatever they want.

As a consumer I ride my bicycle round trip to work as well as errands around 
town. It’s my way of putting my foot down and reduce the money I have to spend 

on gasoline. The lower demand of oil which has been reflected in the numbers 

demonstrate that I’m not the only American putting their foot down to this abuse. 

The only way this country will see a true economic recovery is to lift this weight 

of high gas prices off the consumer. It’s folks like I that hold the key to fixing 

what the last President did. It’s folks like us that will pump our money into other 

segment of the economy and therefore create recovery. But that will not happen 

while we carry the burden of high energy prices caused by unjust speculators who 

are clearly removed from what’s really happening in our economy.

Jorge Barba
From: Eric Lindvall

To: energyhearingcomments; 

Subject: CFTC position limits in gold and silver futures trading

Date: Wednesday, August 12, 2009 1:38:28 PM

CFTC Commissioner

Please put short side position limits on gold and silver. This is more 

important than long side limits in putting a stop to the manipulation

by a few large traders.

Thank you for your attention to this long overdue correction.

C. Eric Lindvall

.
From: Steve Loy

To: energyhearingcomments; 

Subject: Comex Short Sales

Date: Wednesday, August 12, 2009 1:35:45 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to 

heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Please stop the manipulation. 

Thanks for your consideration This email was sent from home or REMOTE 

location-- 

Steve Loy 

 

 
From: Jon Nimtz

To: energyhearingcomments; 

Subject: Thank you for your efforts

Date: Wednesday, August 12, 2009 1:26:59 PM

August 12, 2009

Dear CFTC Commissioners:

I do not normally write government regulators, but the events of the past year have been very 

disturbing to me. It is clear that there appears to be significant gaps in regulatory oversight of 

several markets that have allowed potential manipulation of markets to occur. I sincerely 

applaude your recent investigation into position limits to help curb future manipulative potential 

in this area.

I am amazed how many of my friends and business associates are all becoming acutely aware 

of these issues, and how it is beginning to dominate our casual conversations that used to be 

about sports, children’s activities, and leisure subjects. Now the first words out of our mouth 

tend to be about the latest abuses by large corporate entities who appear to be benefiting at 

the great expense of the public. 

In regard to position limits in the commodity futures markets, I urge you to heed the comments 

made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are absolutely as necessary as long-side limits to prevent potential 

manipulation and harm to the investing public. As they say, an ounce of prevention is worth a 

pound of cure. In this case, taking steps to prevent the possibility of manipulation will serve to 

provide strong protection against the severe market disruption that would ensue if a failure to 

deliver would occur from a trader who has a large, concentrated short exposure to a finite 

commodity, such as oil, gold, or silver. 

Thank you for investigating this subject and for your efforts in protecting the investing public. 

Jon Nimtz 
From: rafael perales

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 1:21:39 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Rafael Perales 

 
From: sbchristian

To: energyhearingcomments; 

Subject: CFTC Hearings on Speculative Position Limits 

Date: Wednesday, August 12, 2009 1:19:56 PM

Chairman Gensler,

The following passages are from your opening statement of August 5th. 

“I believe that position limits should be consistently applied across markets for physical commodities of finite supply.” “..., I believe that at 

the core of promoting market integrity is ensuring markets do not become too concentrated.”

The CFTC allows major banks to illegally manipulate the Silver Futures market and it must be stopped. This is just one example in a long 

line of examples throughout the US of how the big players flout the law and make billions. I hope you actually stand by your statement and 

stop this illegal manipulation by the Big Banks. 

Regards,

Stephen Christian
From: jlewis3846

To: energyhearingcomments; 

Subject: Regarding energy hearings

Date: Wednesday, August 12, 2009 1:18:05 PM

Office of the Secretariat

Commodity Futures Trading Commission

1155 21st St., NW

Washington, DC 20581

Dear Commissioners:

It seems odd that just two US banks continue to have such a dominate positions in short futures contracts in 

silver at the COMEX. Would it not be tempting for these two banks to use this large and concentrated short 

position to manipulate or intimidate this market? No other commodities except gold, platinum and palladium have 

such concentrated short positions. Who do these two banks represent? 

Sincerely yours,

Jeffrey Lewis

 BANK 

LONG SHORT OPEN

 DATE COMMODITY TYPE COUNT FUTURES % 

FUTURES % INTEREST

08/04/09 CMX SILVER U.S. 2 15 

0.0 29,813 30.0 99,477

 NON U.S. 15 8,038 

8.1 3,211 3.2

 ---- --------- ---- 

--------- ----

 17 8,053 

8.1 33,024 33.2
From: Keith Parizek

To: energyhearingcomments; 

Subject: Short sales and position limits

Date: Wednesday, August 12, 2009 1:17:12 PM

Ladies and Gentlemen: 

1. If you do not stop naked short selling now and ordinary short selling for the 

duration of our downturn, you are part of the problem now ocurring in our 

country. A naked short sale is a near fatal stab in the back of any American 

company trying to make a comeback in this enviornment. I am amazed and 

disappointed at the number of respected financial editors who are promoting 

short sales when we need American capital to be investing in our country and not 

others. You and you alone must make drastic changes NOW to reverse this 

trend. 

2. Position limits must be limited because they make easy all the things that I 

have listed above. 

3. You folks have the capability to restore financial stability to this country that 

will eventually have greater effect than a lot of the fiscal stimulus money that has 

already been spent.

4. Please create trust in our financial system by stopping all naked short selling 

now and also ordinary short selling until our financial system has again won the 

trust of American investors as well as the rest of the world.

Sincerely,

Dr. Arthur K. Parizek
From: Sterling Farr

To: energyhearingcomments; 

Subject: Short side position limits

Date: Wednesday, August 12, 2009 1:13:45 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are just as necessary as long-side limits. Please 

do the right thing. The silver market is not "free".

Thanks for your consideration.

Sterling Farr
From: bigumbro

To: energyhearingcomments; 

Subject: SHORT SIDE POSITION LIMITS

Date: Wednesday, August 12, 2009 1:06:38 PM

DEAR SIR,JUST A SHORT NOTE TO LET YOU KNOW THAT IT IS AS 

IMPORTANT TO SET SHORT SIDE POSITION LIMITS AS IT IS TO SET 

LONG SIDE POSITION LIMITS.I KNOW,THAT AS A PUBLIC SERVANT,YOU 

WILL SEE TO THE INTERESTS OF THE PUBLIC AND DO THE RIGHT 

THING FOR THE PUBLIC FOR WHOM YOU ARE IN OFFICE TO SERVE.

THANK YOU FOR YOUR TIME. ARNOLD WILLIAMS 
From: Clem Malecki

To: energyhearingcomments; 

Subject: your solicitation of comments

Date: Wednesday, August 12, 2009 1:05:40 PM

Messieurs/Dames- If you do not find it your duty to protect investors from the 

corrupt silver/gold shorting rapaciousness of Goldman Krupp and I.G. Morgan, 

please just vote to disband. Clement Malecki 
From: tacitus

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 1:04:53 PM

Chairman Gensler, 

Thank you for the opportunity to comment on the issue of position 

limits in energy and other physical commodities of finite supply. 

For a long time I have great concerns about the disproportional 

large short position large bullionbanks like JP Morgan-Chase holds 

in silver and gold. 

It is obvious for me that there is a strong possibility that these 

short-positions can be used to manipulate the gold and silver 

markets. I urge you to take notice of the great work GATA has put 

forward concerning this matter. I urge you to read these articles 

in particular. 

http://news.silverseek.com/TedButler/1250014324.php

and 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

John Tacitus 
From: Paul Barr

To: energyhearingcomments; 

Subject: position limits

Date: Wednesday, August 12, 2009 12:58:36 PM

Dear CFTC, 

Thank you for conducting hearings recently on setting position limits on 

physical commodities. Your recent comments are most appropriate. See your 

quotes below: 

“I believe that position limits should be consistently applied across 

markets for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated." 

It is my hope that position limits will be imposed to avoid market 

distortions and to allow for a more transparent and fair physical markets 

for all market participants. 

Your efforts in this regard are most appreciated. 

Sincerely, 

Paul A. Barr 

President 

Barr Asset Management 
From: Lionel Broderick

To: energyhearingcomments; 

Subject: America is DEAD

Date: Wednesday, August 12, 2009 12:57:37 PM

Dear CFTC Commissioners:

Honestly, I am so disgusted with our government that I am hesitant to take the time to 

write this letter. Sadly, today there are leaders in our country. Only those that want to 

make a buck for themselves and be on their way. Slowly over the last 30 or so years 

those in government of chipped away at our rights to their own and their cronies 

benefit. The rights of the people are ignored or pushed to the side while laws are 

ignored or simply changed to meet the needs of a few.

In the long run, the best thing for our country will be a blood and guts war in the street. 

A revolution, where we take back our country from thieves. It is the only way to shock 

people back to doing the right thing rather than the self serving thing.

So, you are looking at tightening the laws on gold and silver trading but only the longs 

not the shorts. 

If you don’t know what the right thing to do is, than you simply should not be holding 

your posts and you should resign, maybe today.

The fact that you are considering one without the other shows that you are controlled by 

our government. Or, paid off by someone. Maybe, we should be investigating your 

ethics.

Today you will make a decision that will screw a lot of hard working people out of money 

because you support the shorts.

Your job is to protect everyone but you only protect yourself and your cronies.

FOAD,

Copy of QB 

Logo 2

Lionel Broderick
From: Charles Krogman

To: energyhearingcomments; 

Subject: silver and gold price suppression by the government

Date: Wednesday, August 12, 2009 12:55:45 PM

Dear CFTC members,

Please heed the advice and comments submitted by Ted Butler and GATA 

board member Adrian Douglas, and stop this illegal price fixing and 

suppression.

You have for years failed to take corrective action to end this excessive 

concentrated short position of a few investment banks. Stand up now and 

do the right thing and your legal charge.

Charles Krogman
From: Eddie Qi

To: energyhearingcomments; 

Subject: Position limits in the commodity futures markets

Date: Wednesday, August 12, 2009 12:53:25 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to 

heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Eddie Qi
From: Allen Larson

To: energyhearingcomments; 

Subject: Energy hearing comments

Date: Wednesday, August 12, 2009 12:48:46 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thank you for your consideration. 

Allen R. Larson 

 
From: john steidel

To: energyhearingcomments; 

Subject: fair and free markets

Date: Wednesday, August 12, 2009 12:44:45 PM

Stop the manpulation of the commodities markets.

Stop the naked shorting in the commodities market.

all actions should be above board and on the table.

Thank you 

LCDR John B Steidel USNR ret
From: davehmur

To: energyhearingcomments; 

Subject: Make the Silver Market Fair.

Date: Wednesday, August 12, 2009 12:44:37 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

David Murray 
From: 

Sent: 

To: 

Cc: 

Subject: 

Secretary 

Patricia Gillman [pngillman@gmail.com) 

Wednesday, August 12, 2009 12:43 PM 

energyhearingcomments 

Andrew Bastow; pngillman@gmail.com 

Energy Hearing Comments 

Commodity Futures Trading Commission 

1155 21st Street, NW 

Washington, DC 20581 

Re: Energy Hearing Comments 

Dear Sir, 

August 12, 2009 

In response to the Commission's request for public input into whether federal speculative position limits 

("speculative position limits") should be set by the CFTC for commodities of finite supply, Winton Capital 

Management Limited ("Winton"), a CFTC registered CT A and CPO, would like to make a number of 

observations about the energy markets, which we hope you will find helpful. 

Formation of Speculative Position Limits in the Energy Markets 

Winton naturally believes that the commodity futures markets provide a valuable price discovery and risk 

transfer mechanism, in which futures prices follow current and future expectations of physical market 

fundamentals. Notwithstanding that belief, Winton acknowledges that excessive speculation has the potential to 

impinge on the efficient functioning of those mechanisms in the short term. 

In the event that the Commission determines that energy market speculative position limits are necessary, 

consideration ought to be given to implementing a set of tapered position limits. Appropriately narrow limits 

would be applied to the front months, with limits becoming progressively more relaxed further out along the 

expiry curve and potentially unlimited for those months furthest out. 

Winton believes that this configuration of limits is supported by the following observationsill: 

~ In absolute terms, speculation in the energy markets, as measured by open interest (OI) as a proxy, is not 

significant compared to the level of production. 

o Crude oil OI (incl. Crude, E-mini Crude & Brent Crude) amounted to approximately 2.4bn barrels of 

oil, the equivalent of only 8% of annual world production, which stood at approximately 31 bn 

barrels in 2008. 

1 
~ Relative to levels of speculation in other commodity markets, the degree of speculation in the energy markets 

is not exceptionally high, as shown in Figure 1. 

o Crude oil OI as a percentage of annual world production (8%) is significantly lower than that of, for 

example, Soybeans (28%) and Aluminium (43%). 

~ OI in the energy markets is heavily concentrated in the front months. 

o OI in the first six Crude contracts accounted for approximately 58% oftotal Crude OI. 

o OI in the Crude front month contract was approximately 16% of monthly world production; double 

the value of total Crude OI as a percentage of annual world production. 

Figure 1: Commodity Markets ' Average OJ as a percentage of Annual Production (based on 2008 data) 

Cocoa 

Gold 

Aluminium 

SUI It 

Coffte 

S<lybun 

Cotton 

COm 

• cRUDE 

Wh•at 

0% 10% 2.0% 30% 40% SO% 60% 70% 80% 90% 100% 

All& 0 1/Anrt ~;t io n 

By tapering the size of speculative position limits towards the spot month, greater control may be exerted over 

the front months where OI is concentrated and the potential for market dislocation is most acute, whilst 

encouraging greater participation further along the curve, helping to preserve and possibly enhance the risk 

transfer mechanism. 

In order to increase the potential effectiveness of tapered position limits, Exchanges could be encouraged to 

construct incentive programmes designed to promote increased levels of trading in the further out contract 

months. 

As the Commission holds its hearings on energy speculative position limits over the next two weeks, we hope 

that consideration may be given to the comments contained in this letter. We at Winton would be pleased to 

speak with any Commissioner, CFTC staff member or member of the Energy and Environmental Markets 

Advisory Committee who has questions or would like further elaboration of our thoughts. I and Nicola 

Malhotra, Winton's Head of Risk Management, may be reached at 011-44-20-7610-5350. US Counsel, Patricia 

Gillman, is reachable at 773.665.9787. 

Yours sincerely, 

David W. Harding 

Chief Executive Officer and Head of Research 

2 
From: JT

To: energyhearingcomments; 

Subject: Fw: Silver Market Manipulations

Date: Wednesday, August 12, 2009 12:40:54 PM

FYI ------------ jpt

--- On Tue, 7/28/09, JT wrote: 

From: JT 

Subject: Silver Market Manipulations 

To: "Gary Gensler" <ggensler@cftc.gov> 

Date: Tuesday, July 28, 2009, 5:22 PM 

Dear Chairman Gensler ----------------

As a longtime market observer, and silver enthusiast, 

I encourage you and your Board Members to give your 

concentrated attention and interest to the very 

suspect manipulations of the silver market.

I do agree with Ted Butler that the position limits in 

COMEX silver should be reduced to the suggested 

level of 1,000 contracts. And, that the suspect hedge 

exemptions for non-producers and consumers be 

eliminated.

Your attention to these matters will be appreciated.

Respectfully --------------

John P. Tyson M.D. // 

 
From: Redd

To: energyhearingcomments; 

Subject: Market manipulation

Date: Wednesday, August 12, 2009 12:31:53 PM

Please refer to comments made by Gata,As a INVESTOR we need 

Free Markets not Manipulated Markets. Sincerely Marion 

Cummins 
From: robert kuzman

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:29:22 PM

The huge run-up in oil to $147 and then the subsequent crash was 

entirely done by speculators gambling wildly (it's easier than going to 

Atlantic City); if you want to stop this kind of wild price gyrations then 

increase margin requirements to 100% of the contract's value, limit the 

participants to those companies who really need to hedge (airlines, 

shipping etc.). Stop letting people like me gamble wildly on energy 

products, I have personally helped the wild price swings by gambling 

repeatedly in the markets.. 

 

 

Rob Kuzman 
From: Jeff & Karen

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:12:53 PM

We recognize that the focus of your hearings was on energy, but that you are 

also aware of concentration and position limit issues in other commodities.

We would ask that you address, in any rule makings, the silver market, and 

specifically the short side (we're pretty sure you'll address the long side, which is 

not historically the problem in this market).

From Ted Butler last month:

"the level of accountability limits in silver is too large, by a factor of five or more 

compared to any other commodity (including gold). Even though the current limit 

needs to be reduced drastically from 6,000 contracts to between 1000 and 1500 

contracts, the big shorts now hold a lot more than 6000 contracts each. One or 

two US banks hold a minimum of more than two and half times the obscene 

6000 contract limit. If silver position limits were reduced to 1500 contracts, the 

big banks would be holding more than ten times that limit. That’s insane."

We can not say it better than Ted Butler did, but we CAN ask you to act 

expeditiously to fix this problem of many years:

The first step is to immediately enforce the current [ridiculously high] limit of 6000 

contracts.

The second step is to re-regulate down to a maximum of 1500 contracts for any 

long or SHORT position.

Thank you for your current and future efforts, with much appreciation for your 

work,

Jeff and Dr. Karen Allstadt
From: Carole

To: energyhearingcomments; 

Subject: Position limits in the Commodity futures markets.

Date: Wednesday, August 12, 2009 12:12:13 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I 

urge you to heed the comments made by silver market analyst Ted 

Butler here:

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of 

position limits in energy and other physical commodities of finite 

supply. The hearings you conducted were of great public service. 

I will confine my comments to one market – the COMEX silver 

futures market.

I have excerpted the following passages from your opening 

statement of August 5th. You said:

“I believe that position limits should be consistently applied 

across markets for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is 

ensuring markets do not become too concentrated.”

“The very important question becomes: how much concentration 

is too much? At what point of market concentration does a trader 

detract from liquidity instead of enhance it? I think we would all 

agree that if one party controls half the market, that party is 

more likely to lessen liquidity than enhance it. Position limits 

should enhance liquidity by promoting more market participants 

rather than having one party that has so much concentration so 
as to decrease liquidity.”

According to data contained in the most recent Commitment of 

Traders and Bank Participation Reports, both for positions held as 

of August 4, the level of concentration on the short side of 

COMEX silver futures would appear to meet or exceed the level 

you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are 

removed, the net short position of one or two US banks exceeds 

40% of the total net futures open interest. That same calculation 

indicates the net short position of the four largest traders 

exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any 

other market for physical commodities.

The only effective means of ensuring market integrity and 

enhancing liquidity is for the Commission to impose legitimate 

speculative position limits. This will increase the number of 

traders on the short side of COMEX silver, as you stated. The level 

of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line 

with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite 

supply, whether in relation to actual production or as a percent of 

total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in 

COMEX silver futures.

I also strongly urge you to restrict any exemption from that 

speculative position limit to the bona fide producers or 

consumers of the actual commodity, and not to those engaged in 

financial trading through aggregation. 

I would respectfully remind you that while the thrust of the 

hearings involved the enforcement of position limits to guard 

against excessive speculation on the long side, commodity law 

requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as 

close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you change 
that profile by establishing a speculative position limit of no more 

than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of 

the metal. 

Theodore Butler

Butler Research LLC

And by commodity market analyst Adrian Douglas here:

Tuesday, August 11, 2009

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581

Dear Chairman Gensler:

Your hearings on position limits in the commodity futures markets 

have presupposed that the issue is speculation on the long side. 

You will not correctly regulate markets if your inquiries and 

hearings are being conducted from the conclusion you want to 

make and then work backwards.

The fundamental problem is not with finite resources but with 

infinite production of dollars. You are turning a blind eye to the 

manipulation of markets on the short side (and the massive OTC 

derivatives markets) that is undertaken to mask the uncontrolled 

creation of fiat dollars backed by nothing. 

The price suppression is rampant and is making finite commodities 

even more finite as it becomes uneconomic to produce them. The 

paper promises to supply commodities from stocks that do not 

exist suppresses prices. 

The CFTC has been investigating price manipulation in silver and 
gold for almost a year. The manipulators here will be drawing a 

pension before you recognize manipulation. Meanwhile the U.S. 

Senate can apparently recognize long-side manipulation of wheat 

and even crude oil in a flash. 

Why have your hearings focused on how oil rose to $147 per 

barrel and not equally how it fell to $35 per barrel and how the 

dollar made a magnificent rise in the middle of a credit crisis, a 

feat never before achieved?

Federal Reserve Chairman Ben Bernanke testified in response to U.

S. Rep. Alan Grayson that the rise in the dollar was a total 

coincidence even though it occurred even as half a trillion dollars 

of currency swaps were executed with foreign central banks. 

Really? And was it an equal coincidence that as a result of the 

dollar's rising from the dead the entire commodity complex 

cratered, including the most time-honored safe-haven asset, gold? 

Any limits you put on trading must be applied equally to short 

sellers. But the CFTC's investigation needs to dig into how 

markets are being manipulated at the behest the U.S. government 

to maintain dollar hegemony so that imports can be purchased for 

free and so the United States doesn't have to compete in the 

global marketplace to manufacture anything anymore except a 

torrent of greenbacks.

My guess is that you will aid and abet the continuation of this 

Ponzi scheme because that is so much easier than doing what is 

right and what you are paid to do as a servant of the American 

people.

Regards,

Adrian Douglas

Short-side position limits are absolutely as necessary as long-side 

limits. 

Thank you for your consideration of my opinions and thoughts.
Leroy R. Hutchinson
From: Ryan Chennault

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 12:11:17 PM

Dear Chairman Gensler and CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Ryan Chennault
From: caguinta

To: energyhearingcomments; 

Subject: Please Limit Short Positions

Date: Wednesday, August 12, 2009 12:10:02 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler 

here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Craig A. Guinta

 
From: Mike Davis

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:09:22 PM

August 12, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of 

position limits in energy and other physical commodities of 

finite supply. My comments relate to two markets – the COMEX 

silver and gold futures markets.

In your opening statement of August 5th. You said: "I think 

we would all agree that if one party controls half the 

market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by 

promoting more market participants rather than having one 

party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the your own Commitment of 

Traders and Bank Participation Reports, the level of 

concentration on the short side of COMEX silver and gold 

futures would appear to meet or exceed the level you imply 

threatens market integrity and liquidity. After spreads are 

removed, the net short position of the largest traders 

exceeds well over half of the total net open interest in both 

markets. Such levels of concentration simply do not exist in 

any other market for physical commodities.

As a remedy, the Commission should impose a speculative 

position limit of no more than 1500 contracts in COMEX silver 

and gold futures on both the long and short sides. While the 

hearings were more about enforcement of positions limits to 

prevent excessive speculation on the long side, existing 

commodities law requires you to guard against manipulation 

and excessive speculation on the short side as well.
Also, any exemptions from speculative position limits should 

be granted only to actual producers or consumers of the 

physical commodity. Those engaged in only in financial 

trading (e.g. the commercial banks) should not be allowed to 

exceed the limit of 1500 contracts in COMES gold or sliver.

Thank you for your time and consideration.

Michael F. Davis
From: Angelo Di Fusco

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:05:03 PM

August 12, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. This is the time to finally put an end 

to the manipulation by a few concentrated short position traders who are 

holding down the price of silver. The concentration of silver as stated in the 

COT is more than any other commodity at any given time. Me and my 

colleagues have raised this issue with the CFTC for several years and now is 

the time to get serious and actually put this practice to an end.

Thank you

Angelo Di Fusco 
From: Calvin Hotchkiss

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:04:24 PM

Dear Sirs;

I am hopeful that these hearings will finally put an end to the illegal 

manipulation of the Comex Silver Futures Market.

A few large banks use concentrated short positions to control the silver 

markets. A fair playing field is long over due. 

Please institute realistic Position Limits in order to eliminate this ongoing 

criminal activity.

Regards, Cal Hotchkiss
From: jcpreece tds.net

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Wednesday, August 12, 2009 12:03:57 PM

Chairman Gensler and Commissioners,

The huge short positions of a few huge Wall Street banks is a drain on the 

market. Yes, I know the market has never been a level playing field, but it 

time to stop management of the markets. Particularly Silver and Gold . 

The short positions of Goldman/JPMorgan are criminal. Yes, Wall Street 

owns Washington lock, stock, and barrel, but try to stop it as we are 

getting fed up with" look the other way "regulators. Do the RIGHT thing. 

Wall Street//Morgan-Government Sachs//Washington---Who is the Dog 

and who is the Tail? Which is the CFTC? Remember Superman--Truth ,

Justice, and the American Way.

jc preece
From: Zabaly, Vincent

To: energyhearingcomments; 

Subject: Comex Silver Futures Market

Date: Wednesday, August 12, 2009 11:58:39 AM

Chairman Gensler,

I have the following comments regarding the Comex Silver Futures Market.

First thank you for the opportunity to comment on the issue of position limits in energy and 

other physical commodities of finite supply. The hearings you conducted were of great public 

service. I will confine my comments to one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 5th. You 

said:

“I believe that position limits should be consistently applied across markets for physical 

commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do not 

become too concentrated.”

“The very important question becomes: how much concentration is too much? At what point 

of market concentration does a trader detract from liquidity instead of enhance it? I think we 

would all agree that if one party controls half the market, that party is more likely to lessen 

liquidity than enhance it. Position limits should enhance liquidity by promoting more market 

participants rather than having one party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of concentration on the 

short side of COMEX silver futures would appear to meet or exceed the level you imply 

threatens market integrity and liquidity. After published non-commercial and imputed 

commercial spreads are removed, the net short position of one or two US banks exceeds 

40% of the total net futures open interest. That same calculation indicates the net short 

position of the four largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market for physical 

commodities.

It seems that the only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will increase the 

number of traders on the short side of COMEX silver, as you stated. The level of the current 

accountability limit of COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether in relation to 
actual production or as a percent of total open interest, would dictate that the Commission 

impose a speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also most strongly urge you to restrict any exemption from that speculative position limit to 

the bona fide producers or consumers of the actual commodity, and not to those engaged in 

financial trading through aggregation. 

Lastly I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long side, 

commodity law requires you to guard against excessive speculation or manipulation on the 

short side as well. No other market comes as close to fitting the profile of a manipulated 

market than does COMEX silver on the short side. Once again, I urge you change that profile 

by establishing a speculative position limit of no more than 1500 contracts in COMEX silver 

and by restricting any exemption to that limit to the actual producers and consumers of the 

metal. 

Vincent Zabaly
From: Ric Ronveaux

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 11:55:59 AM

I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.

 I believe that at the core of promoting market integrity is ensuring markets do not 

become too concentrated.

This is especially true as it pertains to the short side of COMEX silver. The level of 

the current accountability limit of COMEX silver futures, on an all months combined 

bases, is way out of line compared with any other commodity.

2 US banks account for more than 40% of total shorts with the 4 largest traders 

exceeding 66% of total net open interest.

Please restrict any position limit to 1500 contracts in COMEX silver and restrict any 

exemption to that limit to the actual producers and consumers of silver.

Respectfully, Richard Ronveaux, 
From: jwinner

To: energyhearingcomments; 

Subject: Silver & Gold Trading

Date: Wednesday, August 12, 2009 11:55:14 AM

Dear CFTC,

Please listen to Theodore Butler's request sent to you by e-mail. We 

definitely need regulation in our precious metals market as proven by the 

COT reports.

Thank You!

John Winner
From: David Weishaar

To: energyhearingcomments; 

Subject: Commodity Futures Markets

Date: Wednesday, August 12, 2009 11:49:03 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thank you for your consideration.

David

David Weishaar

Senior Account Executive

Merit Financial
From: Don

To: energyhearingcomments; 

Subject: DO THE RIGHT THING not the typical greed based decision

Date: Wednesday, August 12, 2009 11:44:56 AM

I know it is impossible for anyone in government or industry to 

DO THE RIGHT THING as our system does not reward this. 

If what we have seen in the CFT market has not been enough to 

show HOW DESTRUCTIVE these practices are to the planet 

and 99.9% of the people then we will just continue on our rapid 

decline lead by clueless, greedy, selfish and very ignorant people. 

As I said you people could not do the right thing if your life's 

depended on it, and sadly in part ours does.

Don Clark
From: Dave.Larson

To: energyhearingcomments; 

cc: nrgdave@mindspring.com; 

Subject: Short-side position limits - Comment

Date: Wednesday, August 12, 2009 11:43:10 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, 

I urge you to heed the comments made by silver market analyst 

Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Dave Larson

Project Management Analyst

CompuCom
From: Jeff Wanshel

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Wednesday, August 12, 2009 11:42:55 AM

Good CFTC: 

Kindly allow me to observe, hopefully without sounding too testy, that the CFTC 

has for some time allowed long-term illegal abuse of the U.S. futures markets by 

banks on the SHORT side of the silver and gold markets. 

It's transparent to those who follow these markets, and are not just rooting for 

the home team, that limiting long side participation without equal offsetting 

short side limits - and in some markets rather than others - would constitute 

rigging those markets on the long side. 

Would all business go elsewhere? Hard to say - it's tough to establish just how 

dumb the participants in a market where so many of those who dip a toe in, get 

fleeced, may be. 

Short side concentrations in the silver and gold markets run another risk, that 

the whole sorry enterprise will suddenly, spectacularly fail, pull the other U.S. 

futures markets with them, spark yet another panic, and inititate yet more 

proceedings, in re: how did this happen? 

These markets are already rigged - on the short side - by just such illegal 

manipulation as the CFTC claims to be addressing - should be addressing, but is 

not - it's just playing pass-the-hot-potato. 

Position limits: good idea. Longside only positions limits, ignoring markets where 

two thirds of the open (short) interest is in the hands of TWO PARTICIPANTS: 

Charlie Chaplin. 

Very Sincerely Yours, 

Jeff Wanshel 
From: breizize

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 11:39:01 AM

Dear Chairman Gensler,

 I support your intention to limit speculative positions in energy and 

other physical commodities and strongly urge you to move to have 

these position limits "...consistently applied across markets for 

physical commodities of finite supply". Thank you for listening to all 

of us small fry who have seen evidence of the abuse of such 

speculative positions to seriously undermine the free market in these 

commodities.

Yours truly,

Robert Tompkins
From: Jim Davis

To: energyhearingcomments; 

Subject: Position limits on Silver

Date: Wednesday, August 12, 2009 11:36:14 AM

 

Please stop the crime, put position limits on silver so that one megabank 

can't short a hugh percentage of the market. A lot of people are livid 

over this as it has been going on for years and the regulators do nothing. 

 

Thank you 

Jim Davis 
From: Arthur Salna

To: energyhearingcomments; 

Subject: MARKET MANIPULATION

Date: Wednesday, August 12, 2009 11:31:27 AM

SIRS: PLEASE ADDRESS THE CONCERNS FORWARDED BY BUTLER AND 

DOUGLAS. TRANSPARENCY PLEASE! 

 

A LEE 
From: Jim

To: energyhearingcomments; 

cc: "Jim"; 

Subject: Urgent message, please take heed and do your job properly while you have the chance

Date: Wednesday, August 12, 2009 11:31:25 AM

I am one of many many many many U.S. citizens urging the commission to heed the comments 

sent to the commission by Butler and GATA board member Adrian Douglas. 

Butler's comments can be found here: 

http://news.silverseek.com/TedButler/1250014324.php

Douglas' comments may be found here:

http://www.gata.org/node/7683

Your public servant status requires you to act accordingly and put position limits in gold and silver 

trading, on both the LONG side, and the SHORT side. Please don’t fail the American public, as this 

also has world wide implications besides.

This has gone on for years, and it is long enough, position limits for everyone (no hedging or big 

bank exemptions) must now be strictly imposed.

Sincerely,

J Sto
From: Charles & Karin

To: energyhearingcomments; 

Subject: limit short position limits

Date: Wednesday, August 12, 2009 11:27:36 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Charles Coleman
From: Mike Mauriello

To: energyhearingcomments; 

cc: Chilton, Bart; Gensler, Gary; 

Subject: Comment in regard to enforcement of position limits in the futures markets

Date: Wednesday, August 12, 2009 11:25:07 AM

To Whom It May Concern,

Please consider short-side position limits as well as long-side limits.

They are just as vital to a fair market. 

Thanks for your consideration.
From: Brian

To: energyhearingcomments; 

Subject: CFTC 

Date: Wednesday, August 12, 2009 11:23:26 AM

Dear CFTC Commissioners:

I have been following (or trying to) the monetary and financial policies of the US 

Government for several years now and am very alarmed at the inside the 

Keynesian box thinking that seems to prevail to the exclusion of long term 

common sense.

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Brian G. D'Aoust, Ph.D.
From: George Douglas

To: energyhearingcomments; 

Subject: Short side position limits in the commodity futures markets

Date: Wednesday, August 12, 2009 11:22:40 AM

Dear CFTC Commissioners:

Having followed the precious metals for some years, and seen 

the “odd” PM market price behavior in the last few years, and 

read the essays addressing same by a variety of experienced 

precious metals analysts, I fully agree with the request here 

given.

In regard to position limits in the commodity futures 

markets, I urge you to heed the comments made by silver 

market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side 

limits.

Thanks for your consideration.
From: cyn02003

To: energyhearingcomments; 

Subject: For Your Consideration

Date: Wednesday, August 12, 2009 11:22:40 AM

I am writing this note to ask that you heed the comments sent to the 

commission by Mr. Ted Butler and GATA board member Mr. Adrian Douglas. 

 

Butler's comments can be found here: 

http://news.silverseek.com/TedButler/1250014324.php 

 

Douglas' comments may be found here: 

http://www.gata.org/node/7683

Sincerely,

Cynthia Miller
From: John Belles

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 11:21:59 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

John Belles
From: Robert LeChevalier

To: energyhearingcomments; 

cc: Senator Harry Reid; Senator John Ensign; 

Subject: Gold and Silver contracts

Date: Wednesday, August 12, 2009 11:21:50 AM

Dear Sirs, 

I have written repeatedly to my legislative representatives (Senators Reid 

and Ensign) on the issue of gold and silver contract manipulation by two 

banks, JP Morgan Chase and HSBC. These two banks, no secret who they 

are, hold commanding positions in these metal contracts and use these 

positions to routinely short these metals thereby robbing individual 

investors, like myself, who hedge these metals to protect their investment 

portfolios. One has only to look at the trading charts for these metals to 

see the methods being employed by these banks. Before I became aware 

of this illegal practice, I was trading these metals and a lost a considerable 

amount. I no longer trade these metals.

I am old enough to remember when the two brothers attempted to corner 

the silver market back in the 80's and lost their shirts. It is my belief that 

at some time in the future this is likely to happen again to these two 

banks. When they lose control of these metals, both banks will similarly 

lose their shirts and then will come crying to us the tax payers for bailouts. 

 It is the CFTC's responsibility to level the playing field and stop these 

crooks. I will expect a reply to this e-mail for actions taken against this 

illegal practice.

Robert LeChevalier
From: John Belles

To: energyhearingcomments; 

Subject: metals market manipulation

Date: Wednesday, August 12, 2009 11:20:01 AM

Greetings, 

I implore you to stop the short side manipulation of the silver and gold 

markets by big banks. Those of us who work in these mines and invest in 

these metals don't need large banks driving the prices down (this could 

not be more obvious) to save the value of their over printed dollar!! 

A brief study of the facts would lead you to know the truth of the matter 

( see http://news.silverseek.com/TedButler/1250014324.php ). 

YOU ARE RESPONSIBLE TO YOUR TAX PAYERS, GET YOUR JOB DONE!!! 

John Belles 
From: Ralph "Buck" DeMarco

To: energyhearingcomments; 

Subject: Energy Hearing Comments - Position limit reform needed for commercials

Date: Wednesday, August 12, 2009 11:05:30 AM

Dear Commissioners:

re: Energy Hearing Comments

It is long past time to reform the position limits in Silver and Gold 

in the commercial category. Only one or two banks monopolize 

the commercial short activity in both metals. Massive shorting in 

after hours markets clearly not designed to make sense for any 

legitimate commercial activity are hallmarks in these markets, 

particularly silver where the net commercial position has never 

been not net short since 1986. As a result, with the 

commensurate depressed prices the silver mining companies all 

post losses and the entire industry barely limps along as major 

silver miners have continued to go bankrupt over the years. 

These one or two banks are clearly conducting speculative 

shorting activity not of a commercial nature. Just looking at the 

notional amount of derivatives they hold the numbers have 

skyrocketed while actual legitimate demand has been significantly 

more sanguine creating a prepostorous snapshot of market player 

positions. This situation would not exist if the regulators did not 

turn a blind eye to the out sized position limits held that are far in 

excess of those in any other commodities markets. The 

illegitimate and unfair market conditions in silver and gold are 

clearly observable for anyone with eyes to see.

Sincerely

Ralph DeMarco
From: paul totten

To: energyhearingcomments; 

Subject: energy hearings comments

Date: Wednesday, August 12, 2009 11:03:12 AM

energy hearings comment 

Dear Sirs: 

 Please, please do the right thing for us little people and place 

position limits on the giants that are manipulating the markets and unfairly 

affecting prices, on oil and especially gold and silver. 

thank you for your consideration, 

paul totten 

 
From: H J Bergami

To: energyhearingcomments; 

Subject: Gold and silver futures trading;

Date: Wednesday, August 12, 2009 11:01:59 AM

Please consider the small investors in your consideration of concentrated 

contracts in these markets. It is obvious to all interested parties that several of 

the larger banks are using short trades to manipulate prices in their favor. You 

are the only protection the small investor has from these ponzi bandits!

Sincerely;

H J Bergami
From: Mitch Floyd

To: energyhearingcomments; 

Subject: CFTC hearings

Date: Wednesday, August 12, 2009 11:00:27 AM

Dear CFTC Commissioners,

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

 

Mitch Floyd
From: charlie wheeler

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 10:59:42 AM

I support your action 

C.D.Wheeler 
From: Steven Perry

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:55:41 AM

There is obvious manipulation in the energy market that must be dealt with using 

limits on how many contracts a single entity can hold, long or short.

That obvious manipulation is very much more seen in silver and gold contracts 

where one or two bullion banks hold the vast majority of the short positions and 

use the size of their positions to drop the prices illegally and certainly unfairly. 

They pull their bids and cause huge market drops that can clearly be seen. They 

could not do this as dramatically if the number of contracts they can hold was 

minimized. As it is they have shorted more than 75% of a year’s entire production 

in these precious metals. No single entity should be allowed that clout and control.

Their ability to control and retard the market should be terminated immediately.

The Hunt brothers were stopped when they appeared to be doing the same thing. 

Therefore why is J.P. Morgan allowed to do this?

I want these deceptive and manipulative practices stopped.

In addition to asking you the CFTC to intervene and cease this illegal activity, I will 

be contacting my elected representatives and donating money to groups also 

fighting to end these practices.

Thank you for your consideration.

Respectfully;

Steven W. Perry
From: rand

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:52:42 AM

I appreciate the efforts the committee is making in the area of energy 

futures.

Please take time to consider the silver market that is presently 

dominated (manipulated) by a handful of bullion banks on the short side.
From: Johan Goffin

To: energyhearingcomments; 

Subject: position limits

Date: Wednesday, August 12, 2009 10:52:02 AM

Dear CFTC Commissioners,

In regards to position limits in the commodity futures markets, I urge you to heed 

the comments made by Mr. Adrian Douglas here:

http://news.silverseek.com/SilverSeek/1250049681.php

Thanks for your consideration,

Johan Goffin

----- Original Message ----- 

From: Johan Goffin

To: energyhearingcomments@cftc.gov

Sent: Wednesday, August 12, 2009 4:19 PM

Subject: position limits

Dear CFTC Commissioners,

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration,

Johan Goffin
From: Brannan Rowe

To: energyhearingcomments; 

Subject: Short-side Position limits

Date: Wednesday, August 12, 2009 10:49:36 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Brannan Rowe
From: Kevin Merry

To: energyhearingcomments; 

Subject: Kevin Merry

Date: Wednesday, August 12, 2009 10:49:15 AM

Hi

With just a few banks holding all the shorts in the silver market and 1500 contract 

limits for buyers, without a doubt this market is rigged. Just how many buyers are 

there for 1500 contracts anyway? This gives the shorts insider info in what they 

have to short in order to stay the buying. Sweet.

Even still it is a losing battle and when delivery is demanded on their gross short 

position and defaults occur, heads will roll and it will be the regulators I want on a 

stick unless they were pro-active to end this travesty. 

Good guys or bad guys, it’s your choice.

Yours truly,

Kevin Merry
From: Off World Theatre

To: energyhearingcomments; 

Subject: gold market manipulation to support the dollar

Date: Wednesday, August 12, 2009 10:45:32 AM

I agree with Adrian Douglas' Comments as posted on the GATA Website, 

in particular, this paragraph:

"Any limits you put on trading must be applied equally to short 

sellers. But the CFTC's investigation needs to dig into how 

markets are being manipulated at the behest the U.S. 

government to maintain dollar hegemony so that imports can be 

purchased for free and so the United States doesn't have to 

compete in the global marketplace to manufacture anything 

anymore except a torrent of greenbacks." Adrain Douglas

Let's have Government for the people by the people again, not 

government by the Fed and for the Fed and Goldman Sachs.

Let the markets work. And let the people know the truth about 

the real condition of our country, our economy, our markets, our 

resources, 

and our currency.

Sincerely,

Elyse Knight
From: Kevin Helrich

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:42:13 AM

To all concerned,

I agree totally with Ted Butler and Adrian Douglas regarding position 

limits in the futures markets with special attention to the egregious 

goings on in the silver futures market.

Thank you,

Kevin Helrich

 Sai Baba
From: Ralph Benincasa

To: energyhearingcomments; 

Subject: Position Limits Hearing

Date: Wednesday, August 12, 2009 10:40:52 AM

Dear Chairman Gensler, 

 The reform of commodity position limits is one of the most important tasks in 

the world right now. This issue is paramount. Scrutinizing long side manipulation 

completely misses the target, but that is the point of your hearings I suppose. 

Any limits put on trading must be applied equally to short sellers. For instance in 

COMEX silver; as of August 4, 2009 two large U.S. banks represent 76.3% of all 

commercial net short positions. Just two “bona fide hedgers” literally dominate 

the short side of the COMEX silver market. But the CFTC's investigation needs to 

dig into how markets are being manipulated at the behest of the U.S. 

government. Our monetary system is debt based. Manipulation of commodity 

futures occurs to keep prices for real things especially commodity money capped 

so the issuance of new debt money can continue unabated. New debt money 

can be created by the stroke of a keyboard at the FED. New Oil, Gold, Silver, 

Copper, Wheat, etc. 

 cannot be created out of thin air. That is our problem. Finite things and infinite 

debt money a.k.a. Federal Reserve Notes. Short side manipulation as well as 

long side manipulation must be addressed in order to "balance the scales". 

Please do the right thing. Investigate both sides of the market, otherwise the 

integrity of Americas commodity trading system will be exposed as fraudulent. 

 Regards, 

 Ralph Benincasa 

 
From: Ray Hrynyk

To: energyhearingcomments; 

Subject: Enforce position limits

Date: Wednesday, August 12, 2009 10:37:18 AM

Dear Person:

In the interest of keeping America the shining light in the world of finance, 

please enforce position limits in the futures markets. Such action on your 

part will ensure a truly free market.

Ray Hrynyk
From: Carol Rawle

To: energyhearingcomments; 

Subject: Butler and Douglas

Date: Wednesday, August 12, 2009 10:35:50 AM

Please consider seriously the information submitted by these GATA 

representatives regarding silver shorts manipulating and suppressing 

the silver price. It hurts us small silver investors. I've personally 

lost money due to this unfair practice. 

Carol Rawle 
From: Brent Anderson

To: energyhearingcomments; 

Subject: Stop the manipulation of the commodities market!

Date: Wednesday, August 12, 2009 10:35:06 AM

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581

Dear Chairman Gensler:

I respectfully urge you to heed the findings of Ted Butler and and Adrian Douglas 

with regard to limiting excessive speculation on both the short and long sides of the 

commodities market. 

 As Ted says “I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive speculation 

on the long side, commodity law requires you to guard against excessive 

speculation or manipulation on the short side as well. No other market comes as 

close to fitting the profile of a manipulated market than does COMEX silver on the 

short side. Once again, I urge you change that profile by establishing a speculative 

position limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal.”

As Adrian says “Any limits you put on trading must be applied equally to short 

sellers. But the CFTC's investigation needs to dig into how markets are being 

manipulated at the behest the U.S. government to maintain dollar hegemony so that 

imports can be purchased for free and so the United States doesn't have to 

compete in the global marketplace to manufacture anything anymore except a 

torrent of greenbacks.”

Links to the full text of their comments follow

http://www.gata.org/node/7683

http://news.silverseek.com/TedButler/1250014324.php

Respectfully submitted

Brent Anderson
From: Mike Jones

To: energyhearingcomments; 

Subject: Energy price cap

Date: Wednesday, August 12, 2009 10:34:27 AM

Don't you Fools get it, if you control the price of something people will just 

turn to another median to trade it. This will only backfire. Weren't most of 

you clowns around during the Nixon price controls? The only thing you will 

ensure is that Americans will be last in line to get oil.

 

Sincerely,

 a 

American
From: Mark Bronson

To: energyhearingcomments; 

Subject: short side position limits!

Date: Wednesday, August 12, 2009 10:32:05 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Mark Bronson, 
From: Harvey Lewis

To: energyhearingcomments; 

Subject: Silver shorts

Date: Wednesday, August 12, 2009 10:31:17 AM

The SEC refused to see the Madoff problem no matter how many times it was 

pointed out to them. Is the CFTC going to refuse to see the problem of a 

few big banks manipulating the silver commodity market with infinite shorts ? 

Harvey 
From: HMonkowsk

To: energyhearingcomments; 

Subject: Shorting the Silver Market

Date: Wednesday, August 12, 2009 10:29:25 AM

Dear Chairman Gensler, For many years I have invested in the silver market 

because I felt that there was some potential for me to gain some funds for my 

retirement years. This has not come to past.

What I find very disappointing is that some special interests who have access to 

short the market do it in excess and make significant profits while hurting the 

small investor; and this is acceptable by the authorities and has been for many 

years.

If we are to have a free market, and shorting is part of that process, no one, or 

any institution who enters that market should have an unfair advantage to profit. 

To allow 3-4 large institutions to short the market to the extent that has been their 

practice for their gain; an ability that the small investor does not have, I find 

unethical. Although not illegal, the authorities should not have allowed this 

condition to exist. I find it very discouraging that nothing is being done to level 

the playing field.

I urge that you change this situation by reducing the speculative position limit in 

the number of contracts in COMEX silver and limit any exemption to only actual 

producers and consumers of the metal.

Sincerely, H. Monkowski, 
From: William Safley

To: energyhearingcomments; 

Subject: Position limits in futures

Date: Wednesday, August 12, 2009 10:29:24 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

William L. Safley 

 
From: William Safley

To: energyhearingcomments; 

Subject: GATA position

Date: Wednesday, August 12, 2009 10:29:24 AM

Dear sirs, please strongly consider the evidence provided by GATA 

regarding excessive speculative positions taken in the gold and silver 

market. I ask you to implement their recommendations. Thank you. 
From: BFOShea

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 10:28:53 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler 

here: 

http://news.silverseek.com/TedButler/1250014324.php 

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683 

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Brian F. O'Shea
From: Karl Golovin

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:25:00 AM

Energy Hearing Comments:

Chairman Gensler,

As a retired U.S. Customs criminal investigator ("internal affairs" the last 

six years of my federal career), also privileged to have been security 

director of the 2008 Ron Paul Presidential Campaign, I am astonished by 

the extent of evidence tending to prove manipulation of the gold and silver 

futures markets in the absence of position limit enforcement by the CFTC. 

I strongly endorse the recommendations of Ted Butler and Adrian Douglas 

regarding position limits in the futures markets, as may be found at these 

links: 

http://news.silverseek.com/TedButler/1250014324.php

http://www.gata.org/node/7683

Regards,

Karl N. Golovin
From: PardnerInCrime

To: energyhearingcomments; 

Subject: Fwd: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:22:35 AM

From: Pardner In Crime 

To: energyhearingcomments@cftc.gov 

BCC: 

Sent: 8/11/09 11:25:54 P.M. Eastern Daylight Time 

Subj: Fwd: Energy Hearing Comments 

I wanted to give you my full name, address, phone number so that you 

now i am a bona fide, voting, American.

Donna Lemig-Badach

From: Pardner In Crime 

To: energyhearingcomments@cftc.gov 

BCC: 

Sent: 8/11/09 11:21:25 P.M. Eastern Daylight Time 

Subj: Energy Hearing Comments 

August 10, 2009

Chairman Gensler,

I can only parrot EXACTLY what Mr. Ted Butler asks of you 

and by quoting him below, i DO ask the same as what he had 

written:

"Thank you for the opportunity to comment on the issue of 

position limits in energy and other physical commodities of 
finite supply. The hearings you conducted were of great public 

service. I will confine my comments to one market – the 

COMEX silver futures market.

I have excerpted the following passages from your opening 

statement of August 5th. You said:

“I believe that position limits should be consistently applied 

across markets for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is 

ensuring markets do not become too concentrated.”

“The very important question becomes: how much 

concentration is too much? At what point of market 

concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls 

half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by 

promoting more market participants rather than having one 

party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of 

Traders and Bank Participation Reports, both for positions held 

as of August 4, the level of concentration on the short side of 

COMEX silver futures would appear to meet or exceed the 

level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads 

are removed, the net short position of one or two US banks 

exceeds 40% of the total net futures open interest. That same 

calculation indicates the net short position of the four largest 

traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in 

any other market for physical commodities.

The only effective means of ensuring market integrity and 

enhancing liquidity is for the Commission to impose legitimate 

speculative position limits. This will increase the number of 

traders on the short side of COMEX silver, as you stated. The 

level of the current accountability limit of COMEX silver futures 

(6,000 contracts), on an all months combined basis, is way out 
of line with any other commodity. Any reasonable method of 

applying position limits consistently across all commodities of 

finite supply, whether in relation to actual production or as a 

percent of total open interest, would dictate that the 

Commission impose a speculative position limit of no more 

than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that 

speculative position limit to the bona fide producers or 

consumers of the actual commodity, and not to those engaged 

in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the 

hearings involved the enforcement of position limits to guard 

against excessive speculation on the long side, commodity law 

requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes 

as close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you 

change that profile by establishing a speculative position limit 

of no more than 1500 contracts in COMEX silver and by 

restricting any exemption to that limit to the actual producers 

and consumers of the metal."

I concur with exactly what Mr. Butler has submitted, and i too 

submit the same ideology to the Commission as he does. I 

respectfully request that you all consider this request with 

fresh, open, and honest eyes. The RIGHT thing must be done 

to correct the inequities at hand in this matter. In the 

meantime, and as always, May God continue to bless you all 

as you endeavor to do the right thing regarding these matters.

Respectfully submitted,

Donna Badach
From: PardnerInCrime

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:22:22 AM

Dear Commissioners and Chairman Gensler,

In addition to the other two comments i sent you all wherein i concurred with both 

Ted Butler's and Adrian Douglas' ideology, comments, solutions, suggestions 

and answers to your problems regarding the inequities in the commodities 

markets (especially the silver and gold precious metals), i submit Gene 

Arensberg's letter to you as quoted below, and concur with him as well and ask 

that you please consider and reconsider each and every comment made to you 

by all. Here is Mr. Arensberg's letter:

" 

Office of the Secretariat 

Commodity Futures Trading Commission

1155 21st St., NW

Washington, DC 20581

Re: Energy Hearing Comments 

Dear Chairman Gensler and Commissioners,

My name is Gene Arensberg. I am a private investor and editor of Got 

Gold Report. 

Setting arbitrarily low position limits and removing exemptions on 

aggregators of common-minded investors, i.e., index funds or exchange 

traded funds, is a short-sighted fool’s errand. All it will do is force such 

funds to break up into sub-funds across multiple entities which will end 

up raising the cost for individuals and investors to hedge their exposure 

to commodity and energy prices.

Focus and position limits should be on individual actors, not 

aggregators. 

Numerous times in the three days of hearings we heard the phrase 

“excessive speculation.” As if excessive speculation is to blame for high 

energy prices in 2008, which of course it was not, as shown repeatedly 

in testimony by John Hyland of USCF, Dr. Jarecki of Gresham Investment 

Management and others. 

Not once during the hearings did we ever hear the words “excessive 
hedging,” or “excessive short selling.” As if excess or abuse in the 

futures markets is only possible from the long side. It certainly is 

‘possible’ from either side of the contracts, both in theory and in 

historical practice. 

We did, however, hear repeated references to preserving bona fide 

hedger’s exemptions from position limits. As if traders the CFTC classes 

as hedgers are now and always will be above or beyond abusive trading. 

 As if the motives, means and methods of “hedgers” such as Goldman 

Sachs, UBS, HSBC or J P Morgan Chase, et al, are now and always will 

be inviolate. Are they? Will they be? 

Commissioner Chilton said that the Commission has the responsibility 

not only to protect against actual manipulation, but also potential 

manipulation. With regard to that idea, consider the following facts 

about the very small silver futures market (small by comparison to the 

oil market). 

Silver is also a commodity of finite supply and thus within the scope of 

the hearings. Both Commissioner Chilton and Chairman Gensler 

mentioned the metals complex as markets which the Commission 

intends to intervene. 

Each month the CFTC publishes its Bank Participation in the Futures 

and Options Markets Report which shows the positioning of reporting 

banks in the U.S. futures markets for commodities including gold and 

silver. 

As of August 4, 2009, exactly two U.S. banks reported holding 15 

contracts long silver and 29,813 contracts short silver for a total net 

short position of 29,798 COMEX 5,000-ounce contracts -- with the total 

open interest of 99,477 contracts open and silver closing on the cash 

market at $14.62. See the graph below.

According to the CFTC Commitments of Traders Report, all commercial 

traders as a group, ALL OF THEM, held a net short silver futures position 

of 39,041 contracts as of the same day, so the U.S. banks’ percentage 

of the total commercial net short positioning stood at 76.3% as shown 

in the graph below. 
Thus, two large U.S. banks represented 76.3% of all commercial net 

short positions. Just two “bona fide hedgers” literally dominate the 

short side of the COMEX silver market. 

What is very apparent from the above data is that if, repeat IF, the two 

U.S. banks wanted to, they certainly could manipulate and/or abuse the 

very small silver market with the weight of their own trading. By merely 

continuing to absorb additional buying pressure by means of taking ever 

larger net short positioning, the market ‘could’ be manipulated and price 

discovery thwarted. 

This is not to allege that the banks are manipulating the markets, but as 

Commissioner Chilton observed, the Commission bears a responsibility 

not only to prevent actual manipulation, but also ‘possible 

manipulation.’ Since the two banks are apparently able to put on any 

size position as hedgers, why should we not believe that they have the 

potential for abusive trading or excessive short selling? 

In summary, a focus purely on one side, the long side, of the market in 

regard to position limits is anti-competitive, unfair and smacks of 

attempted price control. Some of us view it as the first step toward the 

government being able to determine who may participate in the “free”

markets. Such a leap of government control is unacceptable. 

If the Commission is bound and determined to take over the role of 

setting position limits and even accountability limits in the energy 

markets (and other markets of finite supply), and if the Commission 

intends to set rigid position limits for all traders on the speculative or 

long side, then those very same position limits should also apply equally, 

fairly, without exception or exemption, to the actors on the hedging or 

short side. Sine qua non. “Without which, not.” 

The Commission should not, repeat not, remove the exemptions from 

position limits for qualified funds already granted, such as the funds 

managed by USCF, which pool thousands of like-minded individual 

investors wishing to protect themselves from the horrible destruction in 

the value and purchasing power of the U.S. dollar. The dollar damage 

caused by decades of fiscal mismanagement by the United States 

Congress and easy money policies of the U.S. Federal Reserve. 

If the CFTC actually does want to insure fair and free markets, then it 

will not install unreasonably small limits on one side of the market and 

not the other. We expect that if the Commission does set limits which 

unduly restrict liquidity, it will result in market flight to less regulated, 

more opaque markets and considerably less transparency, permanently.
Respectfully,

Gene Arensberg 

Got Gold Report "

Mr. Arensberg has articulately and graphically outlined the case for 

consideration to the CFTC. It would be prudent, wise and RIGHT to 

consider his comments, along with Mr. Butler's and Mr. Douglas', when 

coming to the RIGHT CONCLUSION on to how to handle these problems 

in the commodities (especially silver and gold precious metal markets) 

markets, and stop the obvious and damaging manipulation that has 

made our markets a lie. I say this in all fervency and trust to you, and 

believe in my heart of hearts that you WILL do the right thing. Mr. 

Butler has all the trust in the world in Mr. Gensler to follow through 

PROPERLY and RIGHTEOUSLY in these matters as Mr. Gensler has 

indicated in the recent past. I, too, have the same trust and faith in Mr. 

Gensler and the Commission to follow through RIGHTEOUSLY and 

PROPERLY so as to stop all the manipulations in commodities, especially 

the silver and gold precious metals. I pray, wholeheartedly, that Mr. 

Butler IS right. 

As always, may God continue to bless you all to be inspired to do the 

RIGHT THING.

Respectfully submitted,

Donna Badach
From: Phillip Colson

To: energyhearingcomments; 

Subject: Position limits

Date: Wednesday, August 12, 2009 10:21:18 AM

I urge you to look into what Ted Butler and Adrian Douglas have 

to say about the positions some of these banks are taking in 

gold and silver and how they are suppressing these markets. 

Please look at and do something about this. Markets work best 

with a high degree of integrity. Thank you.

Phil Colson

 
From: PaBillyBee

To: energyhearingcomments; 

Subject: Positionn limits

Date: Wednesday, August 12, 2009 10:19:49 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I 

urge you to heed the comments made by silver market analyst 

Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

William R. Halligan
From: Johan Goffin

To: energyhearingcomments; 

Subject: position limits

Date: Wednesday, August 12, 2009 10:19:17 AM

Dear CFTC Commissioners,

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration,

Johan Goffin
From: Reile, Chris

To: energyhearingcomments; 

cc:

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:19:16 AM

Chairman Gensler,

Thank you for the opportunity to comment on position limits.

No other market comes as close to fitting the profile of a manipulated 

market than does COMEX silver on the short side.

I have been following the silver COMEX for over ten years now.

For the sake of brevity, I will not include any facts to back up the next 

statement because I am pretty sure you are aware of them already 

from experts such as Ted Butler and Adrian Douglas.

The silver market defies the law of supply and demand, indicating it is 

being artificially manipulated. This is so painfully obvious it hurts. 

I have included links to statements by these gentlemen for your 

convenience. I wholeheartedly urge you to read what these experts 

have to say.

http://news.silverseek.com/TedButler/1250014324.php

http://www.gata.org/node/7683

Sincerely,

 Chris Reile
From: ronald serraglio

To: energyhearingcomments; 

Subject: position limits hearings

Date: Wednesday, August 12, 2009 10:18:30 AM

Ted Butler: http://news.silverseek.com/TedButler/1250014324.php

Adian Douglas: http://www.gata.org/node/7683

Please read the above comments if you have not already. I agree with the positions that both of these 

gentlement take on position limts / accountability limits. 

Please put a stop to the nonsense of the rampant price manipulations performed by a few gigantic speculators 

of the short side (who get away with this manipulation under the guise of legitimate hedging). The hedging 

these banks (JPM and HSBC) are doing is ANYTHING but legitimate. They hold a monopoly on gold and silver 

prices. They are destroying the underpinning of our successfully capatilistic society, at the expense of all the 

little guys out here who are just trying to make an HONEST living. 

Stop the madness!!! 

Thanks, 

Ron Serraglio 

 

If you prefer not to receive future e-mail offers for products or services from 

Key 
From: James Wetmore

To: energyhearingcomments; 

cc: James Wetmore; 

Subject: short side position limits

Date: Wednesday, August 12, 2009 10:15:04 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

James Wetmore 
From: mel hase

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 10:13:25 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler 

here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Mel Hase
From: Bill Bertolino

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:11:38 AM

Hello - this e-mail is about regulating the commodities market to eliminate 

unnatural price swings in commodities by speculators who have no material 

interest in the commodities that they trade.

As an individual investor for many years, I've observed market forces at work, 

and up until the last ten or so years, things seemed to have worked pretty well.

I fully understand commodity producers and suppliers needs to be able to 

"control" or at least "lock in" a given price to be able to allocate investment 

resources (human and otherwise) for the coming year/years.

What I don't understand is the ability of hedge funds or other monied interests to 

participate in commodities exchanges like a gambling casino, where those with 

enough money can buy or sell enough of a given commodity to significantly 

affect the price of a given commodity.

It is also apparent that the majority of futures contracts never get delivered, 

which is troublesome to me, and indicates that perhaps MOST of the futures 

being traded are not being traded by firms that are even involved in that market.

This is a VERY simplistic thought, but please consider it: Imposing a penalty for 

NOT delivering or taking delivery of a given futures contract upon the settle date. 

Let's say my business is going great and I need to lock in the price of Silver or 

Gold to know my manufacturing costs. Let's also say, I miscalculate my needs 

for some reason, and do not need all the Gold or Silver I contracted to buy at the 

time of settlement.

This is MY mistake, and I would suggest that if I refuse delivery, I should pay a 

penalty of say, 2%, to NOT take delivery of the commodity. This would put the 

burden on those who miscalculate their actual needs. I would go one step 

further and impose this penaly every month for open long/short positions that are 

simply "rolled" over each month.

I must also mention I'm severely concerned about the concentration of Short 

Gold and Silver positions by US banks, that I follow by watching the COT 

monthly bank participation reports. What was especially disturbing was that 

these positions were open during a large portion of the last 12 months when 

these same banks were in deep trouble, and I expect might still be.
What banks are doing holding such massive short positions in Gold and Silver, is 

beyond unusual, out of the scope of their core business as banks, and I seriously 

doubt they could begin to deliver anything near the quantity of metal they have 

short if those positions needed to be liquidated.

I like what I'm hearing from your office about ridding the commodities exchanges 

of speculators, and look forward to the day when the commodity markets are 

once again priced by genuine supply and demand.

Thanks for your attention.

Bill Bertolino
From: Anthony Wilcox

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 10:07:27 AM

Chairman Gensler,

I am a private individual who invests in common stocks, bonds and 

commodities. I am concerned by recent volatility in all these markets. Like 

many others I have incurred losses. 

I believe the root cause of this volatility is excess leveraging – i.e., the 

excessive use of other peoples’ money. 

I agree with your comments that markets do not become too concentrated. 

Excessive leveraging enables concentration of control and concentration of 

ownership. 

I would encourage you to set reasonable limits on leveraging in all 

commodities exchanges. One-to-one leveraging has worked well for the 

NYSE. Why not apply same limits to COMEX and other exchanges? For 

foreign exchanges why not use our diplomatic relations to encourage 

foreign governments to do the same? Let us close the loopholes.

Thank you for considering my opinions.

Regards,

Anthony Wilcox
From: Larry Galearis

To: energyhearingcomments; 

Subject: Ignoring the short side

Date: Wednesday, August 12, 2009 10:02:23 AM

Dear sir,

I am a Canadian and you would think that, at first thought you would 

therefore not have to consider this email at all...But know that when your 

president Reagan called the Soviet Union the "Evil Empire" he did so in 

error...Your manipulation blindness for futures trades at the COMEX in the 

overwhelming short position in gold and silver is just as evil if not more so 

than what the old Soviet Empire accomplished...And it is ironic that the 

present Russian government is the better champion of free markets than 

what has evolved in the U.S. From a Canadian's perspective I see the U.S. 

as a champion for corrupt markets to the extent that there are no free 

markets functioning in your previously admirable country.

Regards,

Larry Galearis
From: Mike OConnor

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 9:58:26 AM

Dear Chairman Gensler,

As a private investor in commodities, I am pleased to see you addressing the 

excessive manipulation problem in various commodities. As an investor in 

the silver market, I have absorbed losses many times as a result of the 

manipulative actions of a few banks going excessively short driving the 

silver price down. I have written many letters to no avail - perhaps you will 

make a difference.

If you act to reduce the potential to manipulate commodity markets on the 

long side, please do so on the short side as well. I also urge you to take such 

action with an eye towards preventing the egregious abusers from doing any 

type of end run around the new restrictions - put teeth in the penalties for 

such conduct. 

Sincerely,

Michael O'Connor
From: michael payne

To: energyhearingcomments; 

Subject: Unregulated short positions

Date: Wednesday, August 12, 2009 9:58:00 AM

 

I would like to add my concern to that expressed by Mr. Ted Butler & Mr. 

Adrian Douglas and others in regards to the unregulated manipulation of 

the futures prices of gold and silver. I feel the CFTC has dragged it's feet 

long enough in it's failure to take appropriate action to stop said 

manipulation. To protect the interests of the few at the expense of the 

many is directly opposed to the principals and guidelines which the CFTC 

is established to protect. 

 

Sincerely, 

 

Michael E. Payne 

 
From: Preston Fischer

To: energyhearingcomments; 

Subject: Short Side Position Limits

Date: Wednesday, August 12, 2009 9:55:24 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to 

heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Preston R. Fischer
From: w

To: energyhearingcomments; 

Subject: CFTC hearings

Date: Wednesday, August 12, 2009 9:55:04 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to study 

and take into consideration the comments about position limits made by silver 

market analyst Ted Butler as shown below and linked here: 

http://news.silverseek.com/TedButler/1250014324.php

In addition please read and take in to consideration the comments calling 

for equal treatment of position limits for longs AND shorts by commodity market 

analyst Adrian Douglas also shown below and linked here: 

http://www.gata.org/node/7683

It is clear that short-side position limits are as necessary as long-side limits and 

we urge you to finally bring transparency and market integrity to these markets. 

Sincerely

William Robinson

 

 August 11, 2009

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 
Washington, D.C. 20581

Dear Chairman Gensler:

Your hearings on position limits in the commodity futures markets have 

presupposed that the issue is speculation on the long side. You will not correctly 

regulate markets if your inquiries and hearings are being conducted from the 

conclusion you want to make and then work backwards.

The fundamental problem is not with finite resources but with infinite production 

of dollars. You are turning a blind eye to the manipulation of markets on the short 

side (and the massive OTC derivatives markets) that is undertaken to mask the 

uncontrolled creation of fiat dollars backed by nothing. 

The price suppression is rampant and is making finite commodities even more 

finite as it becomes uneconomic to produce them. The paper promises to supply 

commodities from stocks that do not exist suppresses prices. 

The CFTC has been investigating price manipulation in silver and gold for almost 

a year. The manipulators here will be drawing a pension before you recognize 

manipulation. Meanwhile the U.S. Senate can apparently recognize long-side 

manipulation of wheat and even crude oil in a flash. 

Why have your hearings focused on how oil rose to $147 per barrel and not 

equally how it fell to $35 per barrel and how the dollar made a magnificent rise in 

the middle of a credit crisis, a feat never before achieved?

Federal Reserve Chairman Ben Bernanke testified in response to U.S. Rep. Alan 

Grayson that the rise in the dollar was a total coincidence even though it 

occurred even as half a trillion dollars of currency swaps were executed with 

foreign central banks. Really? And was it an equal coincidence that as a result of 

the dollar's rising from the dead the entire commodity complex cratered, including 

the most time-honored safe-haven asset, gold? 

Any limits you put on trading must be applied equally to short sellers. But the 

CFTC's investigation needs to dig into how markets are being manipulated at the 

behest the U.S. government to maintain dollar hegemony so that imports can be 

purchased for free and so the United States doesn't have to compete in the 

global marketplace to manufacture anything anymore except a torrent of 

greenbacks.

My guess is that you will aid and abet the continuation of this Ponzi scheme 
because that is so much easier than doing what is right and what you are paid to 

do as a servant of the American people.

Regards,

Adrian Douglas

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 

5th. You said:

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do 

not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls half the market, 

that party is more likely to lessen liquidity than enhance it. Position limits should 

enhance liquidity by promoting more market participants rather than having one 

party that has so much concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 
exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities.

The only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will 

increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 

across all commodities of finite supply, whether in relation to actual production or 

as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not to 

those engaged in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal. 

Theodore Butler

Butler Research LLC
From: chuck newsom

To: energyhearingcomments; 

Subject: Short side limits

Date: Wednesday, August 12, 2009 9:53:24 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to 

heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Charles L. Newsom 

* * * 
From: Remus, Peter

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 9:52:34 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Peter Remus 
From: Jeff Tryka

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 9:48:52 AM

To the Members of the Commodity Futures Trading Commission:

To start, I would like to thank you for your efforts on behalf of commodity 

investors, large and small. After reading some of the recent articles and 

comments made by Chairman Gensler, I am very encouraged that we are 

heading in the right direction to restore fairness and public confidence in 

the financial markets, and especially the commodities markets.

No doubt, you have probably already heard from many fellow investors, 

but I would like to share two points that I believe are critical to the reform 

process. The first relates to position limits. As I understand the law, the 

CFTC has the authority to set position limits, but over the course of time 

and a trend towards deregulation, that authority was transferred to the 

exchanges. While I am sure this seemed like a good idea at the time, it 

strikes me as a serious conflict of interest to allow exchanges, who derive 

profits from trading, to set the limits for positions (e.g. how much 

trading may be done). This seems much more appropriate a role for the 

regulator of the industry, that is the CFTC. After all, the NYSE doesn't set 

margin requirements, the Federal Reserve does, and they don't set limits 

on stock positions, those are goverened by the SEC. I have no doubt you 

will face some pretty stiff opposition from the exchanges in taking back 

the authority you have over position limits, but I encourage you to stand 

firm, as you are on the right side of this battle.

My second point relates to ensuring that the Commission looks at both 

slides of the position limit issue, the long and short side. While the major 

attention of the public and members of Congress surrounded the huge 

increase in the price of oil to $147, very little is said about the subsequent 

crash to $35. Both of these are important, for consumers, the prospect of 

$4-$5 gasoline has a harmful effect, but similarly to oil producers who 

have seen production costs rise, a sudden drop to a price level that is 

uneconomical for production can be just as devastating. In the same way, 

farmers can be hurt when grain prices are artificialled capped or 

suppressed on the short side, making it unprofitable for them to plant. 

These unofficial price controls have the same impact as government 

imposed price contols, farmers soon plant other crops and we end up with 
a shortage in the market, where no amount of short selling magic will be 

able to deliver grains or other commodities that no longer exist.

My third point relates to the position limits specific to the silver market, 

which strike me as wholly out of line compared with other commodities, 

both as a percentage of annual production as well as a percentage of 

available inventories. I won't bother you with the details, but it seems to 

me that the current limit of 6,000 contracts could be cut by 75% and still 

allow the market to function quite smoothly. Silver miners and consumers 

could still obtain exemptions from these limits as legitimate hedgers, and a 

break-up of the large concentrated short positions might actually 

encourage more commodity investors to begin participating in the market, 

thus improving overall liquidity. 

Finally, in reviewing potential exemptions to position limits, I would urge 

care and due consideration, as any clear thinking individual would 

question why a bank or other financial firm, which neither produces nor 

consumes a commodity, would be considered a legitimate hedger, and be 

allowed to hold a position equal to a quarter of annual global production 

of said commodity, as in silver. If the bank is merely hedging for a 

customer, then let the customer apply for the exemption and let the bank 

act as an intermediary. The customer need not be publicly identified, but 

merely disclosed to the CFTC so that customer's positions can be 

adequately monitored to ensure compliance.

Thank you for your time and willingness to consider investor comments in 

this important issue. I wish you the best in your efforts, and hope that 

any actions you take would reach toward a goal of increasing transparency 

and fairness in our markets.

Sincerely, 

Jeff Tryka, CFA
From: Michael Williams

To: energyhearingcomments; 

Subject: long and short limits

Date: Wednesday, August 12, 2009 9:48:42 AM

Sir. It seems to me that limits should be placed on the short side as well as the 

long.

Manipulation and excessive speculation cannot be tolerated if we are to have 

order.

Commodities will then become more stable in price and this will be good for 

business

planning. The precious metals and oil are the ones to focus on in my humble 

opinion.

Sincerely,

michael williams
From: Rayburn Blair

To: energyhearingcomments; 

cc: Lavik, A. Roy; Chilton, Bart; Jamie Dimon; Dunn, Michael; Gensler, Gary; 

Sommers, Jill; Dean Payton; Obie, Stephen J.; Lukken, Walter; 

Subject: Silver Market Manipulation

Date: Wednesday, August 12, 2009 9:46:07 AM

To The People's CFTC Commissioners, It must surely be true by now that 

most or all of you have become familiar with Ted Butler's thirty year study 

of the silver market. I think it is without question that he is the leading 

expert on that subject. Please read his letter to the commission if you 

read no other. Thousands of silver investors are aware of the problem of 

silver market manipulation by two or three of the largest banks. Almost 

all of the enormous silver shorting is done by these two or three 

 banks. Please cap their ability to control and manipulate this most 

important metal. The longer they are allowed to continue this illegal 

activity the more damage will be done to our economy when it explodes.....

and it will explode....soon ! I think the truth of this matter has become 

obvious to you and I thank you for taking appropriate and immediate 

action to remedy this violation of security law. Rayburn Blair 
From: Jim Dugan

To: energyhearingcomments; 

Subject: Position limits.

Date: Wednesday, August 12, 2009 9:40:31 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

James Dugan 
From: Gumbotz@aol.com

To: energyhearingcomments; 

Subject: Support Ted Butler Position Limits

Date: Wednesday, August 12, 2009 9:39:47 AM

I am a commodity investor. I support Ted Butler and his efforts to regulate CFTC 

position limits.

Thank You

John Henitz - 
From: bedye

To: energyhearingcomments; 

Subject: COMEX Position Limits/Market Concentration

Date: Wednesday, August 12, 2009 9:39:18 AM

Dear Commissioners

As a "main street investor" I am asking that you protect the integrity of 

the COMEX markets by eliminating the obvious and gross concentration 

(short-side) that exists in COMEX Gold and Silver. If I can see it, then it 

must be glaringly obvious to professionals such as yourselves. 

Also, please consider short-side position limits equal to the long-side 

limits. To have otherwise is to meddle in the markets through regulation, 

with un-intended consequences.

Brad Dye
From: Greg

To: energyhearingcomments; 

Subject: Commodity Futures Markets Position Limits 

Date: Wednesday, August 12, 2009 9:37:50 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Gregory Plate
From: Luis M. Cornejo

To: energyhearingcomments; 

Subject: Necessary Short-Side Position Limits 

Date: Wednesday, August 12, 2009 9:37:20 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Luis M. Cornejo 

 
From: Gold Silver Support

To: Chilton, Bart; energyhearingcomments; 

Subject: You all have the opportunity!

Date: Wednesday, August 12, 2009 9:35:41 AM

Hello CFTC, 

Please do what's right and end the manipulations in commodities and 

precious metals trading. Stand up for the American people. 

James Anderson 
From: pw2010

To: energyhearingcomments; 

Subject: support and enforce position limits

Date: Wednesday, August 12, 2009 9:24:00 AM

Dear CFTC:

I write to urge you to heed the comments sent to the commission by silver market 

analyst Ted Butler and GATA board member Adrian Douglas. 

Butler's comments can be found here: 

http://news.silverseek.com/TedButler/1250014324.php

Douglas' comments may be found here: 

http://www.gata.org/node/7683

Best regards,

Phil

-------------------- 

Phil Wolf 
From: George Wright

To: energyhearingcomments; 

Subject: Commodity future markets

Date: Wednesday, August 12, 2009 9:13:11 AM

Dear CFTC Commissioners: 

As a Canadian investor, the apparent manipulation of the commodity 

future markets is on great concern. 

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

George Wright 
From: Stephanie Ellison

To: energyhearingcomments; 

Subject: Position in commodity futures

Date: Wednesday, August 12, 2009 9:09:09 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

- - -

Stephanie Ellison
From: Rick Bechthold

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 9:08:21 AM

Dear Chairman Gensler and members of the CFTC,

Re: Energy Hearing Comments

I urge the CFTC to reduce the position limits in the silver, gold and energy 

markets to prevent market manipulation by large traders.

Similar problems exist in these markets, however the problem is most 

pronounced in the silver market.

I request the CFTC reduce the position limit in the silver market and make the 

position limit for silver to be more in line with the limits on other commodities.

The position limit must apply equally to the long and short side of the market.

The only exception to the limit should apply to bona fide mining companies or 

consumers of the metal, which can provide proof to the CFTC that their silver 

hedging requirements are of 

such a large size that they require a higher position limit.

The position limit for COMEX Silver should be reduced to approximately 1,000 to 

1,500 contracts to be more in line with the limits on other commodities.

The current position limit for silver at 6,000 contracts or 30,000,000 ounces is 

way too high. This amount equates to nearly 5% of the annual world production 

of silver.

This excessively high position limit permits large traders to unfairly influence the 

price of the commodity.

For the same reason, the position limits for gold and the energy markets should 

also be reduced.

Thank you for the attention to this matter.

Sincerely,

Rick Bechthold

 
From: Richard F. Malinski

To: energyhearingcomments; 

Subject: POSITION LIMITS

Date: Wednesday, August 12, 2009 9:07:22 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to 

heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

RICHARD MALINSKI 
From: stanley kon

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 9:05:42 AM

Dear CFTC Commissioners:

How aboout leveling the playing firld for the common investor by seeking to do the 

wishes of those who are knowledgable about precious metals? This has gone on far 

too long and more and more of us out here know it!

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thank you

Stanley Kon
From: Jeff Power

To: energyhearingcomments; 

Subject: This is Important!

Date: Wednesday, August 12, 2009 9:04:19 AM

Dear Fair minded people at the CFTC,

I strongly urge you to heed the comments already sent by Ted 

Butler and GATA board member Adrian Douglas. 

Butler's comments can be found here: 

http://news.silverseek.com/TedButler/1250014324.php

Douglas' comments may be found here:

http://www.gata.org/node/7683

Sincerely,

Jeff Power
From: Glen Pfeiffer

To: energyhearingcomments; 

Subject: Short-side Position Limits

Date: Wednesday, August 12, 2009 9:03:32 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I strongly urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Those inclined to manipulate finite commodity markets will employ the use of 

both long and short positions in efforts to take unfair advantage. Clearly shortside position limits are equally important and as necessary as long-side limits. I 

thank you for your consideration.

Glen Pfeiffer 
From: Kim Cochrane

To: energyhearingcomments; 

Subject: short-side position limits

Date: Wednesday, August 12, 2009 9:02:49 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed the 

comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Kim Cochrane 
From: David Jerome

To: energyhearingcomments; 

Subject: Short-side position limits

Date: Wednesday, August 12, 2009 8:59:54 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

David Jerome 
From: yap1993

To: energyhearingcomments; 

Subject: silver COMEX short positions

Date: Wednesday, August 12, 2009 8:58:12 AM

dear sirs, 

the current short silver position on the COMEX by the 

commericals is, in fact, a crime. 

it is well know this ridiculous 69,000 contract position 

is almost all held by j.p. morgan. 

we need rules and regulations here. to be short 350 

million ounces of silver makes no sense at allexcept to manipulate the price down. 

thank you, 

roger mason 
From: Guildcap

To: energyhearingcomments; 

Subject: In support of Position Limits (both long and short) on precious metals -

Date: Wednesday, August 12, 2009 8:58:08 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

Thank you,

Jeffrey Homburger
From: Paul Ferguson

To: energyhearingcomments; 

Subject: Position limits in the commodity futures markets.

Date: Wednesday, August 12, 2009 8:55:20 AM

Dear CFTC Commissioners: 

I am encouraged that the CFTC is taking action in regard to position limits in the 

commodity futures markets. Towards that end, I urge you to heed the comments 

made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php 

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683 

Short-side position limits are as necessary as long-side limits. 

Many thanks for your consideration. 

Paul Ferguson 
From: araho

To: energyhearingcomments; 

Subject: Short side Position Limits

Date: Wednesday, August 12, 2009 8:49:46 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

NAME: Robert OHara 

 
From: Derick Jones

To: energyhearingcomments; 

Subject: Short-side position limits

Date: Wednesday, August 12, 2009 8:49:01 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Derick Jones
From: richrose10

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 8:47:56 AM

SAMPLE LETTER TO CFTC

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits for individual 

investors as well as institutional, including the large banks .

Thanks for your consideration.

Richard Rose
From: Debra Greene, PhD

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 8:45:55 AM

Dear CFTC Commissioners: 

Please consider short-side position limits with regard to commodity futures 

markets. This is essential to fair trade. It is unconscionable to let the 

current scheme continue. 

Yours Sincerely, 

Debra

__________________________________

Debra Greene, Ph.D.
From: nathan mckinley

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 8:44:53 AM

My Name is Nathan McKinley. I am writing this email to the CFTC, so all of you 

can know that I echo the opinions and teachings of Ted Butler. He has shined a 

light on the manipulation of the commodities market. 

I praise all of you for the work you are doing and the positive strides you are 

making to make our markets fair 

Thank you for your time. 

 August 10, 2009 

Chairman Gensler, 

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market. 

I have excerpted the following passages from your opening statement of August 

5th. You said: 

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets 

do not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead 

of enhance it? I think we would all agree that if one party controls half the 

market, that party is more likely to lessen liquidity than enhance it. Position 

limits should enhance liquidity by promoting more market participants rather 

than having one party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of Traders and 
Bank Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities. 

The only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will 

increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 

across all commodities of finite supply, whether in relation to actual production 

or as a percent of total open interest, would dictate that the Commission impose 

a speculative position limit of no more than 1500 contracts in COMEX silver 

futures. 

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not 

to those engaged in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal. 

Theodore Butler 

Butler Research LLC 

__________________________________________________ 
From: James McShirley

To: energyhearingcomments; 

Subject: Position limits

Date: Wednesday, August 12, 2009 8:44:26 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

James C. McShirley
From: James Hanson

To: energyhearingcomments; 

Subject: Commodity Position Limits

Date: Wednesday, August 12, 2009 8:43:19 AM

 

Dear CFTC Commissioners: 

 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

 

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

 

Short-side position limits are as necessary as long-side limits. 

 

 

Thanks for your consideration. 

James Hanson 

 
From: Cook, T Robert

To: energyhearingcomments; 

Subject: in support of short side position limits

Date: Wednesday, August 12, 2009 8:34:26 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

T. Robert Cook
From: William Cochran

To: energyhearingcomments; 

Subject: Silver Futures Market

Date: Wednesday, August 12, 2009 8:31:19 AM

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments to 

one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of 

August 5th. You said:

“I believe that position limits should be consistently applied across markets 

for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one party 

controls half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by promoting more 

market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, the 

level of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity 

and liquidity. After published non-commercial and imputed commercial 

spreads are removed, the net short position of one or two US banks 

exceeds 40% of the total net futures open interest. That same calculation 

indicates the net short position of the four largest traders exceeds 66% of 
total net open interest. Such levels of concentration do not exist, either on 

the long or short side, in any other market for physical commodities.

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of COMEX 

silver, as you stated. The level of the current accountability limit of COMEX 

silver futures (6,000 contracts), on an all months combined basis, is way 

out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether 

in relation to actual production or as a percent of total open interest, 

would dictate that the Commission impose a speculative position limit of 

no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. No other 

market comes as close to fitting the profile of a manipulated market than 

does COMEX silver on the short side. Once again, I urge you change that 

profile by establishing a speculative position limit of no more than 1500 

contracts in COMEX silver and by restricting any exemption to that limit to 

the actual producers and consumers of the metal. 

Theodore Butler

Butler Research LLC

-- 

Regards, 

Bill Cochran 
From: Tom Egert

To: energyhearingcomments; 

Subject: silver market

Date: Wednesday, August 12, 2009 8:28:41 AM

Chairman Gensler: Please level the field in trading for all commodities. As Mr. 

Butler has written; "According to data contained in the most recent Commitment 

of Traders and Bank Participation Reports, both for positions held as of August 4, 

the level of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity and 

liquidity. After published non-commercial and imputed commercial spreads are 

removed, the net short position of one or two US banks exceeds 40% of the total 

net futures open interest. That same calculation indicates the net short position 

of the four largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other 

market for PHYSICAL COMMIDITIES. I urge the commission to heed the 

comments sent to the commission by Butler and GATA board member Adrian 

Douglas. Thank your for your consideration. Tom Egert
From: MGarippo

To: energyhearingcomments; 

Subject: Position limits in the commodity futures markets

Date: Wednesday, August 12, 2009 8:24:34 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php 

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683 

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Michael Garippo 
From: Adam Frank Szczotka

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 8:20:35 AM

i am not much for writing, but I feel strongly that position limits 

on all

commodities, especially metals, should be impossed.

It is apparent to me that behemots like Goldman Saks can and do

manipulate those markets, while small fry like me have no 

influence at all.

A very good example of this is the silver market during the Hunt 

Brothers

period. If you did not change the contract" settlement rules, they 

would

own the market.

Sincerely,

Adam F. Szczotka.
From: George Spiciarich

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 8:15:54 AM

 

 

 

I totally agree witrh Mr. Butler's conclusions (below) about the 

concentrated speculative short positions in Comex Silver Futures. I 

strongly urge you to implement his recommendations. 

 

Sincerely, 

George N. Spiciarich 

 

 

 

Chairman Gensler, 

 

 

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments 

to one market – the COMEX silver futures market. 

I have excerpted the following passages from your opening statement of 

August 5th. You said: 

“I believe that position limits should be consistently applied across 

markets for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one 

party controls half the market, that party is more likely to lessen liquidity 

than enhance it. Position limits should enhance liquidity by promoting 

more market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, 

the level of concentration on the short side of COMEX silver futures 

would appear to meet or exceed the level you imply threatens market 

integrity and liquidity. After published non-commercial and imputed 

commercial spreads are removed, the net short position of one or two 
US banks exceeds 40% of the total net futures open interest. That same 

calculation indicates the net short position of the four largest traders 

exceeds 66% of total net open interest. Such levels of concentration do 

not exist, either on the long or short side, in any other market for 

physical commodities. 

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of 

COMEX silver, as you stated. The level of the current accountability limit 

of COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable 

method of applying position limits consistently across all commodities of 

finite supply, whether in relation to actual production or as a percent of 

total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver 

futures. 

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard 

against excessive speculation or manipulation on the short side as well. 

No other market comes as close to fitting the profile of a manipulated 

market than does COMEX silver on the short side. Once again, I urge you 

change that profile by establishing a speculative position limit of no more 

than 1500 contracts in COMEX silver and by restricting any exemption to 

that limit to the actual producers and consumers of the metal. 

 
From: StGennaroBVI

To: energyhearingcomments; 

Subject: (no subject)

Date: Wednesday, August 12, 2009 8:06:31 AM

Gentleman, please regard the writings of Butler and 

Douglas, as to the market manipulation of silver, and the 

ongoing manipulation of gold. This is illegal, and has 

been going on for years under your noses! There are more 

futures owned by Goldman Sach in silver than actual 

physical product on the this planet! If you don't bring 

this Scam to light, and take the proper actions, eventually 

it will come back to haunt you! It is your jobs on the line! 

HOW ABOUT EARNING YOUR KEEP? A concerned 

citizen, Paul Shofner, 
From: jay tolbert

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Wednesday, August 12, 2009 8:04:06 AM

short side limints should be applied the same as long side limints jay 

tolbert, 

 
From: dkutscher

To: energyhearingcomments; 

Subject: gold and silver

Date: Wednesday, August 12, 2009 7:57:51 AM

please listen to mr. butler and mr. douglas...............my cftc friends i 

lived in washington d. c. now live in greece.............i have been 

monitoring the GOLD AND SILVER market for the last 8 

YEARS...........3 to 4 HOURS per day..........please dont insult me to 

tell me the gold and silver market is NOT manipulated...........on the 

inside the cftc and COMEX know exactly what is going on.................

 

 
From: Martin Jones

To: energyhearingcomments; 

Subject: Enforce position limits in the gold and silver markets

Date: Wednesday, August 12, 2009 7:56:15 AM

Dear CFTC Commissioners, 

In regards to the position limits in the commodity futures markets, 

Please enforce the position limits in the gold and silver markets. 

If you cannot accomplish your mandate it is important you resign your 

position. You are entrusted with the business of protecting the 

public. Do your job! 

Respectfully, 

Martin M. Jones 

Citizen 
From: Howard Wetsman MD

To: energyhearingcomments; 

Subject: setting position limits

Date: Wednesday, August 12, 2009 7:51:36 AM

Commissioners:

I really have very little interest in the hearings as I’m pretty sure it’s all window 

dressing. For instance, you’ve said that it’s about commodities of finite supply yet 

this email is for “energyhearingcomments,” not 

“finitesupplycommoditycomments.”

In listening to the comments at the hearings, it seems you are really only 

interested in long side manipulation, which gives the appearance of this being a 

politically motivated attempt on the part of the government to appease citizens 

upset at high energy prices. If your hearings are seen as a government attempt to 

control the ability of large traders from “hurting” private citizens with high energy 

prices, perhaps it will quiet protests by those citizens.

Yet I ask myself, even if the high energy prices were due to excessive speculation 

by people with too much money to throw around (rather than by the finite supply 

and increasing demand for oil as it seems to me), then what would be the ultimate 

source of the ability to speculate this way. The answer I have arrived at after years 

of study is that it is the inflationary policy of the Federal Reserve, which itself 

would not have been possible for so long without the short side manipulation of 

the gold and silver market which you have allowed. If you did not allow the 

concentrated unlimited selling of metal that cannot be delivered, the rise in price 

of gold would have checked the inflationary policies long ago and the people who 

are threatening the low price of oil by speculation would have had much less 

ammunition with which to do so.

The idea that a “seller,” who doesn’t have the thing that he can “sell” anyway in 

increasing and unlimited quantities, is not manipulating the market is absurd on its 

face. All I need to manipulate to the long side is the actual money and the will to 

take delivery of more than is available. But if I want to manipulate to the short 

side, I can do so regardless of how much supply there is as long as I can print more 

money and achieve a concentration in the market. Many have already shown you 

how concentrated the short side of the metals markets are. I will not repeat the 

evidence. I don’t have a long standing wish to own these metals; I am not a “gold 

bug;” I only want to be able to invest my retirement savings in things that actually 

trade in a free market so that I can make logical decisions about where to put the 

money. 
I ask that in your deliberations that you remember that you work for the people, 

not the government, of the United States, and that we people are best served by 

money that doesn’t change in its purchasing power. That purchasing power can 

best be maintained in honest markets, which, I must say, doesn’t seem to include 

the metals futures markets under your jurisdiction.

Howard Wetsman MD FASAM
From: Jeff L. Glenn

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 7:44:29 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Jeff Glenn
From: Derek Richardson

To: energyhearingcomments; 

Subject: Excessive Speculation and Manipulation

Date: Wednesday, August 12, 2009 7:27:27 AM

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581 

Dear Chairman Gensler: 

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments to 

one market – the COMEX silver futures market. 

I have excerpted the following passages from your opening statement of 

August 5th. You said: 

“I believe that position limits should be consistently applied across markets 

for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one party 

controls half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by promoting more 

market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, the 

level of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity 

and liquidity. After published non-commercial and imputed commercial 

spreads are removed, the net short position of one or two US banks 

exceeds 40% of the total net futures open interest. That same calculation 
indicates the net short position of the four largest traders exceeds 66% of 

total net open interest. Such levels of concentration do not exist, either on 

the long or short side, in any other market for physical commodities. 

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of COMEX 

silver, as you stated. The level of the current accountability limit of COMEX 

silver futures (6,000 contracts), on an all months combined basis, is way 

out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether 

in relation to actual production or as a percent of total open interest, 

would dictate that the Commission impose a speculative position limit of 

no more than 1500 contracts in COMEX silver futures. 

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. No other 

market comes as close to fitting the profile of a manipulated market than 

does COMEX silver on the short side. Once again, I urge you change that 

profile by establishing a speculative position limit of no more than 1500 

contracts in COMEX silver and by restricting any exemption to that limit to 

the actual producers and consumers of the metal. 

Regards, 

Derek Richardson 
From: JHbonz

To: energyhearingcomments; 

Subject: Gold and Silver

Date: Wednesday, August 12, 2009 7:25:18 AM

Dear Commissioners-

 I urge you to heed the words of Ted Butler on the issue of 

short limitations shown here-http://news.silverseek.com/

TedButler/1250014324.php

 Thank you

 Joe Harrison
From: Ed Woods

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 7:24:21 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

 

Ed Woods 

 
From: Pat Sayeau

To: energyhearingcomments; 

Subject: SHORT SIDE SPECULATION LIMITS

Date: Wednesday, August 12, 2009 6:58:49 AM

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581

Dear Chairman Gensler:

Although I am not an American Citizen I do trade actively in both the GOLD and 

SILVER markets , both bullion and commodity producer shares.

As such I am heavily impacted by the price of these commodities as presently 

manipulated by short side contracts traded on the COMEX EXCHANGE which 

is supposed to be regulated and controlled by the CFTC, although regulatory 

enforcement appears sadly lacking.

 Traders world wide are affected by the pricing on this exchange and therefore I 

respectively request that my comments be equally weighted with any other trader 

regardless of citizenship.

Having traded-in and followed these markets closely for the past ten years I 

heartily endorse the position on SHORT SIDE POSITION LIMITS as submitted 

by THEODORE BUTLER and ADRIAN DOUGLAS.

Butler's comments can be found here: 

http://news.silverseek.com/TedButler/1250014324.php

Douglas' comments may be found here: 

http://www.gata.org/node/7683

Most particularly I draw your attention to the following paragraph from TED 

BUTLER'S submission.

"According to data contained in the most recent Commitment of Traders and 
Bank Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities."

In my opinion it is ludicrous to suggest that a net short position of the four largest 

traders which exceeds 66% of the total net open interest does not constitute 

blatant manipulation of the market price....the precise practice which the CFTC 

is empowered to prevent. World -wide traders seek protection from such 

manipulation. 

Patrick Sayeau
From: Safari42S

To: energyhearingcomments; 

Subject: Short-side position limits 

Date: Wednesday, August 12, 2009 6:54:03 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Michael E. Stewart
From: Daniel Stafford

To: energyhearingcomments; 

Subject: short side position limits

Date: Wednesday, August 12, 2009 6:42:47 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Daniel Stafford 
From: JAMES DAVENPORT

To: energyhearingcomments; 

Subject: Position limits

Date: Wednesday, August 12, 2009 6:41:43 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, 

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

James R. Davenport 
From: Dean Leith

To: energyhearingcomments; 

Subject: In support of short-side position limits

Date: Wednesday, August 12, 2009 6:36:19 AM

Dear CFTC Commissioners: 

In regard to short-side position limits in the commodity futures 

markets,I urge you to heed the comments made by silver market analyst 

Ted Butler here: 

 August 10, 2009 

Chairman Gensler, 

Thank you for the opportunity to comment on the issue of position 

limits in energy and other physical commodities of finite supply. The 

hearings you conducted were of great public service. I will confine my 

comments to one market – the COMEX silver futures market. 

I have excerpted the following passages from your opening statement of 

August 5th. You said: 

“I believe that position limits should be consistently applied across 

markets for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is 

ensuring markets do not become too concentrated.”

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if 

one party controls half the market, that party is more likely to 

lessen liquidity than enhance it. Position limits should enhance 

liquidity by promoting more market participants rather than having one 

party that has so much concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 

4, the level of concentration on the short side of COMEX silver 

futures would appear to meet or exceed the level you imply threatens 

market integrity and liquidity. After published non-commercial and 

imputed commercial spreads are removed, the net short position of one 
or two US banks exceeds 40% of the total net futures open interest. 

That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any 

other market for physical commodities. 

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative 

position limits. This will increase the number of traders on the short 

side of COMEX silver, as you stated. The level of the current 

accountability limit of COMEX silver futures (6,000 contracts), on an 

all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits 

consistently across all commodities of finite supply, whether in 

relation to actual production or as a percent of total open interest, 

would dictate that the Commission impose a speculative position limit 

of no more than 1500 contracts in COMEX silver futures. 

I also strongly urge you to restrict any exemption from that 

speculative position limit to the bona fide producers or consumers of 

the actual commodity, and not to those engaged in financial trading 

through aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard 

against excessive speculation or manipulation on the short side as 

well. No other market comes as close to fitting the profile of a 

manipulated market than does COMEX silver on the short side. Once 

again, I urge you change that profile by establishing a speculative 

position limit of no more than 1500 contracts in COMEX silver and by 

restricting any exemption to that limit to the actual producers and 

consumers of the metal. 

Theodore Butler 

Butler Research LLC 

And by commodity market analyst Adrian Douglas here: 

Tuesday, August 11, 2009 
Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581 

Dear Chairman Gensler: 

Your hearings on position limits in the commodity futures markets have 

presupposed that the issue is speculation on the long side. You will 

not correctly regulate markets if your inquiries and hearings are 

being conducted from the conclusion you want to make and then work 

backwards. 

The fundamental problem is not with finite resources but with infinite 

production of dollars. You are turning a blind eye to the manipulation 

of markets on the short side (and the massive OTC derivatives markets) 

that is undertaken to mask the uncontrolled creation of fiat dollars 

backed by nothing. 

The price suppression is rampant and is making finite commodities even 

more finite as it becomes uneconomic to produce them. The paper 

promises to supply commodities from stocks that do not exist 

suppresses prices. 

The CFTC has been investigating price manipulation in silver and gold 

for almost a year. The manipulators here will be drawing a pension 

before you recognize manipulation. Meanwhile the U.S. Senate can 

apparently recognize long-side manipulation of wheat and even crude 

oil in a flash. 

Why have your hearings focused on how oil rose to $147 per barrel and 

not equally how it fell to $35 per barrel and how the dollar made a 

magnificent rise in the middle of a credit crisis, a feat never before 

achieved? 

Federal Reserve Chairman Ben Bernanke testified in response to U.S. 

Rep. Alan Grayson that the rise in the dollar was a total coincidence 

even though it occurred even as half a trillion dollars of currency 

swaps were executed with foreign central banks. Really? And was it an 

equal coincidence that as a result of the dollar's rising from the 

dead the entire commodity complex cratered, including the most timehonored safe-haven asset, gold? 
Any limits you put on trading must be applied equally to short 

sellers. But the CFTC's investigation needs to dig into how markets 

are being manipulated at the behest the U.S. government to maintain 

dollar hegemony so that imports can be purchased for free and so the 

United States doesn't have to compete in the global marketplace to 

manufacture anything anymore except a torrent of greenbacks. 

My guess is that you will aid and abet the continuation of this Ponzi 

scheme because that is so much easier than doing what is right and 

what you are paid to do as a servant of the American people. 

Regards, 

Adrian Douglas 

Short- side position limits are as necessary as long- side position 

limits. 

Thank you for your consideration. 

DEAN H. LEITH, JR. 

 
From: Sid Reynolds

To: energyhearingcomments; 

Subject: Urgent reading

Date: Wednesday, August 12, 2009 6:26:48 AM

Dear CFTC Commissioners,

In regard to position limits in the commodity futures markets, I urge you to heed the 

comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Sid Reynolds
From: excellence

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 6:25:12 AM

August 10, 2009

Chairman Gensler,

Thanks for the opportunity to comment on the issue of position limits in energy 

and other physical commodities of finite supply. The hearings you conducted 

were of great public service. I will confine my comments to one market – the 

COMEX silver futures market.

I saw a copy and agee mostly with Ted Butlers comments on the enclosed 8-10 

letter he sent you. ...please fix the problem, and quit cheating the public, and 

supporting special interests.

"I have excerpted the following passages from your opening statement of August 

5th. You said:

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do 

not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls half the market, 

that party is more likely to lessen liquidity than enhance it. Position limits should 

enhance liquidity by promoting more market participants rather than having one 

party that has so much concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 
largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities.

The only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will 

increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 

across all commodities of finite supply, whether in relation to actual production or 

as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures.

REMEMBER: Commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. 

No other market comes as close to fitting the profile of a 

manipulated market than does COMEX silver on the short side

I also strongly urge you to 

1. restrict any exemption from that speculative position limit to the bona fide 

producers or consumers of the actual commodity, and not to those 

engaged in financial trading through aggregation. 

2. establish a speculative position limit of no more than 1500 contracts in 

COMEX silver and by restricting any exemption to that limit to the actual 

producers and consumers of the metal.

3. Allow free markets to do their thing

Thanks you, All Rights reserved by the sender

J Schlosser
From: Steve Phillips

To: energyhearingcomments; 

Subject: Commodity position limits

Date: Wednesday, August 12, 2009 6:17:58 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to 

heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration.

Regards,

Steve Phillips
From: Roy Rogers

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 6:16:46 AM

Chairman Gensler: I think for everyone involved in the gold and silver 

markets to have a level and fair trading field all gold and silver tradex 

should be done with the metals themselves. Most PAPER GOLD and 

Silver transactions have no backings at all, just a piece of paper. Let's start 

to run this country like it was supposed to be done by our forefathers. 

Sincerely Andrew J Hughes 
From: harvey

To: energyhearingcomments; 

Subject: Stop the Corruption

Date: Wednesday, August 12, 2009 6:13:16 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php 

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683 

Short-side position limits are as necessary as long-side limits.

Although not an American I would like to protest as there are 

other people on this planet and we can see quite clearly the 

escalation of corruption that exists in your markets.

Your job is to regulate those markets in a fair and proper

manner, this is not happening, crime is happening.

This will lead to no good.

Thanks for your consideration. 

Harvey Sparrow 

 
From: John Smith

To: energyhearingcomments; 

Subject: Ted Butler

Date: Wednesday, August 12, 2009 5:55:29 AM

Dear CFTC 

Please listen to Ted Butler and GATA. Lets not allow the financial 

suffering to last any longer. I am a young 26 year old and I realize what 

is really going on. Me and my friends like Ted Butler and GATA and 

support their efforts. 

Thanks 
From: Adrienne Trantham

To: energyhearingcomments; 

Subject: Silver Short Limits

Date: Wednesday, August 12, 2009 5:51:56 AM

Dear CFTC Commissioners:

Regarding position limits in the commodity futures markets, please listen to the 

comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Adrienne Trantham
From: Max Wehrle

To: energyhearingcomments; 

Subject: Dear CFTC Commissioners:

Date: Wednesday, August 12, 2009 5:23:23 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Max Wehrle 
From: Mark Pfaff

To: energyhearingcomments; 

Subject: My Son

Date: Wednesday, August 12, 2009 5:10:41 AM

Dear Sirs,

 I thought that I would let you know how the manipulated markets have 

a devastating effect all over the World. www.macmin.com.au was catering for 

much of Australias Silver needs, but has now been forced into receivership with 

the loss of many jobs including my Sons, who is a geologist,which has had a 

terrible effect on him and his family.

The manipulation and naked short selling are forcing many Mines to close, 

causing massive unemployment worldwide and I would be grateful if you could 

use your powers to bring this to an end.

 Many Thanks Mark Pfaff
From: Ed Steer

To: energyhearingcomments; 

Subject: "Energy Hearing Comments."

Date: Wednesday, August 12, 2009 5:10:17 AM

Attachments: AVG certification

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets in 

general...and silver and gold in particular, I urge you to heed the 

comments made by silver market analyst Ted Butler here:

http://www.investmentrarities.com/ted butler comentary08-11-09.shtml

Short-side position limits are as necessary as long-side limits. 

And these limits must be enforced.

The short-side manipulation of the silver market must be ended 

ASAP.

Thanks for your consideration.

Ed Steer
From: Ken Kniel

To: energyhearingcomments; 

Subject: Limts on Trading

Date: Wednesday, August 12, 2009 4:54:18 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to heed the comments made by silver 

market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

And I look forward to some true enforcement of existing rules and evaluation of the existing manipulative policies. 

Kenneth Kniel
From: Dave LaFee

To: energyhearingcomments; 

Subject: Ted Butler and Adrian Day comments.

Date: Wednesday, August 12, 2009 4:52:16 AM

Sirs,

Please read and carefully consider the comments of the gentlemen listed above 

in regard to the enforcement of position limits in the futures markets.

Sincerely,

David LaFee
From: TR4AH

To: energyhearingcomments; 

cc: TR4AH@aol.com; 

Subject: “Energy Hearing Comments”

Date: Wednesday, August 12, 2009 3:50:04 AM

Dear Chairman Gensler:

Here are my Energy Hearing Comments.

As an educator, now retired and 66 yrs. old, I find it hard to pay my bills 

without substituting on the side to make ends meet.....esp. since 2008 ! 

I have a little of my savings invested in physical silver and gold. It is so 

obvious to even me the markets are being strongly, regularly manipulated; 

not only by the long sellers but, by the short sellers as well. They 

are profiting heavily on both sides at the expense of all the rest of us that 

aren't in these schemes. 

I appreciate your serious, honest concern for all the smaller investors as 

you consider the enforcement of position limits in all the futures markets. 

You know this manipulation that has been going on far too long is as bad 

as or worse than Madoff's ponzi scheme. 

I have excerpted the following passages from the opening statement of 

your August 5th hearing and comments to you by Ted Butler of Butler 

Research, LLC and GATA board member, Adrian Douglas.

 You said: “I believe that position limits should be consistently applied 

across markets for physical commodities of finite supply.” 

to which Douglas replied in part................

"The fundamental problem is not with finite resources but with infinite 

production of dollars. You are turning a blind eye to the manipulation of 

markets on the short side (and the massive OTC derivatives markets) that 

is undertaken to mask the uncontrolled creation of fiat dollars backed by 

nothing." 
Mr. Douglas' letter is linked here http://www.gata.org/node/7683

You said on Aug. 5 “..., I believe that at the core of promoting market 

integrity is ensuring markets do not become too concentrated.”

to which in part Mr. Butler said...........

Any reasonable method of applying position limits consistently across all 

commodities of finite supply, whether in relation to actual production or as 

a percent of total open interest, would dictate that the Commission impose 

a speculative position limit of no more than 1500 contracts in COMEX 

silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. 

and Mr. Butler is linked here http://news.silverseek.com/

TedButler/1250014324.php

Thank you,

Jayna Catherine, I 

am a real person with real concerns to clean up and control all this!
From: Vallabhi Knaapen-Bouwmans

To: energyhearingcomments; 

Subject: Nake short selling, position limits.

Date: Wednesday, August 12, 2009 3:41:06 AM

Dear sir,

Even in the Netherlands we are aware of the illegal manipulation schemes 

going on in the US financial markets. Since the US markets are ruling the 

world this is very bad for world society. When your country isn't able to stop 

the criminals which country can?

Please take the appropriate measures to stop the criminal financial activities.

Kind regards,

Rob Knaapen, 
From: Håkan Karlsson

To: energyhearingcomments; 

Subject: Position limits in the commodity futures markets.

Date: Wednesday, August 12, 2009 3:35:45 AM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler 

here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Hakan Karlsson 
From: Michel

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Wednesday, August 12, 2009 3:21:25 AM

Energy hearing comments

August 12th 2009

To Chairman Gensler.

I Michel Verdon fully support the comment sent to you by Theodore 

Butler from Butler Research LLC.

Its time to change the system and to be more equitable for the market 

and not just few.

Michel Verdon
From: James Christian

To: energyhearingcomments; 

Subject: ENERGY HEARING COMMENTS

Date: Wednesday, August 12, 2009 3:06:16 AM

 MR GENSLER, 

 THE LIKES OF THEODORE BUTLER ARE VERY KIND TO 

YOU. THEY DO NOT REALIZE THAT YOU ARE WHERE YOU ARE BECAUSE 

YOU ARE CONDUCIVE TO THE PROCESS AT HAND THEREFORE WHAT I 

HAVE TO SAY IS SIMPLE. DO YOUR DAMN JOB BEARING IN MIND IT 

WILL BE ON RECORD. 

MY GROUP ARE AWAITING YOUR POSITIVE ACTIONS. THANK YOU VERY 

MUCH SIR. 

DIMITRI 
From: pc

To: energyhearingcomments; 

Subject: Silver Short Position in Comex

Date: Wednesday, August 12, 2009 2:48:04 AM

Gentlemen: 

I see no evidence that the CFTC is doing its job in preventing obvious 

abuse in the 

COMEX silver market. 

Will it be a Madoff thing all over again, with proof that GATA 

has been calling attention to the evidence for over a decade? 

Who will be the fall guy(s) for that? 

As Ted Butler's research recently pointed out: 

"After published non-commercial and imputed commercial spreads are 

removed, the *net short position of one or two US banks exceeds40% of 

the total net futures open interest.* That same calculation indicates 

the net short position of the *four largest traders exceeds 66% of total 

net open interest*. *Such levels of concentration do not exist, either 

on the long or short side, in any other market for physical commodities."* 

There is no doubt as to the evidence. Criminal penalties may eventually 

be applied. 

When will the CFTC do its job? 

Regards, 

George Andrew, 
From: Jeff Rogers

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 2:46:28 AM

Aug. 11, 2009 

Chairman Gensler,

As a tax-paying citizen, I do appreciate the opportunity to send my 

comment regarding the hearings the CFTC held on speculative position 

limits in energy and other physical commodities of finite supply.

I am a novice investor, but follow energy and precious metals markets in 

particular. First because they impact our lives on a daily basis. One takes 

our wealth away and the other protects it.

Both are obviously manipulated by concentration in long and short 

positions , depending on the agenda of the few large traders who have 

stolen the wealth of america and are in the process of destroying our 

currency as well.

I may not be very articulate to express my views as well as a seasoned 

investor, but I know when we the people are being manipulated and 

impoverished on a daily basis.

I finally have a glimmer of hope that you will do what is right and agree 

with you that position limits should be consistently applied across markets 

for physical commodities of finite supply,

and ensuring that markets do not become concentrated in a few hands. 

The Commission has the responsibility to stop this blatent manipulation 

and I am of the opinion that position limits should be administered by the 

CFTC without exception, to both the long and short side of trades . It is 

imperative that some faith is restored in these manipulated markets,which 

will in turn , restore faith in a free market, before it is too late. America as 

a nation depends on your decisions. The people are growing tired of the 

bankers that have raped this country. We are tired of the greed which has 

brought this once great nation to its knees. Thanks to the power of the 

internet, the average person now has the ability to search for the truth out 

of all the lies and see for themselves what has brought us to this disaster 

in our economy. Its the same people that caused this collapse, that also 

manipulate the commodity markets. Route them out, and you will be the 

hero!

Sincerely,

Jeff Rogers
From: james kryzak

To: energyhearingcomments; 

Subject: positioin limits

Date: Wednesday, August 12, 2009 2:42:22 AM

Sir,

Please enforce "position limits". Please.

Why continue to allow white collar crime.

Things are bad enough as it is already.

Make a difference. Enforce the rules.

James Kryzak
From: Trevor Torrey

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 2:42:02 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to 

heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Trevor Torrey 

__________________________________________________ 

 
CFTC Commissioners, 

I took heart upon reading your statements made on July 7, and look 

forward to more news on your hearings. That you're seeking input from 

the public is a positive step in the right direction. 

For too long the CFTC has turned the other way whilst speculative 

trading has taken place in the precious metals market. Most notable is 

silver, followed by gold. 

I'd like for you to take into serious consideration Mr Butler's and Mr Douglas' 

comments:

http://news.silverseek.com/TedButler/1250014324.php

www.gata.org/node/7683 

The main way in which you can put an end to the speculation is through 

imposing position limits. I recommend a limit of 1000 contracts. For 

this to be effective, we need for you to scrap the scandalous exemptions 

currently granted to a few big shorts that dominate the COMEX pricing 

(most notable are JP Morgan Chase, HSBC, Goldman Sachs). I've yet to see 

any reasoned explanation from these big shorts explaining why they are 

short. 

I've been disappointed that the hearings didn't include any precious metals 

witnesses, and note 

from the recent ongoing build up of naked short positions by a few well known 

banking institutions, that 

the naked short selling has continued unabated. I'm confident that you have the 

public's support. 

Best Regards, 

Calum Coburn 
From: jan.bleys

To: energyhearingcomments; 

Subject: Energy Hearing Comments , silver

Date: Wednesday, August 12, 2009 1:58:56 AM

Tuesday, August 11, 2009 

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581 

Dear Chairman Gensler: 

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market. 

I have excerpted the following passages from your opening statement of August 

5th. You said: 

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets 

do not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead 

of enhance it? I think we would all agree that if one party controls half the 

market, that party is more likely to lessen liquidity than enhance it. Position 

limits should enhance liquidity by promoting more market participants rather 

than having one party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of Traders and 

Bank Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 
largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities. 

The only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will 

increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 

across all commodities of finite supply, whether in relation to actual production 

or as a percent of total open interest, would dictate that the Commission impose 

a speculative position limit of no more than 1500 contracts in COMEX silver 

futures. 

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not 

to those engaged in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal. 

Respectfully, 

copied from http://news.silverseek.com/TedButler/1250014324.php

http://news.silverseek.com/TedButler/1250014324.php
From: User773100

To: energyhearingcomments; 

Subject: concentrated short positions in gold/silver

Date: Wednesday, August 12, 2009 1:58:17 AM

Dear members of CFTC,

I urge you to enforce the law and stop the price suppression/manipulation of all 

commodities including the precious metals.

Thank you,

Bob Williams
From: david (tony) bonn

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 1:43:21 AM

With respect to the captioned hearing’s consideration of position limits in the 

trading of energy and other commodities I would urge strongly that both long and 

short positions be regulated in comparable manner and that vigorous measures 

with active enforcement be implemented to prevent market concentrations by 

very few players.

Clearly there must be a relationship between the physical supply of a commodity 

and the ability to trade it, especially on the short side. This disconnection with 

supply has been used to manipulate prices downward with the highly adverse 

consequences of impaired production and the robbing of wealth of American 

citizens. Healthy markets depend upon uncorrupted price signals which 

unfortunately have disappeared because willful negligence on the part of the 

regulatory agencies charged with overseeing these markets.

My special interest is COMEX gold trading where short positions are held by just 3-

4 “traders” who control 75-90% of all such positions. This meets the test if not the 

definition of market manipulation and possibly cornering.

It is obvious to all disinterested parties that the government is actively engaged in 

the rabid manipulation of capital and commodities markets for political gain. The 

Department of Energy engineered the collapse of oil last summer. Larry Summers 

has published papers on the necessity of manipulating gold downward in order to 

prop up interest in government debt. These matters should be settled by all 

players trading in a transparent free market – not by the 8000 pound gorilla of the 

Plunge Protection Team aka The President’s Working Committee on Markets – a 

committee which would be prosecuted out of existence if working as a private 

group.

For more detailed development of some of these ideas you may consider the 

arguments of the following.

Butler's comments can be found here: 

http://news.silverseek.com/TedButler/1250014324.php

Douglas' comments may be found here:

http://www.gata.org/node/7683
David Bonn
From: Ken Krupski

To: energyhearingcomments; 

cc: Maria Cantwell; Patty Murray; 

Subject: Short-side position limits 

Date: Wednesday, August 12, 2009 1:28:38 AM

Dear CFTC Commissioners:

Regarding 'position limits in the commodity futures 

markets', I urge you to heed the comments made by silver 

market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

and by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side 

limits. This is not only an issue of fairness but also one 

of confidence and credibility.

Thank you for your consideration.

Ken

Ken Krupski 
From: Bbhsudduth

To: energyhearingcomments; 

Subject: Comment on Short Selling/Position Limits under consideration.

Date: Wednesday, August 12, 2009 1:25:39 AM

Dear CFTC,

Please heed the comments of Mr. Butler and Gata Board Menber Adrian 

Douglas. Their respective comments are linked below.

http://www.cftc.gov/newsroom/commentprocedureinstructions.html

http://www.gata.org/node/7683

I also wish to say that nobody should be able to Sell a commodity or a stock 

without actually owning it. The practice of Short selling is totally fraudulent from 

beginning to end unless it is truly a sale of property owned. In our society there 

would not be a moments hesitation to jail anyone who sold his neighbors house 

without his knowledge or even asking him? It is absolutely immoral and 

illegal. No one can do these criminal activities unless sanctioned by the 

government and you must not condone it. 

It does not matter not how much you sell or how big the position is that you are 

selling but it is pure Fraud to be selling that which you do not actually own. If you 

do not own it, you cannot sell it. Simple truth. Anything else is Fraud pure and 

simple. It accommodates and encourages market participants who love to get 

rich by robbing from society as a whole. And you in your denial, are facilitating 

this theft. Please, stop this practice immediately and forever more. 

Yours truly,

Beau Sudduth
From: LARRY E JACOBSON

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 1:15:48 AM

Chairman Gensler, 

I hope and pray you are the man that can stand up for what's right and 

help fix this most corrupt and one sided market that is so in favor of the 

big investment bankers. It is the short side of the markets especially the 

silver market with their gigantic massive concentration that I see as 

manipulation. That kind of concentration can only lead to manipulation, 

They have the power to control the market at will. The tactics they 

use are pure robbery of the people, picking their pockets at will. That is 

why Goldman for one has all the advantage over the little guy. The chips 

are stacked against us to the point that we have not even a chance in 

you know where of ever seeing a level playing field. Limit the short side 

as well as the long side with exemptions only to those who legally qualify. 

 

 Helena Jacobson 

 
From: Peter

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 1:13:00 AM

Chairman Gensler,

According to data contained in the most recent Commitment of 

Traders and Bank Participation Reports, both for positions held as of 

August 4, the level of concentration on the short side of COMEX 

silver futures would appear to meet or exceed the level which 

threatens market integrity and liquidity. 

After published non-commercial and imputed commercial spreads are 

removed, the net short position of one or two US banks exceeds 40% 

of the total net futures open interest. 

That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. 

Such levels of concentration do not exist, either on the long or 

short side, in any other market for physical commodities.

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative 

position limits. 

This will increase the number of traders on the short side of COMEX 

silver, as you previously stated. 

The level of the current accountability limit of COMEX silver 

futures (6,000 contracts), on an all months combined basis, is 

way out of line with any other commodity. 

Any reasonable method of applying position limits consistently across 

all commodities of finite supply, whether in relation to actual 

production or as a percent of total open interest, would dictate that 

the Commission should impose a speculative position limit of 

no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that 

speculative position limit to the bona fide producers or consumers of 

the actual commodity, and not to those engaged in financial trading 

through aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to 

guard against excessive speculation or manipulation on the 

short side as well. 

No other market comes as close to fitting the profile of a 
manipulated market than does COMEX silver on the short side. 

I urge you to change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by 

restricting any exemption to that limit to the actual producers and 

consumers of the metal.

Respectfully,

Peter Soldwedel
From: Mark Howard

To: energyhearingcomments; 

Subject: Limiting Positions in Commodity Futures Markets

Date: Wednesday, August 12, 2009 1:12:43 AM

Dear CFTC Commissioners: 

I am very concerned that our currently poorly regulated system enables big 

players to unethically manipulate the market by concentrating short positions 

in silver and gold. I favor position limits, especially short-side position limits. 

I urge you to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

 

And by commodity market analyst Adrian Douglas of GATA here: 

http://www.gata.org/node/7683

 

Short-side position limits are as necessary as long-side limits. 

 

Sincerely, 
From: Alan Walsh

To: energyhearingcomments; 

Subject: Comment regarding enforcement of position limits in the futures markets

Date: Wednesday, August 12, 2009 1:04:44 AM

Ladies and Gentlemen,

RE: The COMEX Silver market.

I find it abhorrent that the net short position of one or two US banks 

exceeds 40% of the total net futures open interest, and that the net 

short position of the four largest traders exceeds 66% of total net open 

interest. Such levels of concentration do not exist, either on the long or 

short side, in any other market for physical commodities.

It's an abomination that the CFTC has allowed this to go on for so long, 

sobering questions are raised as to why, and it's well past time to put a 

stop to it.

Thank you,

Alan L. Walsh
From: Andrew Green

To: energyhearingcomments; 

Subject: Price manipulation in gold and silver market

Date: Wednesday, August 12, 2009 1:02:55 AM

I think it is obvious that there is price manipulation in both the gold and 

silver market. Please take care of it... That's why you were hired on as a 

PUBLIC SERVANT. You don't work for Goldman Sachs; you work for the 

public. 

Thanks,

Andy Green :-)
From: LARRY E JACOBSON

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 12:54:06 AM

Chairmen Gensler, 

 

Having been the victim of having a number of my stocks appear on the 

FTD list in the last couple of years I prayfully urge you to take steps to 

govern the short side as well as the long side. It appears to me that 

there has been more damage done by minipulation of the short sellers 

illegal and legal. It has been my observation the market is so lop sided 

and corrupt in favor of the investment bankers with their big money and 

their over sized consentration in contracts especially in the silver 

markets. It is obvious that they run the show and can sheer the sheeple 

when ever they choose. It has gotten so corrupt that I don't think I will 

ever see a level playing field in the markets in my lifetime. The 

Oligarths run the country to their benifit and the Fed. the SEC and even 

the Presidency dances to their toons. I pray that some one who can 

make a difference has the you know what to stand up and make 

that difference. 

 

 Hoping for a miracle 

 Larry E Jacobson 

 

 
From: Lynn

To: energyhearingcomments; 

Subject: short side position limits

Date: Wednesday, August 12, 2009 12:45:18 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, 

I urge you to heed the comments made by silver market analyst 

Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Lynn Bailey

 

 
From: Julia Sze

To: energyhearingcomments; 

Subject: Comments submitted by Butler & Douglas

Date: Wednesday, August 12, 2009 12:44:21 AM

I urge the CFTC to heed the comments submitted by Ted Butler and 

Adrian Douglas. Thank you for your attention. 

Here are the links:

Butler: http://news.silverseek.com/TedButler/1250014324.php

Douglas: http://www.gata.org/node/7683

Julia Sze
From: William Peace

To: energyhearingcomments; 

Subject: What about SILVER!

Date: Wednesday, August 12, 2009 12:41:17 AM

Chairman Gensler,

Thank you for the attention that these hearings are bringing to a subject that 

needs to be addressed. Namely, position limits for futures of commodities of 

finite supply, and the limitation of exemptions to bonafide producers, and 

consumers of these actual commodities.

I agree that possition limits should be set for the futures trading of all 

commodities. Futures are, after all, derivatives and as such need common sense 

limits.

It is a violation of common sense when a bank, or small group of banks is 

allowed to sell short more of a commodity than is produced in a year, when the 

bank does not even produce that commodity.

Yet, that is exactly what is happening in the Silver market.

The first problem is that current limits on Silver are way too high when compared 

to limits already in place for all other commodities.

Whether you use annual production, or a percentage of open interest, the limits 

on silver are way out of whack.

The second is that exemptions have been given to large bank participants who 

are not bonafide hedgers.

These banks (JP Morgan & HSBC) have taken huge positions on the short side 

of the silver market, exceeding 40% of the total net futures open interest.

These same banks hold monsterous positions in off market derivatives of gold 

and silver. Seems like there is plenty of motive for these banks to want to 

'control' the underlying asset that their huge derivatives are based off of.

Motive, however, is a moot point. The fact is that there is a highly concentrated, 

and manipulative structure in the silver market right out in the open for everyone 

to see. This structure is in violation of commodity law, and has, and continues to 

cause damage to the public.

This is the most obvious example of concentration, and hence control that can be 

seen out there. I have no idea why the silver market is not being used as an 

example of why there needs to be lower overall position limits, and no 

exemptions to the big derivative players (the banks).

I am glad that these issues are being discussed. I would like to see the issue of 

the silver market discussed. But while you are discussing these things, there is a 

manipulation and fraud being perpetrated. It is the task given to the CFTC to 

protect the public from just such crimes. A crime of this nature cannot be allowed 
to continue, even to avoid so called market dislocation. The dislocation exists 

already due to the manipulation, and continues to claim victims while it is allowed 

to continue.

Please set the limits in the silver market to no more than 1500 contracts. And for 

goodness sake, revoke the exemptions from all but genuine bonafide producers, 

and users.

William Peace
From: Harry Hilleognds

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:39:21 AM

I would like to comment on position limits.

There needs to be position limits for the short side as well as the long 

side.

Unless you want someone to manage a market when you are not 

looking.

All you have to do is look what institutions have caused the biggest 

problems in this country by not having limits. That would be the 

banks. Especially the large ones who are to big to fail. Why wait for 

more problems?

I would like to point out the metals markets as well as energy need 

looking into.

Harry Hillegonds
From: Herbert Berkowitz

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:38:58 AM

I strongly urge the Commission to adopt rules to stop all manipulation 

of all markets from both the long and short sides and without regard 

to the commodity involved. Manipulation is wrongful in all events 

whatever the reason and whoever the source. Do the right thing!! 

Herbert Berkowitz 
From: flexcon

To: energyhearingcomments; 

Subject: Energy hearing Comments

Date: Wednesday, August 12, 2009 12:33:28 AM

Attachments: Energy Hearing Comments CFTC.doc

“Energy Hearing Comments”

August 11, 2009 

Chairman Gensler 

Firstly I would like to thank the commission for the opportunity to comment on 

the issue of position limits in energy and other physical commodities of finite 

supply. I would also like to commend the CFTC in its effort so far on the issue. 

I myself am an investor in the silver market outside of the Unite States of 

America and have over the years noticed issues with regards to market integrity, 

position limits, and manipulation. Time and time again this has become more 

and more obvious. It’s no secret that this market is manipulated severely by just 

a few institutions, when it comes to short and long positions. 

This sort of exemption or lack there of regulation has made the market 

extremely unfair to the general investor. It not only makes investing in these 

markets undesirable, it also shines a dark light on the whole market, and deters 

investors in both the United States and abroad from investing in the United 

States. 

You need only look at what’s going on in the markets right now to see that 

things are jittery and on the edge, ignoring manipulation and allowing 

exemptions does not help and never has helped the markets in anyway, only 

very few have benefitted from this sort of behaviour. 

Without getting into figures, as I am sure your well aware and informed as to 

what is going on, id like to state that I believe speculative position limits of 

between 1000 to 1600 contracts be set by the CFTC in COMEX silver futures, 

and restrictions on any exemptions from the speculative position limit to the 

bona fide producers or consumers of the commodity and not to those engaged 

in financial trading through aggregation. These limits should possibly be 

reviewed every so often as to the performance and impact on the market. 

Your opening statement on the issue during the hearings was very encouraging 

and welcomed by myself and most surely many other investors. I note that you 
have the support of many in these hearings, and trust that a well informed and 

intelligent decision will be made, to make these markets a better and safer place 

to invest in. 

I believe its time to prove the sceptics out there wrong and show that the CFTC 

has now turned a new leaf in its chapter and is committed to correcting these 

problems, despite having to make some decisions that will no doubt be 

unfavourable by a minor few institutions. 

This will undoubtedly be extremely welcomed by the markets world wide and will 

show that not only is the CFTC doing its job, but that the United States 

Government has acknowledged these problems exist in the markets, and will 

actively do something to correct them. This can only be viewed as a positive 

step forward to the rest of the world watching. 

Once again thank you for the opportunity to comment and I look forward to the 

CFTC decision. 

Yours truly, 

George Christodoulou 
From: William Froemming

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:32:53 AM

Chairman Gensler; 

Although I am far from being an expert on this topic, it seems clear to me 

that the option of trading futures has strayed far to many miles from it's 

original intention. 

The original intentions of such a system, protected the producers and 

consumers from severe price fluctuations, and ensured a constant supply 

at reasonable and steady prices. The actions of the short sellers in recent 

years, has done just the opposite. 

Whether it is fact or not that barrels of oil were traded 27 times before 

hitting the pumps last summer, there was certainly a large amount of 

speculation causing severe price fluctuations. There is no room for such 

activity and it must be stopped one way or the other. 

Some have argued that these new "creative investment vehicles" help to 

fuel the economy. This is pure nonsense. It fuels a very small cadre of 

individuals, who have no interest in the well being of the consumer or 

steady prices. Their only interest is in making money. This kind of attitude 

is what has converted our economy to what it is today, a shadow of it's 

former self. If we do not change course and get back to producing rather 

than creating paper shuffles that produce profits for a select few, our 

country is near it's end. 

Although my letter has focused here on oil, the same is true for wheat, 

sugar, gold, silver and all other commodities. The ONLY parties that 

should be allowed to engage in these contracts are those that are direct 

buyers or sellers of the product, they should be forced to prove possession 

or intent to posses, and if they can not, let them find another financial 

vehicle to joy ride in. 

You have in your hands, a chance to make history on behalf of the people. 

I hope you make a mark that we can all be proud of. 

Sincerely 

William Froemming
From: David Weirich

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:32:45 AM

Attachments: The Speculation Tax on the Oil Industry.pdf

I do not believe that speculation is necessary at all to ensure liquidity in 

the trading of physically-settled futures, and have enclosed a business 

case explaining why. After the first Hearing on Speculative Position 

Limits in Energy Futures Markets, I called the office of Commissioner Jill 

Sommers to obtain clarification on why she felt that speculators removed 

the risk from those conducting hedging operations. A spokeswoman for 

the CFTC returned my call, the following are the three points she 

stressed, along with my rebuttal of each point. 

1. Speculators take on risk which hedgers wish to shed. This view was 

predominant in Commissioner Jill Sommers’ opening remarks on the 

hearings, and is misleading at best, if not downright untruthful. Futures 

contracts themselves are the avenue hedgers use to eliminate risk, and 

can be made directly between commercial participants without 

speculator interference. Commercial participants do not have to enter 

into physically-settled futures contracts; rather, they may rely on the 

spot price/cash market. But the cash market is what is truly risky, as 

commercial participants do not know how the spot price will fluctuate 

over time. This risk may be eliminated by entering into a physicallysettled futures contract with another commercial participant, with no 

need of speculator involvement. After entering into a futures contract, 

there is a zero-sum gain between the two commercial participants, but 

at least both sides can anticipate future cash inflows and outflows. 

2. Without speculation, no party would take the long position on futures 

contracts. This was a reason given by an unnamed CFTC spokeswoman 

returning my call in response to Commissioner Sommers’ remarks. But 

this only proves that speculators interfere with the true market price of a 

commodity. If there are more potential short parties than long parties 

for a particular commodity, this implies there is more supply than 

demand, and the market price must adjust accordingly; the same 

rationale applies if demand exceeds supply. 

3. Speculators are necessary to ensure a liquid market. But liquid 

markets are provided by exchanges, with no need of speculators. 

Futures exchanges provide timely pricing data for particular 

commodities, which commercial participants can use to decide when and 

if to enter into a beneficial physically-settled futures contract. 

Speculators are not involved out of the kindness of their hearts to 
promote efficient markets. In actuality, investment banks such as 

Goldman Sachs profit handsomely from their speculation efforts. This 

profit must either erode the profits of legitimate commercial participants, 

or increase the price passed on to consumers. In effect, there is a 

speculation tax imposed by the efforts of investment banks. 

Why is the CFTC so determined to advance these myths in defense of 

speculation? Perhaps it is because the CFTC itself is one of the worstcase examples of the revolving door in Washington, with so many key 

members directly linked to the investment banking world. If so, it is no 

wonder the CFTC refuses to hear any arguments on why speculation is 

not necessary in trading physically-settled futures, and there will be 

absolutely no substantive reform with respect to speculation. There 

should be no limits on speculation with respect to cash-settled futures, 

but there is absolutely no need for speculation in physically-settled 

futures, and the CFTC position is indefensible and reprehensible. 

Sincerely, 

David Weirich 
The Speculation Tax on the Oil Industry 

By David Weirich 

Introduction 

In the crude oil market, speculation involves an investment bank or other 

non-commercial company entering into to contracts to actually buy physical 

barrels of crude oil at one time, and entering into a separate contract at a 

different time to sell the oil. In this manner, a firm such as Goldman Sachs 

can influence the market price of crude oil, without ever producing, 

distributing, or refining a single barrel of crude oil. The profits earned by 

speculators are then passed on to consumers, effectively becoming a 

speculation tax on all oil products. Speculation is not required to form an 

effective marketplace bringing crude oil producers and refineries together to 

negotiate a true market price, as this function is performed by exchanges 

such as provided by the CME Group. New regulations are therefore required 

in order to prevent speculators from trading in what are known as 

physically-settled futures, while continuing to allow such entities to trade in 

cash-settled futures. 

The Oil Supply Chain and the Crude Oil Market 

Before entering into an explanation of how speculation influences the price 

of crude oil, it is necessary to understand the oil supply chain and the “crude 

oil market”. The oil supply chain is the process by which crude oil is 

obtained from land or offshore reserves, transported to refineries to be 

distilled into useful finished products, then finally stored and distributed to 

consumers (Figure 1). Only refined products, not crude oil itself, are used 

by consumers; however, price increases in crude oil are transmitted through 

the oil supply chain to consumers.
2

Figure 1: The Oil Supply Chain1

 

The crude oil market is the portion of the oil supply chain which involves 

only crude oil suppliers and refineries. In many countries, state-owned 

companies own and operate the entire crude oil market. Petróleos 

Mexicanos (PEMEX), which is owned by the Mexican government, controls all 

production and refining operations within Mexico. In the United States and 

Canada, although some large firms such as Exxon Mobil and Conoco Phillips 

both produce and refine crude oil, many small private firms occupy only one 

position of the crude oil market. Figure 2 shows a scenario in which Getty 

Oil, which does not own any refineries, produces and delivers 1,000 barrels 

of crude oil on August 15 to the Gulf Coast Refinery, which does not produce 

any crude oil by itself. Since both Getty Oil and Gulf Coast Refinery are 

privately owned, a market mechanism must exist to determine the selling 

price of crude oil, which is $90/barrel in Figure 2. 

 

1

 For a more detailed explanation of the oil supply chain, the reader is encouraged to review 

the Energy Information Administrations brochure at 

http://www.eia.doe.gov/bookshelf/brochures/gasoline/index.html. 

Gas Stations

Land Drills

Offshore Drills

Tankers

Pipelines

Refineries

Fuel Trucks

Pipelines

 Crude Oil Market
3

Figure 2: Transaction in the Crude Oil Market 

Market pricing and incentives 

What determines the price of crude oil in the transaction between Getty Oil 

and Gulf Coast Refinery in Figure 2? There are two principal methods by 

which the transaction price is determined: 

1. Spot price. If Getty Oil and Gulf Coast Refinery do not enter into a 

contractual agreement before August 15, then the spot market price, 

the price most frequently reported in oil markets, will be used. Spot 

price is the market price at which refineries can purchase crude oil for 

delivery on that day with no prior contracts, and is conversely the 

price producers can sell crude oil to refineries on that day with no prior 

contracts. 

2. Futures price. Getty Oil and Gulf Coast Refinery can enter into a 

physically-settled futures contract prior to August 15 at an agreed 

upon price. After entering into the contract, no matter what happens 

to the spot market price of crude oil, Getty Oil will deliver 1,000 

barrels of crude oil to Gulf Coast Refinery on August 15 for $90/barrel. 

The Gulf Coast Refinery desires a low crude oil price in order to minimize 

crude oil expenses and maximize earnings. Analysts predict that the 

refinery will be profitable if it can purchase crude oil at or below $70/barrel, 

which is the breakeven point determined from anticipated future demand of 

finished oil products and refinery operating expenses. Getty Oil analysts, on 

the other hand, have calculated that they need to sell crude oil at or above 

$90 / barrel 

1,000 Barrels 

Crude Oil 

Getty Oil Gulf Coast Refinery
4

$50/barrel to operate profitably; the oil producer seeks to maximize crude 

oil sales revenue in order to maximize earnings. Therefore, crude oil prices 

between $50 and $70/barrel will enable both Getty Oil and Gulf Coast 

Refinery to operate profitably. 

Description of and uses of futures contracts 

A physically-settled futures contract is a standardized contract specifying a 

certain type of commodity, how much of the commodity is to be delivered, 

delivery price, and delivery date. There are also other types of futures 

contracts, known as cash-settled futures, where no delivery of any physical 

commodity occurs; rather, the participants in a cash-settled futures contract 

are simply wagering on how the price of the actual commodity will change 

over time. 

Because Getty Oil and Gulf Coast Refinery need to deal in actual crude oil to 

conduct their business operations, they will enter into a physically-settled 

futures contract. For this example, suppose that the contract is made on 

June 20 for the following terms: Getty Oil will deliver 1,000 barrels of crude 

oil to the Gulf Coast Refinery on August 15 of the same year for $60/barrel. 

Suppose also that the crude oil spot price for June 20 is $55/barrel, and the 

crude oil spot price will fall to $45/barrel on August 15. This situation is 

illustrated in Figure 3. 

Figure 3: Futures Contract Between Producer and Refinery 

$60 / barrel 

1,000 Barrels 

Crude Oil 

Getty Oil Gulf Coast Refinery
5

Why would either Getty Oil or Gulf Coast Refinery enter into this contract? 

The answer is because neither can exactly predict the spot price of crude oil 

on August 15. Refineries require crude oil every day, not just on August 15. 

If Gulf Coast Refinery waits until August 15 to purchase the amount of crude 

oil it needs for that day, the spot price could be $50/barrel, $60/barrel, 

$70/barrel, or any other price. On June 20, the spot price is only $55/barrel, 

but Gulf Coast Refinery does not have sufficient storage space to purchase 

excess crude oil now and hold it until August 15 or any other future date, 

because it can only store a sufficient amount of crude oil for a single day of 

refining operations. So rather than risk the spot price rising above 

$70/barrel on August 15, the spot price at which the refinery believes it can 

operate profitably, Gulf Coast Refinery enters into the contract to avoid the 

negative consequences of a potential steep rise in crude oil price. 

Getty Oil’s minimum required price is $50/barrel, with anything above that 

amount increasing its earnings. So, with the June 20 spot price of 

$55/barrel, Getty Oil could hope for the spot price to remain above 

$50/barrel until August 15, or enter into a futures contract. By entering into 

an agreement to sell at $60/barrel on August 15, Getty Oil would not realize 

any extra earnings if the spot price rose above $60/barrel, but also locks in 

a guaranteed amount of earnings. 

In this example, Getty Oil gains $15/barrel on August 15 by selling crude oil 

at the contract rate of $60/barrel instead of the spot price of $45/barrel. 

Conversely, Gulf Coast Refinery loses $15/barrel by purchasing crude oil at 

the $60/barrel contract rate instead of the lower $45/barrel spot price. The 

futures contract between Getty Oil and Gulf Coast Refinery has resulted in 

zero gain overall over using the crude oil spot price, since Getty Oil’s gain 

was exactly cancelled out by Gulf Coast Refinery’s loss, but the futures 

contract has at least allowed both sides to guarantee a certain profit margin 

and continue operating effectively; if Getty Oil had not entered into the 

contract, the falling spot price would have caused them to operate at a loss. 

This is a classic example of both parties involved in hedging operations while 

facing future economic uncertainties. 

Enter the speculators 

Under the CME Group’s current rules, non-oil producing companies such as 

Goldman Sachs can trade in physically-settled crude oil futures. The impact 

of this speculation on the price of crude oil, and therefore on the price of all 

finished oil products, is now explained. 
6

In the previous section, an example was provided of a crude oil producer 

(Getty Oil) entering directly into a physically-settled futures contract with a 

refinery (Gulf Coast Refinery), which makes good business sense given the 

nature of the crude oil market. Now suppose that Getty Oil enters into a 

futures contract with Speculator. Since Getty Oil needs to sell above 

$50/barrel, on June 10 Speculator offers to buy 1,000 barrels of crude oil on 

August 15 for $58/barrel, as shown in Figure 4. Although this is lower than 

the price Gulf Coast Refinery was willing to pay on June 20, it is still above 

Getty Oil’s required minimum price of $50/barrel, and once the deal is 

complete Getty Oil is contractually obligated to Speculator and cannot 

rescind the contract for more favorable terms. 

Figure 4: Futures Contract Between Producer and Speculator 

Since Speculator does not actually produce, distribute, or refine crude oil, it 

must sell to Gulf Coast Refinery any crude oil it purchases from Getty Oil. 

Gulf Coast Refinery has incentive to obtain crude oil for less than $70/barrel; 

therefore, on June 20 Speculator offers to sell 1,000 barrels of crude oil to 

Gulf Coast Refinery on August 15 for $68/barrel, terms which the refinery 

accepts. The arrangement between Gulf Coast Refinery and Speculator is 

shown in Figure 5, and overall structure of the two contracts involving 

Speculator is illustrated in Figure 6. 

1,000 Barrels 

Crude Oil 

$58 / barrel 

Getty Oil Speculator
7

Figure 5: Futures Contract Between Speculator and Refinery 

Figure 6: Combined Effect of Both Futures Contracts 

Potential impact of speculation on “market” prices 

Notice in Figure 6 that Speculator’s sole function in the crude oil market is to 

act as a broker between Getty Oil and Gulf Coast Refinery, rather than 

producer and refinery negotiating directly as in Figure 3. Speculator does 

$68 / barrel 

Speculator Gulf Coast Refinery

1,000 Barrels 

Crude Oil 

Getty Oil Gulf Coast Refinery Speculator

1,000 Barrels 

Crude Oil 

1,000 Barrels 

Crude Oil 

$58 / barrel $68 / barrel 
8

not actually serve as the marketplace in bringing together crude oil 

producers and refineries; rather, that function is performed by exchanges 

such as the CME Group, which is perfectly capable of enabling the contracts 

shown in Figure 3 between producer and refinery directly. Instead of 

allowing Getty Oil and Gulf Coast Refinery to negotiate a true market price 

amongst themselves in Figure 6, Speculator has artificially inserted itself into 

the crude oil market to obtain a profit without actually delivering anything of 

value to the oil industry or its customers – true value comes from exchanges 

such as the CME Group in enabling producers and refineries from negotiating 

directly, not from speculators. 

Who pays for the profit earned by Speculator in the above example? 

Speculator has earned a profit of $10/barrel without ever having to produce, 

distribute or refine a single barrel of crude oil, while the “market” price of 

crude oil has risen from $60/barrel when Getty Oil and Gulf Coast Refinery 

negotiated directly to $68/barrel when Speculator became involved. This 

cost must (1) be passed on to consumers by the refinery, (2) erode the 

earnings of crude oil producers or refineries legitimately engaged in the oil 

business, or (3) some combination of the first two consequences – this is the 

speculation tax. 

Conclusion 

The use of physically-settled futures contracts, when negotiated directly 

between crude oil producers and refineries, is a legitimate and useful 

method of hedging while providing a valid market price for crude oil. 

Whenever non-commercial speculators such as Goldman Sachs are allowed 

to trade in physically-settled futures, the result is interference in the crude 

oil market which may result in higher prices for consumers and lower 

earnings for the companies which are actually engaged in the oil business. 

Because exchanges such as the CME Group provide a marketplace for 

producers and refineries to negotiate the market price of crude oil directly, 

there is no need for speculators to trade in physically-settled futures 

contracts. Speculators may safely trade in cash-settled futures contracts 

with negligible impact on proper market operation, so long as crude oil 

market participants such as Getty Oil and Gulf Coast Refinery are not 

involved in trading cash-settled futures contracts. 
From: aljandkorbin

To: energyhearingcomments; 

Subject: short-side positions limits

Date: Wednesday, August 12, 2009 12:32:44 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Albert Jablonski

I also agree with the post below and this should be 

considered also.

Gene Arensberg, author of the "Got Gold Report" in Brien Lundin's Gold 

Newsletter (http://www.GoldNewsletter.com), has joined those urging the 

U.S. Commodity Futures Trading Commission not to be more restrictive 

with commodity longs than with commodity shorts. The CFTC, Arensberg 

says, should not impede groups of investors seeking to protect themselves 

against currency debasement by purchasing commodities. Arensberg's 

letter includes some excellent charts. GoldSeek's companion site, 

SilverSeek, has posted it under the headline "Gene Arensberg's Letter to 

the CFTC" and you can find it here:

http://news.silverseek.com/SilverSeek/1250049681.php

* * * 
From: Allan Flynn

To: energyhearingcomments; 

Subject: Commodity Futures Markets Hearings

Date: Wednesday, August 12, 2009 12:31:37 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Allan Flynn 
From: Dr. Colin Walker

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:30:52 AM

Dear Chairman Gensler,

I would like to add my voice to those urging you to seriously considering position 

limits for trading entities in the commodity futures markets, particularly for 

entities that, despite their large positions and adequate capitalization, i.e., 

financial firms, have no actual production facility, and therefore particularly, when 

they hold a disproportionately large short position, are not acting purely as a 

“commercial” hedger, despite being classified as such by the exchanges. This is 

clearly the case in the precious metals markets, as Ted Butler, at http://news.

silverseek.com/TedButler/1250014324.php, has so ably pointed out. 

The repeated takedowns in these markets by the bullion banks that hold a very 

large portion of the short position in the markets, are clearly manipulative, and 

appear to violate the spirit if not the letter of the CFTC regs. That they have found 

loopholes that allow such activity, or that they are able to influence regulators 

such as yourself, in past days, to look the other way, does not do credit to the 

American free market system, (a term that some suspect should no longer apply). 

You alone have the power to see these wrongs put right, and I urge you to inquire 

in detail, and act expeditiously, taking into account all the evidence, including the 

above, and much previously presented by Mr. Butler and others in this regard.

Thank you for your time and consideration.

Colin L. Walker, M.D. 
From: aljandkorbin

To: energyhearingcomments; 

Subject: short side positions limits

Date: Wednesday, August 12, 2009 12:26:21 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Albert jablonski
From: Lincoln Harold

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 12:18:58 AM

Would you please consider posting limit s on the silver and gold short 

positions. The past couple of the two major shorts increase their positions 

and consequently the metals were driven lower in price. how can you 

possibly bury your head in the sand and keep ignoring this major fiasco. 

These derivitives run into the trillions of dollars. I hope you rectify this 

short problem before China and Russia decide to do it for you with 

massive defaults. Lincoln J. Harold
From: chrisstevens

To: energyhearingcomments; 

Subject: We Need Limits on Short Side Trading Also.

Date: Wednesday, August 12, 2009 12:17:50 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge 

you to heed the comments made by silver market analyst Ted Butler 

here:

http://news.silverseek.com/TedButler/1250014324.php

And also the comments made by commodity market analyst Adrian 

Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Chris Stevens
From: Pete Eakle

To: energyhearingcomments; 

Subject: I agree with the comments sent to you by Butler and Douglas (of GATA)

Date: Wednesday, August 12, 2009 12:16:20 AM

Butler's comments can be found here:

http://news.silverseek.com/TedButler/1250014324.php

Douglas' comments may be found here:

http://www.gata.org/node/7683

 Pete Eakle 

 

 

 
From: springhillltd

To: energyhearingcomments; 

Subject: Short side position limits

Date: Wednesday, August 12, 2009 12:15:28 AM

Sir

 please heed the information supplied to you from Ted Butler and Adrian 

Douglas

concerning your upcomming vote; short side position limits / enforce the 

uptick rule

Regards

William Brundige
From: Delbert Rasmusson

To: energyhearingcomments; 

Subject: cftc email

Date: Wednesday, August 12, 2009 12:14:42 AM

dear sirs, 

I am just one of the people you are trying to protect and a blind eye is not 

the way to act. here are a couple links that makes perfect sense to me. 

Butler's comments can be found here: 

http://news.silverseek.com/TedButler/1250014324.php

Douglas' comments may be found here:

http://www.gata.org/node/7683

Sincerely 

Del Rasusson 
From: Heinz Lycklama

To: energyhearingcomments; 

cc: Lukken, Walter; Obie, Stephen J.; secretary; Lavik, A. Roy; R Schaeffer; 

Stowe, Natise L.; Dunn, Michael; Jnewsome@nymex.com; Sommers, Jill; 

Jamie Dimon; Dean Payton; Ryall, Christine; Chilton, Bart; Eric Thorson; 

Gensler, Gary; Maria Cantwell; Rick Larsen; Patty Murray; Patty Murray; 

Subject: CFTC - Enforcing Position Limits

Date: Wednesday, August 12, 2009 12:13:15 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

 http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

 http://www.gata.org/node/7683

Short-side position limits are as necessary and important as long-side limits.

Thanks for your consideration.

Heinz

------------------------------------------------------------------ 

Heinz Lycklama 

 

 
From: ROBERT LAGUARDIA

To: energyhearingcomments; 

Subject: position limits silver trade

Date: Wednesday, August 12, 2009 12:12:44 AM

honorable mr GENSLER PLEASE ESTABLISH POSITION LIMITS METALS 

MKTS EI GOLD AND SILVER...PLS REDUCE POSITION LIMITS IN SILVER 

NO MORE THAN 1500 CONTRACTS AS PER MR BUTLER AND GATA.ORG 

STOP SILVER MANIPULATION BY MONEY CTR BANKS VIA 

CONCENTRATED SHORTS....THREE OR FEWER LARGE PLAYERS ARE 

CONTROLLING SILVER MKT....WHERE IS AGENCY ENFORCEMENT ? ? 
From: palmer0524

To: energyhearingcomments; 

Subject: Dear Commission

Date: Wednesday, August 12, 2009 12:10:50 AM

I think it is of dire urgency that the commission consider the comments of Ted 

Butler and Adrian Douglas in regards to position limits. On another note, I think 

the following link is something that also should be looked into, because if this is 

infact true, it sounds like another massive ponzi scheme involving the banks. 

This is something that could drastically jeopardize americas dominance in not 

only futures trading, but also in the capital markets. I can't imagine china 

investment corp would take very kindly to something like this. This is just as 

important as the issues butler and douglas raise and I hope this matter can also 

be looked into. 

http://www.gata.org/node/7586

Thank you for taking the time to read this letter. 

Alan Palmer 
From: Tony G

To: energyhearingcomments; 

Subject: Concerns regarding position limits

Date: Wednesday, August 12, 2009 12:09:06 AM

Dear Sir/ Madam,

I feel it important to urge you to follow through on your queries regarding maximum 

position limits on futures contracts. The massive disparity that is currently in place 

within the Silver market, with regard to size of position and numbers of parties on 

opposing sides of the trade, relative to all other markets, encourages potential for 

manipulation and anecdotal evidence does nothing to dissuade that thinking. 

Please consider Ted Butlers comments here http://news.silverseek.com/

TedButler/1250014324.php

as well as Adrian Douglas’ comments here http://www.gata.org/node/7683

I am emailing as a concerned individual citizen encouraging all actions that can 

deliver trust back to our market systems.

Regards

Tony Garnham
From: Richard J Greene

To: energyhearingcomments; 

Date: Wednesday, August 12, 2009 12:08:13 AM

When this market blows you will be found complicit.
From: drjrtjr

To: energyhearingcomments; 

Subject: Position Limits

Date: Wednesday, August 12, 2009 12:04:39 AM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to 

heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

 
From: Ralph "Buck" DeMarco

To: energyhearingcomments; 

Subject: Position limits needed for commercials

Date: Wednesday, August 12, 2009 12:03:27 AM

Dear Commissioners:

It is long past time to reform the position limits in Silver and Gold in the 

commercial category. Only one or two banks monopolize the commercial 

short activity in both metals. Massive shorting in after hours markets 

clearly not designed to make sense for any legitimate commercial activity 

are hallmarks in these markets, particularly silver where the net 

commercial position has never been not net short since 1986. As a result, 

with the commensurate depressed prices the silver mining companies all 

post losses and the entire industry barely limps along as major silver 

miners have continued to go bankrupt over the years. 

These one or two banks are clearly conducting speculative shorting 

activity not of a commercial nature. Just looking at the notional amount of 

derivatives they hold the numbers have skyrocketed while actual 

legitimate demand has been significantly more sanguine creating a 

prepostorous snapshot of market player positions. This situation would 

not exist if the regulators did not turn a blind eye to the out sized position 

limits held that are far in excess of those in any other commodities 

markets. The illegitimate and unfair market conditions in silver and gold 

are clearly observable for anyone with eyes to see.

Sincerely

Ralph DeMarco
From: amarkscpa

To: energyhearingcomments; 

Subject: CFTC Hearings on Speculative Position Limits in Energy Futures Markets

Date: Wednesday, August 12, 2009 12:01:43 AM

August 11, 2009

Chairman Gensler:

Thank you for the opportunity to comment on the issue of position limits in energy 

and other physical commodities of finite supply. 

Like you stated on August 5, 2009, I also believe:

1) “that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

2) “that at the core of promoting market integrity is ensuring markets do not 

become too concentrated.”

The only effective means of ensuring market integrity and enhancing liquidity is for 

the Commission to impose legitimate speculative position limits. Further, I also 

strongly urge you to restrict any exemption from that speculative position limit to the 

bona fide producers or consumers of the actual commodity, and not to those 

engaged in financial trading through aggregation. The Commission should continue 

to allow individual investors the opportunity to invest in commodities via Deutsch 

Bank and Rogers commodity products with tickers such as DBC, DBA, DBB, DBE, 

RJI, RJA, RJN, RJZ, etc. as long as these positions are reasonable and transparent.

While the thrust of the hearings involved the enforcement of position limits to guard 

against excessive speculation on the long side, commodity law requires you to 

guard against excessive speculation or manipulation on the short side as well.

Finally, I am concerned that if the CFTC may over-regulate commodities trading 

and drive this business overseas. As Jim Rogers noted on August 6, 2009, "U.S. 

proposals to place curbs on commodities trading will drive business 

overseas"... “It’s going to drive the business away and the rest of the world is going 

to welcome it with open arms” ... “The end result is going to be Singapore, or Hong 

Kong, or Shanghai or who-knows-where” will be “quite happy to take that 

business.” The Commission must ensure our USA commodity trading markets 

remain competitive so that this business stays here.

Thanks for your time and consideration.

-------------------------------------------------------- 
A. Marks Powers, CPA 
From: Sy Khamkongsay

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 12, 2009 12:00:28 AM

I believe your mission is simple. 

To provide a trading environment that closest reflects the natural market 

value of the commodity being traded. This means the elimination of 

extreme positions that can cause erratic market fluctuations that have 

little relevance to supply and demand. 

Sy Khamkongsay 
From: pighogg

To: energyhearingcomments; 

Subject: silver please investigate

Date: Tuesday, August 11, 2009 11:59:58 PM

please investigate 
From: Tim Boyle

To: energyhearingcomments; 

Subject: Investigate illegal shorting of gold and silver

Date: Tuesday, August 11, 2009 11:56:51 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Mr Butler and Mr Douglas have said it more eloquently than I can . Please do 

your jobs and investigate the manipulation of the gold and silver shorting. Let's 

not let this go on indefinitely.. 

Thanks for your consideration. 

Timothy Boyle 
From: Gonzo

To: energyhearingcomments; 

Subject: Comex

Date: Tuesday, August 11, 2009 11:53:23 PM

Greetings - 

How about enforcing the laws regarding illegal control of Comex, like naked 

shorts on silver? You could start by imposing position limits; maybe 

reinstate the up-tick rule? If you don't do something about this criminal 

behavior, you will be displaying your complicity in the crime. 

Sincerely, 

Michael Gompert 
From: Dennis

To: energyhearingcomments; 

Subject: "Energy Hearing Comments" 

Date: Tuesday, August 11, 2009 11:51:09 PM

August 11, 2009

CFTC Chairman Gensler,

I have written your organization several times over the past 

two years and while I received responses, I didn‛t receive 

anything substantive. It would be appreciated if we could see 

the results to date of the gold and silver manipulation 

investigation your agency undertook a year ago. I would have 

expected to have seen something by now but it‛s possible that 

it was merely a façade as so many things occurring today in 

government?

In any event, I would suggest that you could save time, 

taxpayer money, and possibly trips on the incessantly 

expensive private government jets if you would have your 

team members contact and work directly with Ted Butler and 

Adrian Douglas who would be able to assist and direct your 

attention as to who and how. Their comments and Website 

contact information are respectively at the sites below.

http://news.silverseek.com/TedButler/1250014324.php

http://www.gata.org/node/7683

Sincerely yours,

Dennis Birch
From: knd

To: energyhearingcomments; 

Subject: support of short-side position limits in the gold and silver futures markets.

Date: Tuesday, August 11, 2009 11:47:17 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures 

markets, I urge you to heed the comments made by silver 

market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side 

limits.

Thanks for your consideration.

Kerry Thuren
From: Harvey Lewis

To: energyhearingcomments; 

Subject: Silver Shorts

Date: Tuesday, August 11, 2009 11:40:40 PM

The Fed is sneakily buying treasury bonds, the NSA is doing warrantless 

wiretaps. The CFTC might as well declare there is no problem with the 

silver shorts. At least it will look like all the agencies are acting 

according to the same plan. 

Harvey Lewis 
From: Randy Dong

To: energyhearingcomments; 

Subject: CFTC Position Limits

Date: Tuesday, August 11, 2009 11:40:19 PM

Thank you for taking public input on commodity markets and position limits.

I strongly support position limits for both long and short positions. Exceptions 

should only be granted to those who actually produce or consume the commodity.

I believe there is substantial pure financial speculation without regard for the 

actual commodity and its finite supply. The position limits should be applied to 

both long and short positions.

I also strongly support enforcement against naked short sellers. It is unclear to me 

whether the large short positions in Gold and Silver markets are naked or not. It 

seems to me that they are either naked short sellers of the commodities or they 

have the market cornered.

If we do not enforce position limits for both longs and shorts, then Oil markets 

could also develop large, concentrated short positions similar to Gold and Silver. I 

don’t think that would be fair to smaller market participants.

Thanks for taking my input.

Randy Dong
From: David Orndorff

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 11:40:05 PM

Chairman Gensler, 

 August 11, 2009

Thank you for the opportunity to comment on the issue of position limits in energy and other 

physical commodities of finite supply. The hearings you conducted were of great public 

service. I will confine my comments to one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 5th. You 

said:

“I believe that position limits should be consistently applied across markets for physical 

commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do not 

become too concentrated.”

“The very important question becomes: how much concentration is too much? At what point 

of market concentration does a trader detract from liquidity instead of enhance it? I think we 

would all agree that if one party controls half the market, that party is more likely to lessen 

liquidity than enhance it. Position limits should enhance liquidity by promoting more market 

participants rather than having one party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of concentration on the 

short side of COMEX silver futures would appear to meet or exceed the level you imply 

threatens market integrity and liquidity. After published non-commercial and imputed 

commercial spreads are removed, the net short position of one or two US banks exceeds 

40% of the total net futures open interest. That same calculation indicates the net short 

position of the four largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market for physical 

commodities.

The only effective means of ensuring market integrity and enhancing liquidity is for the 

Commission to impose legitimate speculative position limits. This will increase the number of 

traders on the short side of COMEX silver, as you stated. The level of the current 

accountability limit of COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether in relation to 

actual production or as a percent of total open interest, would dictate that the Commission 

impose a speculative position limit of no more than 1500 contracts in COMEX silver futures.
I also strongly urge you to restrict any exemption from that speculative position limit to the 

bona fide producers or consumers of the actual commodity, and not to those engaged in 

financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the enforcement 

of position limits to guard against excessive speculation on the long side, commodity law 

requires you to guard against excessive speculation or manipulation on the short side as 

well. No other market comes as close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you change that profile by establishing a 

speculative position limit of no more than 1500 contracts in COMEX silver and by restricting 

any exemption to that limit to the actual producers and consumers of the metal. 
From: Robert Herron

To: energyhearingcomments; 

Subject: Market Manipulation

Date: Tuesday, August 11, 2009 11:36:58 PM

If this financial crisis has taught us any thing it is need for more regulation 

of the investment banking industry . The Goldman Sachses of the world 

are ruthless and relentless in their pursuit of wealth with no concern for 

the consequences of their actions and clearly they need regulation by 

statutory bodies who can not readily be bought off. The ability of the big 

traders to manipulate futures markets due to inadequate regulation has 

negative consequences for everyone else including those trying to buy or 

sell or simply own commodities with or without positions in the futures 

markets . When Goldman Sachs for example rather than supply and 

demand controls the price of a commodity even tiny little gold traders like 

myself lose out to their unfettered greed. 

-- 

Rob Herron 
From: Lorelei

To: energyhearingcomments; 

Subject: RE: Enforcement of position limits in futures markets

Date: Tuesday, August 11, 2009 11:35:02 PM

To: U.S. Commodity Futures Trading Commission 

I totally support the comments sent to the Commission by Ted Butler and GATA 

board member Adrian Douglas regarding the enforcement of position limits in 

futures market.

Lorelei Kraft
From: Stuart Joynson

To: energyhearingcomments; 

Subject: In support of short side position limits

Date: Tuesday, August 11, 2009 11:34:17 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Stuart Joynson, CMA
From: PardnerInCrime

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 11:33:59 PM

Tuesday, August 11, 2009

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581

Dear Chairman Gensler:

I send you the following comments sent by Mr. Adrian Douglas and i parrot what 

Mr. Douglas has to say als, as i did with Mr. Ted Butler. I agree wholehearted 

and voice my same comments and concerns by Mr. Double by quoting him 

verbatim:

"Your hearings on position limits in the commodity futures markets have 

presupposed that the issue is speculation on the long side. You will not correctly 

regulate markets if your inquiries and hearings are being conducted from the 

conclusion you want to make and then work backwards.

The fundamental problem is not with finite resources but with infinite production 

of dollars. You are turning a blind eye to the manipulation of markets on the short 

side (and the massive OTC derivatives markets) that is undertaken to mask the 

uncontrolled creation of fiat dollars backed by nothing. 

The price suppression is rampant and is making finite commodities even more 

finite as it becomes uneconomic to produce them. The paper promises to supply 

commodities from stocks that do not exist suppresses prices. 

The CFTC has been investigating price manipulation in silver and gold for almost 

a year. The manipulators here will be drawing a pension before you recognize 

manipulation. Meanwhile the U.S. Senate can apparently recognize long-side 

manipulation of wheat and even crude oil in a flash. 

Why have your hearings focused on how oil rose to $147 per barrel and not 

equally how it fell to $35 per barrel and how the dollar made a magnificent rise in 
the middle of a credit crisis, a feat never before achieved?

Federal Reserve Chairman Ben Bernanke testified in response to U.S. Rep. Alan 

Grayson that the rise in the dollar was a total coincidence even though it 

occurred even as half a trillion dollars of currency swaps were executed with 

foreign central banks. Really? And was it an equal coincidence that as a result of 

the dollar's rising from the dead the entire commodity complex cratered, including 

the most time-honored safe-haven asset, gold? 

Any limits you put on trading must be applied equally to short sellers. But the 

CFTC's investigation needs to dig into how markets are being manipulated at the 

behest the U.S. government to maintain dollar hegemony so that imports can be 

purchased for free and so the United States doesn't have to compete in the 

global marketplace to manufacture anything anymore except a torrent of 

greenbacks.

My guess is that you will aid and abet the continuation of this Ponzi scheme 

because that is so much easier than doing what is right and what you are paid to 

do as a servant of the American people.

Regards,

Adrian Douglas"

Respectfully submitted by

Donna J. Lemig-Badach 

A Voting USA CITIZEN

 
From: timothy hamilton

To: energyhearingcomments; 

Subject: Fw: Position Limits

Date: Tuesday, August 11, 2009 11:33:26 PM

TIM HAMILTON

From: timothy hamilton 

Sent: Tuesday, August 11, 2009 6:57 PM 

To: Ggensler@cftc.gov 

Cc: Bchilton@cftc.gov Mdunn@cftc.gov Jsommers@cftc.gov 

Subject: Position Limits 

Dear Mr. Gensler, 

After reading your opening remarks on the CFTC hearing on position limits 

on energy, I was somewhat encouraged.. As tomorrow is the last day to 

respond to those hearings, I would like to make the following comments. 

As flagrant and disruptive as the exemptions CFTC previously granted 

have been for oil, the exemptions granted to financial institutions for silver 

have been worse. First of all, the existing limits for silver relative to annual 

mine output and trading volume, are substantially larger. Then, to grant 

the financial institutions exemptions beyond those large position limits is 

very market disruptive. 

According to the US Geological Society the world by 2020 will be in very 

short supply of silver. It is important that we start immediately to develop 

fair and open markets for silver that are not manipulated by the large 

positions held by three or four financial institutions. These positions, as I'm 

sure you have already noted, are always on the short side. 

As I mentioned in my email of July 14th, my background is mostly in 

production agriculture. A brief study of world history will disclose that 

ultimately in every society, a coalition of politicians and urban dwellers 

usually develops to the point it ultimately causes famine. The four or less 

major financial institutions that have consistently held manipulative short 
positions in silver, clearly have their own agenda. However, just as with 

food, their agenda will ultimately cause major shortages of silver in our 

society. 

Your commission has the opportunity and the responsibility to stop this 

once and for all. Let me thank you and your commission in advance for 

your thoughtful consideration on this matter. 

Sincerely,

TIM HAMILTON
From: Kevin Reel

To: energyhearingcomments; 

Subject: Support for enforcing position limits

Date: Tuesday, August 11, 2009 11:30:24 PM

Dear CFTC, I'm writing you to encourage you to support position limits, 

both short and long, and finally make markets fair for everyone and not 

just the chosen few. I'm dying to get back into the markets but I won't 

do it till I'm sure I'm getting a fair shake. The obvious manipulation 

of the gold and silver markets on the short side and the massive 

derivatives markets are enough to keep me out until the CFTC restores 

fairness. Please fix the obvious problems. Thanks for listening---Kevin Reel 
From: Herbert Yussim

To: energyhearingcomments; 

Subject: American Citizen Comments...Commodity Futures Markets

Date: Tuesday, August 11, 2009 11:29:47 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Herbert Yussim
From: Patrick Gunter

To: energyhearingcomments; 

Subject: “Energy Hearing Comments.”

Date: Tuesday, August 11, 2009 11:28:25 PM

Chairman Gensler,

I have excerpted the following passages from your opening statement of 

August 5th. You said:

“I believe that position limits should be consistently applied across markets 

for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

To that end, I would urge you to limit short contracts in COMEX silver to 

1000 or 1500 maximum. The current situation with a few large financial 

institutions having most of the short positions must end now. The is no 

other legitimate reason or argument for these large shorts other than 

market manipulation. 

Please do the right thing and end this phony manipulation of the COMEX 

silver.

Patrick Gunter 
From: Kevin J Grogan

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 11:26:55 PM

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments to 

one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of 

August 5th. You said:

“I believe that position limits should be consistently applied across markets 

for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one party 

controls half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by promoting more 

market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, the 

level of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity 

and liquidity. After published non-commercial and imputed commercial 

spreads are removed, the net short position of one or two US banks 

exceeds 40% of the total net futures open interest. That same calculation 

indicates the net short position of the four largest traders exceeds 66% of 

total net open interest. Such levels of concentration do not exist, either on 
the long or short side, in any other market for physical commodities.

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of COMEX 

silver, as you stated. The level of the current accountability limit of COMEX 

silver futures (6,000 contracts), on an all months combined basis, is way 

out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether 

in relation to actual production or as a percent of total open interest, 

would dictate that the Commission impose a speculative position limit of 

no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. No other 

market comes as close to fitting the profile of a manipulated market than 

does COMEX silver on the short side. Once again, I urge you change that 

profile by establishing a speculative position limit of no more than 1500 

contracts in COMEX silver and by restricting any exemption to that limit to 

the actual producers and consumers of the metal. 

Sincerely,

Kevin J. Grogan

 
From: Pardner In Crime 

To: energyhearingcomments@cftc.gov 

BCC: 

Sent: 8/11/09 11:21:25 P.M. Eastern Daylight Time 

Subj: Energy Hearing Comments 

August 10, 2009

Chairman Gensler,

I can only parrot EXACTLY what Mr. Ted Butler asks of you and by 

quoting him below, i DO ask the same as what he had written:

"Thank you for the opportunity to comment on the issue of position 

limits in energy and other physical commodities of finite supply. The 

hearings you conducted were of great public service. I will confine my 

comments to one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of 

August 5th. You said:

“I believe that position limits should be consistently applied across 

markets for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”
“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one 

party controls half the market, that party is more likely to lessen liquidity 

than enhance it. Position limits should enhance liquidity by promoting 

more market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, 

the level of concentration on the short side of COMEX silver futures 

would appear to meet or exceed the level you imply threatens market 

integrity and liquidity. After published non-commercial and imputed 

commercial spreads are removed, the net short position of one or two 

US banks exceeds 40% of the total net futures open interest. That same 

calculation indicates the net short position of the four largest traders 

exceeds 66% of total net open interest. Such levels of concentration do 

not exist, either on the long or short side, in any other market for 

physical commodities.

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of 

COMEX silver, as you stated. The level of the current accountability 

limit of COMEX silver futures (6,000 contracts), on an all months 

combined basis, is way out of line with any other commodity. Any 

reasonable method of applying position limits consistently across all 

commodities of finite supply, whether in relation to actual production or 

as a percent of total open interest, would dictate that the Commission 

impose a speculative position limit of no more than 1500 contracts in 

COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard 

against excessive speculation or manipulation on the short side as well. 

No other market comes as close to fitting the profile of a manipulated 
market than does COMEX silver on the short side. Once again, I urge 

you change that profile by establishing a speculative position limit of no 

more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the 

metal."

I concur with exactly what Mr. Butler has submitted, and i too submit the 

same ideology to the Commission as he does. I respectfully request 

that you all consider this request with fresh, open, and honest eyes. 

The RIGHT thing must be done to correct the inequities at hand in this 

matter. In the meantime, and as always, May God continue to bless 

you all as you endeavor to do the right thing regarding these matters.

Respectfully submitted,

Donna Badach
From: Michael Wright

To: energyhearingcomments; 

Date: Tuesday, August 11, 2009 11:24:54 PM

Dear Sirs 

I wish to express my dismay at the manipulation of the gold and silver 

markets from the SHORT 

side that has been occurring for many years, and that the focus of your 

enquiry only appears to 

be on manipulation on the LONG side of commodities such as oil. 

You really need to ask why banks such as 

Goldman Sachs and JP Morgan have such massive 

and concentrated short positions in gold and silver, markets they 

really have no reason to be involved 

in such a large way i.e. they are neither producers nor consumers of 

these metals. 

Yours sincerely 

M. Wright 

 

 
From: Sally

To: energyhearingcomments; 

Subject: position limits

Date: Tuesday, August 11, 2009 11:22:04 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I 

urge you to heed the comments made by silver market analyst 

Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Those of us watching the precious metals markets see it as a problem in 

both the silver and gold markets.

Thanks for your consideration.

Sally Haviland 
From: PardnerInCrime

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 11:21:45 PM

August 10, 2009

Chairman Gensler,

I can only parrot EXACTLY what Mr. Ted Butler asks of you and by quoting him 

below, i DO ask the same as what he had written:

"Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 

5th. You said:

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do 

not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls half the market, 

that party is more likely to lessen liquidity than enhance it. Position limits should 

enhance liquidity by promoting more market participants rather than having one 

party that has so much concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 
concentration do not exist, either on the long or short side, in any other market 

for physical commodities.

The only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will 

increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 

across all commodities of finite supply, whether in relation to actual production or 

as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not to 

those engaged in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal."

I concur with exactly what Mr. Butler has submitted, and i too submit the same 

ideology to the Commission as he does. I respectfully request that you all 

consider this request with fresh, open, and honest eyes. The RIGHT thing must 

be done to correct the inequities at hand in this matter. In the meantime, and as 

always, May God continue to bless you all as you endeavor to do the right thing 

regarding these matters.

Respectfully submitted,

Donna Badach
From: FRANCIAPAULA

To: energyhearingcomments; 

Subject: Position Limits

Date: Tuesday, August 11, 2009 11:18:13 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Francia Trainor
From: Chris Henry

To: energyhearingcomments; 

Subject: Letter on limit positions (both long and short)

Date: Tuesday, August 11, 2009 11:14:29 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

This institution of limits on both sides will lead to much more balanced 

prices of commodities, and will end US dollar hegemony and the morons 

who are behind it. 

Thanks for your consideration.

Chris Henry 
From: AARON OSBORN

To: energyhearingcomments; 

Date: Tuesday, August 11, 2009 11:10:47 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Aaron Osborn
From: James C. Anderson

To: energyhearingcomments; 

Subject: Position Limits

Date: Tuesday, August 11, 2009 11:08:36 PM

Serve the interests of ALL investors equally and fairly while considering 

the specific needs of commodity market being addressed. 

James C. Anderson 
From: LLCCMANSent: 

To: 

Tuesday, August 11,200911:07 PM 

energyhearingcomments 

Subject: Energy Hearings 

August 11, 2009 

Office of the Secretariat 

Commodity Futures Trading Commission 

1155 21st St., NW 

Washington, DC 20581 

Re: Energy Hearing Comments 

Dear Chairman Gensler and Commissioners, 

My name is Gene Arensberg. I am a private investor and editor of Got Gold Report. 

Setting arbitrarily low position limits and removing exemptions on aggregators of common-minded 

investors, i.e., index funds or exchange traded funds, is a short-sighted fool's errand. All it will do is 

force such funds to break up into sub-funds across multiple entities which will end up raising the cost for 

individuals and investors to hedge their exposure to commodity and energy prices. 

Focus and position limits should be on individual actors, not aggregators. 

Numerous times in the three days of hearings we heard the phrase "excessive speculation." As if 

excessive speculation is to blame for high energy prices in 2008, which of course it was not, as shown 

repeatedly in testimony by John Hyland of USCF, Dr. Jarecki of Gresham Investment Management and 

others. 

Not once during the hearings did we ever hear the words "excessive hedging," or "excessive short selling." 

As if excess or abuse in the futures markets is only possible from the long side. It certainly is 'possible' 

from either side of the contracts, both in theory and in historical practice. 

We did, however, hear repeated references to preserving bona fide hedger's exemptions from position 

limits. As if traders the CFTC classes as hedgers are now and always will be above or beyond abusive 

trading. As if the motives, means and methods of "hedgers" such as Goldman Sachs, UBS, HSBC or J P 

Morgan Chase, et al, are now and always will be inviolate. Are they? Will they be? 

Commissioner Chilton said that the Commission has the responsibility not only to protect against actual 

manipulation, but also potential manipulation. With regard to that idea, consider the following facts about 

the very small silver futures market (small by comparison to the oil market). 

Silver is also a commodity of finite supply and thus within the scope of the hearings. Both Commissioner 

Chilton and Chairman Gensler mentioned the metals complex as markets which the Commission intends to 

intervene. 

Each month the CFTC publishes its Bank Participation in the Futures and Options Markets Report which 

shows the positioning of reporting banks in the U.S. futures markets for commodities including gold and 

silver. 

As of August 4, 2009, exactly two U.S. banks reported holding 15 contracts long silver and 29,813 

contracts short silver for a total net short position of 29,798 COMEX 5,000-ounce contracts-- with the 

1 
total open interest of 99,477 contracts open and silver closing on the cash market at $14.62. See the 

graph below. 

2-4 US BANK COME X SILVER NET POSITIONS SEPT 2006 - PRESENT 

35,0([) 

!Il20.CD 

30,00J 

!Il18.CD 25,0([) 

1.1.1 

!;;: !Il16.CD Q 

20,00J 

1-

0 

u 

~ 0::: 

1.1.1 

> ....J 

rJ) 

!Il14.CD 

!Il12.CD 

!Il10.CD 

15 ,om 

10,0CO 

5,000 

0 

(5 ,OOCJ) 

$8. CD -t----~....._.Lt---'--+-......... t------+--......,t------+------J-----t--""---tii...A...J-t-------r--'- (1 0 ,000) 

9/5/200fi 3/B/2007 9/4/2007 3/4/2008 9/2/2008 3/3/2009 

According to the CFTC Commitments of Traders Report, all commercial traders as a group, ALL OF THEM, 

held a net short silver futures position of 39,041 contracts as of the same day, so the U.S. banks' 

percentage of the total commercial net short positioning stood at 76.3°/o as shown in the graph below. 

2 
i= 

ct 

Q 

~ 

0 

u 

1-

ct 

a: 

~ Cii 

2-4 BANKS COMEX NET SHORT POSITIONS AS PERCENT OF ENTIRE 

COMMERCIAL NET SHORT POSITION SEPT 2006 TO PRESENT 

$22.00 120.00% 

z 

$20.00 Got Gold 100 00% ...J 

Report . :$ 

u 

$18.00 80_00% " w 

~ 

:::: 

0 

u 

$15.00 60_00% 1.1. 

0 

;!!I- Vlo: 

$14.00 

ceO 

40_00% ;-::I: 

a::I.IJ 

0 

::1:: 

Vl $12.00 20.00% .... 

w 

z 

lie: 

$10.00 0.00% z 

ct 

.I 

cc 

..,. 

t\1 

$8.00 -20.00% 

9/5/2006 316/2007 9/412007 3/4!2008 9/2/2008 3/3/2009 

Thus, two large U.S. banks represented 76.3°/o of all commercial net short positions. Just two "bona fide 

hedgers" literally dominate the short side of the COM EX silver market. 

What is very apparent from the above data is that if, repeat IF, the two U.S. banks wanted to, they 

certainly could manipulate and/or abuse the very small silver market with the weight of their own trading. 

By merely continuing to absorb additional buying pressure by means of taking ever larger net short 

positioning, the market 'could' be manipulated and price discovery thwarted. 

This is not to allege that the banks are manipulating the markets, but as Commissioner Chilton observed, 

the Commission bears a responsibility not only to prevent actual manipulation, but also 'possible 

manipulation.' Since the two banks are apparently able to put on any size position as hedgers, why 

should we not believe that they have the potential for abusive trading or excessive short selling? 

In summary, a focus purely on one side, the long side, of the market in regard to position limits is anticompetitive, unfair and smacks of attempted price control. Some of us view it as the first step toward the 

government being able to determine who may participate in the "free" markets. Such a leap of 

government control is unacceptable. 

If the Commission is bound and determined to take over the role of setting position limits and even 

accountability limits in the energy markets (and other markets of finite supply), and if the Commission 

intends to set rigid position limits for all traders on the speculative or long side, then those very same 

position limits should also apply equally, fairly, without exception or exemption, to the actors on the 

hedging or short side. Sine qua non. "Without which, not." 

The Commission should not, repeat not, remove the exemptions from position limits for qualified funds 

already granted, such as the funds managed by USCF, which pool thousands of like-minded individual 

investors wishing to protect themselves from the horrible destruction in the value and purchasing power of 

the U.S. dollar. The dollar damage caused by decades of fiscal mismanagement by the United States 

Congress and easy money policies of the U.S. Federal Reserve. 

3 
If the CFTC actually does want to insure fair and free markets, then it will not install unreasonably small 

limits on one side of the market and not the other. We expect that if the Commission does set limits 

which unduly restrict liquidity, it will result in market flight to less regulated, more opaque markets and 

considerably less transparency, permanently. 

Respectfully, 

Gene Arensberg 

Got Gold Report 

4 
From: Stephen L. Bobkin

To: energyhearingcomments; 

Subject: "Energy Hearing Comments" 

Date: Tuesday, August 11, 2009 11:06:56 PM

Attachments: Butler letter dated August 10, 2009.doc

Douglas letter dated August 11, 2009.doc

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to 

heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php (copy attached as 

Butler letter dated August 10, 2009)

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683 (copy attached as Douglas letter dated 

August 11, 2009)

Short-side position limits are as necessary as long-side limits.

Lastly, I want to express my sincere gratitude to all the Commissioners for 

taking on what I believe to be a thankless job. By that I mean that no 

matter what decisions you decide, there will be winners and losers on both 

sides. Those that want to continue with the status quo doing harm to those 

of us investors without the tools to really compete are fooling themselves 

that they can continue to do us harm. By us not playing their game they 

will end up just like those companies that did not move on with the times (e.

g. ice box manufacturers who failed to manufacture refrigerators). 

On the other hand, you the Commissioners by listening to and 

implementing the advice given by people like Mr. Butler and Mr. Douglas, 

give us the small investor a fighting chance to play on a level playing field. 

 Although it may not be palatable to those that are currently manipulating 

the system, it is the right thing to do if we are to salvage any sense of “fair 

play”, “honesty” and above all to ensure that “the rule of law” is upheld. 

As a foreigner and very close neighbour (A Canadian) I believe that the 

United States needs to correct some of the ills that have severely damaged 

itself and by extension the world. The most power document in the world 
in my mind is “The Constitution of the United States of American”. A 

document of such importance that by its very existence, created by some of 

most intellectually brilliant men ever to walk the earth, gave the USA its 

advantage to be the Greatest Nation on earth to be emulated and copied by 

all around the world. However, it is my view that it has been usurped by 

those that would want to shred its very power that allows those that govern 

the USA to rule. Use that document to justify what is right, for “We the 

People” not just of the United States but the World, and you will have the 

peoples of the world behind you in support.

I thank you for your time and for your consideration in this matter.

Yours truly,

Stephen L. Bobkin 

 
“Energy Hearing Comments”

August 10, 2009 

Chairman Gensler, 

Thank you for the opportunity to comment on the issue of position limits in energy and other physical 

commodities of finite supply. The hearings you conducted were of great public service. I will confine my 

comments to one market – the COMEX silver futures market. 

I have excerpted the following passages from your opening statement of August 5th. You said: 

“I believe that position limits should be consistently applied across markets for physical commodities of finite 

supply.” 

“..., I believe that at the core of promoting market integrity is ensuring markets do not become too 

concentrated.” 

“The very important question becomes: how much concentration is too much? At what point of market 

concentration does a trader detract from liquidity instead of enhance it? I think we would all agree that if one 

party controls half the market, that party is more likely to lessen liquidity than enhance it. Position limits 

should enhance liquidity by promoting more market participants rather than having one party that has so 

much concentration so as to decrease liquidity.” 

According to data contained in the most recent Commitment of Traders and Bank Participation Reports, both 

for positions held as of August 4, the level of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity and liquidity. After published noncommercial and imputed commercial spreads are removed, the net short position of one or two US banks 

exceeds 40% of the total net futures open interest. That same calculation indicates the net short position of 

the four largest traders exceeds 66% of total net open interest. Such levels of concentration do not exist, 

either on the long or short side, in any other market for physical commodities. 

The only effective means of ensuring market integrity and enhancing liquidity is for the Commission to 

impose legitimate speculative position limits. This will increase the number of traders on the short side of 

COMEX silver, as you stated. The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other commodity. Any reasonable 

method of applying position limits consistently across all commodities of finite supply, whether in relation to 

actual production or as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures. 

I also strongly urge you to restrict any exemption from that speculative position limit to the bona fide 

producers or consumers of the actual commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the enforcement of position 

limits to guard against excessive speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. Once again, I urge you 

change that profile by establishing a speculative position limit of no more than 1500 contracts in COMEX 

silver and by restricting any exemption to that limit to the actual producers and consumers of the metal. 

Theodore Butler 

Butler Research LLC 
“Energy Hearing Comments”

Tuesday, August 11, 2009 

Gary Gensler, Chairman 

U.S. Commodity Futures Trading Commission 

3 Lafayette Centre 

1155 21st St. N.W. 

Washington, D.C. 20581 

Dear Chairman Gensler: 

Your hearings on position limits in the commodity futures markets have presupposed that the 

issue is speculation on the long side. You will not correctly regulate markets if your inquiries 

and hearings are being conducted from the conclusion you want to make and then work 

backwards. 

The fundamental problem is not with finite resources but with infinite production of dollars. 

You are turning a blind eye to the manipulation of markets on the short side (and the massive 

OTC derivatives markets) that is undertaken to mask the uncontrolled creation of fiat dollars 

backed by nothing. 

The price suppression is rampant and is making finite commodities even more finite as it 

becomes uneconomic to produce them. The paper promises to supply commodities from 

stocks that do not exist suppresses prices. 

The CFTC has been investigating price manipulation in silver and gold for almost a year. The 

manipulators here will be drawing a pension before you recognize manipulation. Meanwhile the 

U.S. Senate can apparently recognize long-side manipulation of wheat and even crude oil in a 

flash. 

Why have your hearings focused on how oil rose to $147 per barrel and not equally how it fell 

to $35 per barrel and how the dollar made a magnificent rise in the middle of a credit crisis, a 

feat never before achieved? 

Federal Reserve Chairman Ben Bernanke testified in response to U.S. Rep. Alan Grayson that 

the rise in the dollar was a total coincidence even though it occurred even as half a trillion 

dollars of currency swaps were executed with foreign central banks. Really? And was it an 

equal coincidence that as a result of the dollar's rising from the dead the entire commodity 

complex cratered, including the most time-honored safe-haven asset, gold? 

Any limits you put on trading must be applied equally to short sellers. But the CFTC's 

investigation needs to dig into how markets are being manipulated at the behest the U.S. 

government to maintain dollar hegemony so that imports can be purchased for free and so the 

United States doesn't have to compete in the global marketplace to manufacture anything 

anymore except a torrent of greenbacks. 

My guess is that you will aid and abet the continuation of this Ponzi scheme because that is so 

much easier than doing what is right and what you are paid to do as a servant of the American 

people. 

Regards, 

Adrian Douglas 
From: Mike Staskiewicz

To: energyhearingcomments; 

Subject: In support of short-side position limits

Date: Tuesday, August 11, 2009 11:05:37 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

Mike Staskiewicz 
From: mike kelly

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 11:04:28 PM

I agree 100% with this letter. The public is losing trust in the regulators. 

Once trust is lost, it's hard to get it back. 

Mike Kelly

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments to 

one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of 

August 5th. You said:

“I believe that position limits should be consistently applied across markets 

for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one party 

controls half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by promoting more 

market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, the 

level of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity 

and liquidity. After published non-commercial and imputed commercial 

spreads are removed, the net short position of one or two US banks 

exceeds 40% of the total net futures open interest. That same calculation 

indicates the net short position of the four largest traders exceeds 66% of 

total net open interest. Such levels of concentration do not exist, either on 

the long or short side, in any other market for physical commodities.
The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of COMEX 

silver, as you stated. The level of the current accountability limit of COMEX 

silver futures (6,000 contracts), on an all months combined basis, is way 

out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether 

in relation to actual production or as a percent of total open interest, 

would dictate that the Commission impose a speculative position limit of 

no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. No other 

market comes as close to fitting the profile of a manipulated market than 

does COMEX silver on the short side. Once again, I urge you change that 

profile by establishing a speculative position limit of no more than 1500 

contracts in COMEX silver and by restricting any exemption to that limit to 

the actual producers and consumers of the metal. 

Theodore Butler

Butler Research LLC
From: GTL101

To: energyhearingcomments; 

Subject: (no subject)

Date: Tuesday, August 11, 2009 11:04:27 PM

 

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Gregory T. Lyons
From: Kevin Thomasson

To: energyhearingcomments; 

Subject: I urge you

Date: Tuesday, August 11, 2009 11:02:12 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures 

markets, I urge you to heed the comments made by silver 

market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side 

limits.

Thanks for your consideration.

Kevin Thomasson 
From: Ronald Knarr

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 11:01:12 PM

Please give us honesty in the gold and silver markets.!!!!! This 

should not be too much to ask. Have we, as a country, deteriorated to 

the point that our government only responds to , what amount to, bribes? 

Sincerely, 

Ronald Knarr 

 
From: rob robbins

To: energyhearingcomments; 

Subject: silver manipulation

Date: Tuesday, August 11, 2009 11:00:21 PM

You need to listen to Butler and Douglas. Their view makes sense in

putting an end to the metals manipulation.

 Rob Robbins 
From: rmohr657

To: energyhearingcomments; 

Subject: Enforcing position limits in the gold and silver futures markets

Date: Tuesday, August 11, 2009 10:58:16 PM

Dear CFTC Commissioners:

I support of support of enforcing position limits in the gold and silver 

futures markets. I believe that the CFTC should bar manipulation by 

shorts, not just longs. Short-side position limits are as necessary as longside limits.

With regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Thanks for your consideration.

ROBERT MOHR 
From: John Bisely

To: energyhearingcomments; 

Subject: Re: Stock market & manipulation........

Date: Tuesday, August 11, 2009 10:57:23 PM

Re: Stock market & manipulation.

Any limits you put on trading must be applied equally to short sellers. The 

market is distorted by both 

longs and naked shorts in spite of laws. Big concentrations in an institution 

is an alarm and needs 

auditing. A free market has given America its high standard of living and 

while socialist China heads 

toward capitalism, our country is sliding into a socialist state with 

government controlling our markets.

We reward failure with bailouts, punish success with taxes and try to 

manipulate every aspect of the 

markets and our lives. You have a duty to correct this one aspect, albeit a 

very very important aspect 

of our free markets. Free markets that have been so rewarding to our 

people.

Respectfully yours,

 John C. Bisely 
From: wsadlowsky

To: energyhearingcomments@cftc.gov.; 

Subject: “Energy Hearing Comments.”

Date: Tuesday, August 11, 2009 10:53:30 PM

After published non-commercial and imputed commercial spreads are removed, 

the net short position of one or two US banks exceeds 40% of the total net 

futures open interest. That same calculation indicates the net short 

position of the four largest traders exceeds 66% of total net open 

interest. Such levels of concentration do not exist, either on the long or 

short side, in any other market for physical commodities. 

Position limits have got to be put in place, monopilzation of the silver 

market is clearly happening right in front of our eyes. 

Do the right thing and reign in the abuse that a few very large 

institutions are getting by with. 
From: John Gamble

To: energyhearingcomments; 

cc: John S Gamble; 

Subject: Short-side position limits 

Date: Tuesday, August 11, 2009 10:50:54 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed the 

comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

John S. Gamble
From: Roger Meadmore

To: energyhearingcomments; 

Subject: Shorting

Date: Tuesday, August 11, 2009 10:50:24 PM

Dear CFTC Commisioners,

In regar to position limits in the commodity futures markets, I urge you to 

heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

and by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

I have found short position limits as necessary as long-side limits.

Than you for your consideration,

Roger Meadmore,

 

 

 
From: Marg Newbigging

To: energyhearingcomments; 

Subject: Watching from Australia

Date: Tuesday, August 11, 2009 10:48:07 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed 

the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Margaret Newbigging 
From: G & L Hevelone

To: energyhearingcomments; 

Subject: “Energy Hearing Comments"

Date: Tuesday, August 11, 2009 10:47:12 PM

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in energy 

and other physical commodities of finite supply. Your opening comments: “I believe 

that position limits should be consistently applied across markets for physical 

commodities of finite supply” and “I believe that at the core of promoting market 

integrity is ensuring markets do not become too concentrated” are properly focused 

to ensure that the markets are not manipulated by excessively large and 

concentrated positions.

There is no commodity of finite supply with such a concentrated short position as 

silver. This is evident from the CFTC's own COT reports.

Therefore, I strongly support position limits in all commodities with no 

exemptions for Goldman Sachs, JP Morgan and HSBC and only exemptions for 

bona fide producers or consumers. Silver obviously needs position limits of no more 

than 1300-1600 contracts, as no other market comes even close to fitting the profile 

of a manipulated market (on the short side) than silver.

Thank you for your time and consideration,

Gary Hevelone
From: Jeanmarie Zirger

To: energyhearingcomments; 

Subject: Energy Hearing Comment

Date: Tuesday, August 11, 2009 10:46:19 PM

Gentlemen; It appears to me that your approach to position limits in the finite 

energy markets must first and formost place severe and rarely exemptable limits 

on the short selling practices that are concentrated in the hands of just a few 

traders. The silver market is a blatent example of manipulated prices via naked 

shorts that have skewed the playing field against us. 

Sincerely,

Jeanmarie Zirger
From: John Resing

To: energyhearingcomments; 

Subject: Regulatory Failure

Date: Tuesday, August 11, 2009 10:46:00 PM

Our nation is in the economic crisis it is because of Federal 

regulatory failure. 

The spot light is now on the CFTC to make sure that the market is not 

the advantaged play pen of NY insiders. All physical commodities 

should have position limits based on physical production of the 

commodity and all rules should apply equally to both buyers and 

sellers AND BE THE SAME FOR ALL CLASSES OF market participants. No 

greater position limits. No lesser exchange fees. No grace on 

settlements. Systems that are engineered to prevent front running 

instead of the active promotion of front running by the NYSE. A fair 

market is a neutral meeting place of prospective buyers and sellers. 

I hope you do the right thing in all the markets but particularly 

gold and silver where the CFTC tolerated illegality has been most gross. 

If you do not correct the evil practices of the past you will be 

leading the US to greater economic destruction. 

John 

John H. Resing, President 

Milestone Capital 

 

Peter F. Drucker on the future: "No one can predict the future; some 

can recognize the future that already exists. However, the 

entrepreneur invents the future." 
From: Paul Janos

To: energyhearingcomments; 

cc: Bill Murphy; Maria Cantwell@cantwell.senate.gov; Barbara Graham; 

cris horbelt; Scott Kemp; justina.guyott@seattle.gov; Justin Hellier; 

robbie gandy; chancellor roland hohensee; Ben Crockett; kaela hobbyreichstein; Grape; Brian David Orr; James Huston; 

Subject: Need for position limits in silver trading

Date: Tuesday, August 11, 2009 10:42:26 PM

CFTC Commissioners:

By permitting two-to-four trading houses to maintain 

incomparably extreme silver market positions (orders of 

magnitude larger than in ANY other commodity, and virtually all 

on the short side), the CFTC has historically colluded to contain 

the price of this strategic metal and to incidentally support the 

over-printed dollar. Such actions far exceed the authority of the 

CFTC. They amount to comicly inept "central planning" of money 

itself, the most crucial element of a purported freemarket system. The CFTC's collusion has clearly served a few 

banking institutions fronting the bank-owned FED and/or the 

bank-bribedTreasury (e.g. JPMorgan and HSBC among them), and 

the financial oligarchies behind them. By its historic collusion in 

silver market manipulations, the CFTC has long functioned as 

a virtual economic enemy of the people. Treasury's billion-ounce 

stockpile of silver was given away.

Obama gave U.S. hope. Chairperson Gensler too gives hope. But 

talk is cheap. The CFTC needs to act - and quickly - to END the 

obvious manipulation in silver. Position limits: YES. And 

comparable to levels for other commodities, not the tale-telling 

orders of magnitude larger observable today.

Respectfully,

Paul Janos
From: Ben Rolfes

To: energyhearingcomments; 

Subject: Enforcement of Position Limits in the Futures Markets 

Date: Tuesday, August 11, 2009 10:41:37 PM

Please heed the comments sent to the commission by Butler and GATA board 

member Adrian Douglas.

Thanks,

Ben
From: rama demmin

To: energyhearingcomments; 

Subject: Re: Position limits in the Commodity Futures Markets * urgent!

Date: Tuesday, August 11, 2009 10:40:08 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you 

to consider seriously the comments made by silver market analyst Ted 

Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thank you for your consideration. 

Rama Gordon Demmin 

 

 
From: Eric Nalven

To: energyhearingcomments; 

Subject: Limit Positions

Date: Tuesday, August 11, 2009 10:39:21 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed the 

comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Eric Nalven
From: Marlon Oddo

To: energyhearingcomments; 

Subject: Gold and silver position limits

Date: Tuesday, August 11, 2009 10:36:26 PM

 

Dear CFTC Commissioners: 

 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

 

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

 

 

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration. 

 

Sincerely, 

Marlon Oddo 
From: Brett Heath

To: energyhearingcomments; 

Subject: Position limits

Date: Tuesday, August 11, 2009 10:35:46 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

-- 

All the best, 

Brett Heath 
From: Danny Bruner

To: energyhearingcomments; 

Subject: Setting Speculation Limits

Date: Tuesday, August 11, 2009 10:33:43 PM

To whom this may concern: Please do the right thing and impose legitimate 

speculative position limits. The blantant mimipulation in silver by the size of the 

shorting by a small handfull of US banks, stands out to us here in Canada.Please 

Sir,impose fair and real limits,its about time.

Thankyou. Mr.DanBruner 

 
From: Sean Ryan

To: energyhearingcomments; 

Subject: Enforcment of Position Limits in the Gold and Silver Futures Markets

Date: Tuesday, August 11, 2009 10:33:13 PM

Dear CFTC Commissioners:

In regard to position limits in the commodity futures markets, I urge you to heed the 

comments made by silver market analyst Ted Butler here:

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here:

http://www.gata.org/node/7683

Short-side position limits are as necessary as long-side limits.

Thanks for your consideration.

Sean Ryan
From: William Higa

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 10:33:09 PM

Dear Commission: 

As an ordinary citizen, may I urge you to restore your rightful 

authority to regulate the commodity markets so that the interest of the 

entire country is protected from greedy speculators who could cause 

another financial disaster as we experienced in the housing-mortgage 

debacle. I understand the main focus of your recent hearings has been 

on the energy futures markets, and rightly so. However, may I also ask 

you to examine the markets in other commodities that are at risk for 

such greed. In particular, I understand that the current position 

limits and exemptions in the silver market deviate abnormally from those 

of all other commodities. I would thus guess that these circumstances 

may be providing the basis for distorting the true and fair price of 

silver. And, that is not right and not the American way! 

As you continue your deliberations in these complex issues, may I also 

congratulate your recent actions in pursuing violators of CFTC rules. 

Taking strong enforcement actions are necessary to attach meaning to the 

rules. Thank you and your staff for doing an outstanding job for our 

country! 

William R. Higa 
From: GoodGuy25

To: energyhearingcomments; 

Subject: In support of short-side position limits

Date: Tuesday, August 11, 2009 10:32:01 PM

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures markets, I urge you 

to heed the comments made by silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php 

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683 

Short-side position limits are as necessary as long-side limits. 

Thanks for your consideration, 
From: jhmosley

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 10:28:29 PM

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in 

energy and other commodities. I believe that proper position limits, with only 

very limited, legitimate exceptions are key to free and fair markets.

In particular, I am very disturbed by the apparent, significant concentration of 

shorts in the COMEX silver market as evidenced in the COT weekly reports. I 

hope and trust that as you review this issue for the energy markets, the intent is 

to also apply similar principles to other markets; i.e. precious metals. For silver, 

in particular, the current limit of 6,000 contracts seems way out of line with other 

commodities. Perhaps a limit of 1,500 contracts would be reasonable.

Thank you for your time and consideration.

Sincerely,

John Mosley
From: victor5555

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 10:23:44 PM

Dear Sir:

While it is important to place position limits on the energy complex, it is 

also important to have limits in the metals markets. In the gold and silver 

markets, two or three large banks have concentrated short positions that 

have overwhelmed the market. It's all well and good for JP Morgan Chase 

or Goldman Sachs to say they have corresponding long positions 

somewhere else (presumably in an over the counter market) but this 

serves to prevent price discovery. Mining companies are being driven into 

bankruptcy so that these large banks can make profits by trading for their 

own accounts.

When physical demand for gold and silver finally overwhelms the market, 

and the banks' offsetting derivative instruments are found not to be 

backed by any bullion, how are you going to explain this?

Regards,

Victor De Grande
From: Donald R. Davis

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 10:18:44 PM

Energy Hearing Comments 

I commend the CFTC for these hearings. 

I am especially concerned about the silver futures market, because 

conditions there are worse than in any other market. 

1. Please reduce position limits for silver futures, both long and 

short, to much less than the current 6000 contracts. 

2. Please stop granting position-limit exceptions to entities that 

are not directly involved in the physical silver markets. 

Donald R. Davis 
From: James Marquart

To: energyhearingcomments; 

cc: "James Marquart"; 

Subject: "Energy Hearing Comments." 

Date: Tuesday, August 11, 2009 10:17:10 PM

I wish to strongly encourage the Commission to heed the well documented 

comments of Ted Butler which verily reflect my views regarding the manipulation 

of the silver and gold markets.
From: DARIO RONCONE

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 10:15:36 PM

To the Commission:

This email is being sent to you so I can state my opinion on the 

speculative position limits in energy futures markets.

I am a very small investor in the stock market and do not participate 

directly in the futures market. There's a few exchange traded funds (ETF) 

that allow the very small investor type like myself to participate in either a 

short or long position in commodities that are otherwise would be beyond 

the comfort and/or knowledge level of most small investors.

Through the ETFs, I can position my portfolio effectively and cheaply for 

moves in the energy market and other commodities. There would be no 

other opportunity for me to do so if it wasn't for the ETFs.

Your commission is considering the limit of energy contracts to control 

speculation. The limits would only squash the ability of small investors like 

myself to have a decent avenue to participate in the commodity market. 

While your commission may believe excessive speculation, please consider 

the unintended consequences of limiting contracts. ETFs will be harmed 

and thus, the avenue for small investors to participate, long or short, in 

energy movements will be shut. Please, do no harm for the small 

investors like myself. The larger participants in the commodities market 

have sway and free range. All I'm asking is to leave the small investor 

with free range via ETFs to play the energy and commodity market. Vote 

no for imposing limits on energy futures.

Regards,

Dario Roncone
From: Phil Baskett

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 10:11:14 PM

August 11, 2009

Chairman Gensler,

I sincerely appreciate the chance to express my views on position limits. In 

particular, I believe position limits need to be reduced significantly in silver, and 

particularly for short positions. My concern is that a very few financial institutions 

have amasses very outsized short positions, and that the market price is thereby 

unduly impacted. True commercial producers or users may have legitimate 

need of exceptions, but surely nobody else.

Thank you for your determination to clean up our financial markets and 

have a high standard of integrity for them.

Phillip E. Baskett
From: Jody Trantham

To: energyhearingcomments; 

Subject: Silver position limits

Date: Tuesday, August 11, 2009 10:09:05 PM

Commissioner, 

 

Thank you for what you are doing with position limits. 

 

I urge you change that profile by establishing a speculative position limit 

of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the 

metal. 

 

Thank you again! 

 

Jody Trantham 
From: Chris Powell

To: energyhearingcomments; 

Subject: stop the short-side manipulation too

Date: Tuesday, August 11, 2009 10:05:42 PM

Tuesday, August 11, 2009 

Dear CFTC Commissioners: 

In regard to position limits in the commodity futures 

markets, I urge you to heed the comments made by 

silver market analyst Ted Butler here: 

http://news.silverseek.com/TedButler/1250014324.php

And by commodity market analyst Adrian Douglas here: 

http://www.gata.org/node/7683

Thanks for your consideration. 

cp 

-- 

CHRIS POWELL, Secretary/Treasurer 

Gold Anti-Trust Action Committee Inc. 
From: Geomantucson532

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 9:41:08 PM

August 11, 2009 

Dear Chairman Gensler, 

I am writing in regards to the position limits in energy and other physical 

commodities. I would like to comment on one market with that being the 

silver market. I believe that position limits are necessary in the silver 

market on COMEX since there is a very large concentration in this market 

which does not exist in other COMET markets or to the same extent. The 

concentration in the silver market on the COMEX is by a very limited 

number of banks which distort the market. 

I would urge you to restrict the market to true producers and consumers of 

the silver metal and to limit to 1500 contracts in COMEX silver to 

speculative positions. 

Thank you, 

Michael Schaffner 
From: vince desmond

To: energyhearingcomments; 

Subject: Ted Butler is absolutly RIGHT..

Date: Tuesday, August 11, 2009 9:34:49 PM

If your commitee does NOT follow Mr. Butlers reccomendations....many many 

many citizens when be asking for your resignations!!!!!!!!!!!!!! 

Please just try to be honest..you work for the people!!!!!!!!!!!!!!! 

Please acknowledge reciept of this message. Cheers.... Vince 

 
From: Harry Hvistendahl

To: energyhearingcomments; 

Subject: Energy Hearing Comments. 

Date: Tuesday, August 11, 2009 9:33:16 PM

From an Australian trader.

Please check the top 1-2 commercial shorts on the Silver COTs. 

Either someone is naked short, or they have a bigger hoard than the Hunt 

brothers.

Regards 

Harry Hvistendahl 
From: Burt Schapiro

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 9:30:18 PM

Please enter my comments into the public record.

The worst fate that can occur in any market is a default. A failure to 

deliver the required amount of physical commodities of finite supply can 

ruin a business, and more importantly confidence in the marketplace. That 

is why I ask the commission why are longs and shorts not given a level 

playing field?

Position limits should be applied equally to both. If speculators are 

permitted to short larger quantities than they can reasonably deliver then 

that puts the marketplace in danger, and eventually will lead legitimate 

producers and users to move their business overseas.

In the silver market the limits placed on those holding long cotracts 

wishing to take delivery represents an unfair regulation that protects 

shorts without the real goods from a potential default. This protection 

should vbe eliminated in favor of enforcing position limits based upon a 

sellers legitimate need to hedge production or documented inventory in 

approved warehouses. 

Thank you,

Burt Schapiro, BC-HIS, ACA
From: Mick Abraham

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 9:15:12 PM

Dear Chairman Gensler~ 

Thank you for taking a fresh look at position limits in energy and other 

physical commodities of finite supply. 

Silver plays a role in my business in site based energy equipment. Some of 

the products I sell may suffer price shocks from an unstable market 

because other regulators have turned a blind eye to an obvious 

concentration & manipulation in the Comex silver market. 

In order for commodity regulations to promote orderly trade, consistent 

mathematical formulas should be used for all commodities of finite supply. 

Allowable levels of concentration should be calculated relative to real 

production or open interest. In the case of silver, the present limit of 

6,000 contracts seems to invite extremes of speculative excess. I ask you 

to consider a much lower limit--around 1,500 contracts or wherever 

consistent, even handed math takes you. A consistent regulatory stance 

across the spectrum of finite commodities is the key. 

Any exemption to trading limits should only be allowed for actual 

producers and consumers of their particular finite commodity. Physical 

supply/demand realities should inform the futures markets, not the other 

way around. With silver, the tail has been wagging the dog for too long. 

Sincerely, 

Mick Abraham, 
From: str8andsimple

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 8:49:07 PM

Commodity Futures Trading Commission, 

I know your time is precious so I'll make my request short and sweet.

Please limit concentrated short positions in the silver futures market. 

This will allow the little guy a fighting chance against powerful market 

manipulators. 

Fairness is all I ask.

Thank You!

Very Respectfully,

Joseph Clements 

__________________________________________________ 

 
From: wdwexe

To: energyhearingcomments; 

Subject: Energy hearing comments

Date: Tuesday, August 11, 2009 8:47:58 PM

Please consider the following quote from an article I read as a request 

from myself. 

"The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of COMEX 

silver, as you stated. The level of the current accountability limit of COMEX 

silver futures (6,000 contracts), on an all months combined basis, is way 

out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether 

in relation to actual production or as a percent of total open interest, 

would dictate that the Commission impose a speculative position limit of 

no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. No other 

market comes as close to fitting the profile of a manipulated market than 

does COMEX silver on the short side. Once again, I urge you change that 

profile by establishing a speculative position limit of no more than 1500 

contracts in COMEX silver and by restricting any exemption to that limit to 

the actual producers and consumers of the metal."

Thank You !
From: rdrews2003

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 8:45:10 PM

Dear Chairman Gensler and CFTC personnel,

Thank you for holding such a forum. As a U.S. citizen who is concerned 

with the integrity of our finanical markets and economy, i view it as 

imperative that our market dealings function as they were designed to. 

Nowhere is this more important as it pertains to commodities.They are the 

lifeblood of all the "stuff" we humans need. And the energy market 

affects us all and is vital to the USA's security to be sure.

However, it is this is also true in agriculture and METALS. In particular, the 

SILVER COMEX. 

This vital metal is necessary for our national defense, medical, 

technological innovation and production, chemical and a host of other 

uses. We need to make sure that supply and demand is allowed to work to 

bring about a proper supply of silver at the market driven price. In the last 

4 years, the USA government has run COMPLETELY out of silver because 

for WAY TOO LONG financial interestes in the silver comex have unduly 

shorted and concentrated to the short side - our silver comex. We need 

this to end so price and can bring supply and demand back into balance 

driven by market (not manipulated price) forces - not managed forces by 

banks who have no vested interest in silver. 

The banking entities should NOT be allowed to concentrate to the short 

side as they are. Ted Butler and others have documented this fact. 

I therefore am requesting that you fulfill your duties to uphold, protect 

and defend the constitution of the USA and all of her laws - and this 

includes COMMODITIES LAW. Those laws say that no entity should be 

allowed to concentrate to the degree that banks have in the silver market. 

This is NOT good for our nation, the silver market, numerous industries, 

and investors as well. WE NEED MORE SILVER. Concentratred short 
positions do not help this situation !! 

Please enforce a reasonable 1500 contract limitation - with the only 

exception being for a VALID USER or PRODUCER of silver. Banking entities 

have caused enough harm to our nation recently. It is time to rein in their 

activities and this is nowhere more obvious in the silver market short side 

as far as commodities go. 

With kind regards,

Roger A. Drews
From: Mark and Jeanne Sievers

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 8:40:20 PM

August 11, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of 

August 5th. You said:

“I believe that position limits should be consistently applied across markets 

for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one party 

controls half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by promoting more 

market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders and 

Bank Participation Reports, both for positions held as of August 4, the level 

of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity 

and liquidity. After published non-commercial and imputed commercial 

spreads are removed, the net short position of one or two US banks exceeds 
40% of the total net futures open interest. That same calculation indicates the 

net short position of the four largest traders exceeds 66% of total net open 

interest. Such levels of concentration do not exist, either on the long or 

short side, in any other market for physical commodities.

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of COMEX 

silver, as you stated. The level of the current accountability limit of 

COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable 

method of applying position limits consistently across all commodities of 

finite supply, whether in relation to actual production or as a percent of total 

open interest, would dictate that the Commission impose a speculative 

position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard 

against excessive speculation or manipulation on the short side as well. 

No other market comes as close to fitting the profile of a manipulated market 

than does COMEX silver on the short side. Once again, I urge you change 

that profile by establishing a speculative position limit of no more than 1500 

contracts in COMEX silver and by restricting any exemption to that limit to 

the actual producers and consumers of the metal. 

Thank you so much for your time, and for looking into this important 

subject. The COMEX is quickly loosing the respect of traders around the 

world because of the blatant manipulation that is occurring in the silver and 

gold markets. Please do not let the CFTC’s reputation become tarnished 

anymore. You can turn this around and show the public that there is still a 

regulator here in the US that will promote market integrity and ensure that 
markets do not become too concentrated.

Thanks again,

Mark Sievers
From: pocomoco

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 8:33:42 PM

Governors of CFTCI have been following and investing in gold/silver markets for the past ten years 

and am in full agreement with Mr. Ted butler. I feel that the price of the 

precious metals is manipulated-silver severely so. I would like to see silver 

contract positions limited to between 1,000 and 1,500 and do away with all the 

phony exemptions. 

 Sincerly, Robert Pennamacoor 
From: Karen Schrock

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 8:29:44 PM

Chairman Gensler, 

 

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments 

to one market – the COMEX silver futures market. 

 

I have excerpted the following passages from your opening statement of 

August 5th. You said: 

 

“I believe that position limits should be consistently applied across 

markets for physical commodities of finite supply.”

 

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

 

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one 

party controls half the market, that party is more likely to lessen liquidity 

than enhance it. Position limits should enhance liquidity by promoting 

more market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

 

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, 

the level of concentration on the short side of COMEX silver futures 

would appear to meet or exceed the level you imply threatens market 

integrity and liquidity. After published non-commercial and imputed 

commercial spreads are removed, the net short position of one or two 

US banks exceeds 40% of the total net futures open interest. That same 

calculation indicates the net short position of the four largest traders 

exceeds 66% of total net open interest. Such levels of concentration do 

not exist, either on the long or short side, in any other market for 

physical commodities. 

 

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of 

COMEX silver, as you stated. The level of the current accountability limit 
of COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable 

method of applying position limits consistently across all commodities of 

finite supply, whether in relation to actual production or as a percent of 

total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver 

futures. 

 

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard 

against excessive speculation or manipulation on the short side as well. 

No other market comes as close to fitting the profile of a manipulated 

market than does COMEX silver on the short side. Once again, I urge you 

change that profile by establishing a speculative position limit of no more 

than 1500 contracts in COMEX silver and by restricting any exemption to 

that limit to the actual producers and consumers of the metal. 

 

Thank You 

 

Karen Schrock 
From: Don Schrock

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 8:15:20 PM

Chairman Gensler, 

 

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments 

to one market – the COMEX silver futures market. 

 

I have excerpted the following passages from your opening statement of 

August 5th. You said: 

 

“I believe that position limits should be consistently applied across 

markets for physical commodities of finite supply.”

 

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

 

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one 

party controls half the market, that party is more likely to lessen liquidity 

than enhance it. Position limits should enhance liquidity by promoting 

more market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

 

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, 

the level of concentration on the short side of COMEX silver futures 

would appear to meet or exceed the level you imply threatens market 

integrity and liquidity. After published non-commercial and imputed 

commercial spreads are removed, the net short position of one or two 

US banks exceeds 40% of the total net futures open interest. That same 

calculation indicates the net short position of the four largest traders 

exceeds 66% of total net open interest. Such levels of concentration do 

not exist, either on the long or short side, in any other market for 

physical commodities. 

 

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of 

COMEX silver, as you stated. The level of the current accountability limit 
of COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable 

method of applying position limits consistently across all commodities of 

finite supply, whether in relation to actual production or as a percent of 

total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver 

futures. 

 

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard 

against excessive speculation or manipulation on the short side as well. 

No other market comes as close to fitting the profile of a manipulated 

market than does COMEX silver on the short side. Once again, I urge you 

change that profile by establishing a speculative position limit of no more 

than 1500 contracts in COMEX silver and by restricting any exemption to 

that limit to the actual producers and consumers of the metal. 

 

Thank You 

 

Donald Schrock 

 
From: Heinz Lycklama

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 7:51:04 PM

Here are my comments for the Energy Hearing being

held by the CFTC. Thanks for your consideration.

Heinz

------------------------------------------------------------------ 

Heinz Lycklama 

 

 

 

------------------------------------------------------------------

----- Original Message ----- 

From: Heinz Lycklama

To: Gary Gensler

Cc: Walter Lukken ; Stephen Obie ; Secretary to CFTC ; Roy Lavik ; R Schaeffer ; 

Natise Stowe ; Michael Dunn ; Jnewsome@nymex.com ; Jill Sommers ; Jamie 

Dimon ; Dean Payton ; Christine Ryall ; Bart Chilton ; Eric Thorson ; Gary Gensler ; 

Maria Cantwell ; Rick Larsen ; Patty Murray ; Patty Murray

Sent: Tuesday, August 11, 2009 12:19 PM

Subject: Speculative Position Limits on Gold and Silver

Ted Butler has provided input to you regarding the hearings the CFTC

held on speculative position limits on Silver in his letter to you on August 10th.

 http://news.silverseek.com/TedButler/1250014324.php

I fully agree with Ted's comments regarding Silver, but I want to make

sure the CFTC applies the same kind of position limit rules for Gold.

I also want to emphasize that the rules must address excessive speculation

on the SHORT side as well as on the LONG side.

Public confidence in financial markets needs to be restored again.

This requires free and fair markets, NOT manipulated markets.

Thanks for listening.

Heinz
From: Scott Lafferty

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 7:42:09 PM

To whom it may Concern, 

 

Please restore balance and fairness to the COMEX silver futures market 

by limiting speculative positions! The excessive speculation on the short 

side has become apparent to all. It is unfair that so few have been able 

to control the price of Silver. Please do the right thing. We are all 

counting on you. 

 

Thank You, 

 

Respectfully, 

 

Scott S. Lafferty 
From: Bill Buchanan

To: energyhearingcomments@cftc.gov.; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 7:34:53 PM

Chairman Gensler 

Thank you for your recent speech on the futures market. I have raised 

cattle for 53 years and watched the grain market. When one deals with 

"the finites" you can get a sense of direction. What has mystified me 

is Gold and Silver at least until this last year. With silver 

especially I understand the backlog of supply being used up. But when 

we hit the wall of low supply with present concentrated positions the 

poop will hit the fan. I hope You and the cftc can keep this from 

getting ugly. I don't want to make too much money with my present hard 

currency positon! But remember this is a "strategic metal". Keep me 

out of trouble. 

Yours Truly 

Bill Buchanan 
From: wdwexe

To: energyhearingcomments; 

Chilton, Bart; 

Subject: silver 

Date: Tuesday, August 11, 2009 7:31:41 PM

I have been following the silver market since 2004, and have been puzzled 

to say the least. I have been following the investigation into silver 

manipulation as well, and have been even more puzzled.

I am excited to hear about the hearings !

"I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. No other 

market comes as close to fitting the profile of a manipulated market than 

does COMEX silver on the short side. Once again, I urge you change that 

profile by establishing a speculative position limit of no more than 1500 

contracts in COMEX silver and by restricting any exemption to that limit to 

the actual producers and consumers of the metal."

The above quote from an article I read says how I feel verry well. Thank 

you for your consideration. By the way, look at the latest comex report 

regarding silver SHORTS !
From: Edward Forth

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 7:27:10 PM

 

 Sir, 

 This letter may seem strange coming to you as it does from someone 

outside the United States of America. It is coming to you from someone 

who lives in England. A person who for some years has invested in 

Silver, a precious commodity, as an investment for his retirement. A 

commodity which for years now has gained hardly a jot and which 

appears to have been the subject of a sustained and cynically corrosive 

culture of suppressive manipulation. Since New York, America, is the 

world host trading platform for this commodity, the rest of the world 

must conclude that this manipulation has been carried out by the dictat 

and with the blessing of the Government of the USA. 

 If ever there was a time for men of honour to step forward and stem 

the tide of selfishness and human greed, this is the hour. 

 Yours faithfully, 

 T. E. Forth 
From: Gary Kugler

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 7:11:03 PM

Dear Commissioner Gensler,

For the many reasons that have been amply voiced by Mr. Ted Bulter over 

the years, I urge you to establish a speculative position limit of no more 

than 1500 contracts in COMEX silver and restrict any exemption to that 

limit to the actual producers and consumers of the metal. Hopefully, this 

will, at long last, bring an end to the obvious manipulation of the COMEX 

silver market by one or two large banks that have no legitimate reason to 

be holding such a large concentrated short position.

Thanks for pursuing justice and fairness in this market!

Sincerely,

Gary Kugler
From: Rob McInerney

To: energyhearingcomments; 

Subject: “Energy Hearing Comments”

Date: Tuesday, August 11, 2009 6:59:08 PM

Chairman Gensler, 

As a silver investor my concerns are with respect to the position 

limits. Fair market value can be artificially suppressed when position 

limits are high punishing smaller investors who sometimes make good 

investment decisions. I would hope that the hearings allow the CFTC to 

come to a clear and concise conclusion on position limits for the 

silver market. What happened last September to the gold and silver 

market was devastating to many, now try to consider these investors 

(myself included) thought they were doing the right thing to protect 

themselves. 

Angry is an understatement, the markets have been a circus and it's 

time the powers that are and the powers that be decide to lower the 

gavel regulate a fair game. 

From what I've read that Ted Butler has written, you are the man that 

will right the ship. Thank you for your efforts and I will be very 

interested in the results of these meetings. 

Thank you, 

Rob McInerney 
From: Adrian Douglas

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Tuesday, August 11, 2009 6:53:41 PM

Dear Chairman Gensler, 

I have written my comments in a published article below. Your hearings have taken the 

presupposition that the issue in futures markets is speculation on the long side. You will not 

correctly regulate markets if your inquiries and hearings are being conducted from the 

conclusion you want to make and then working backwards! 

The fundamental problem is not with finite resources but with infinite production of dollars. 

You are turning a blind eye to the manipulation of markets on the short side (and the massive 

OTC derivatives markets) that is enacted to mask the promiscuous and out-of-control 

creation of fiat dollars backed by nothing. The price suppression is rampant and is making 

finite commodities even more finite as it becomes uneconomic to produce commodities at or 

below cost. The paper promises to supply commodities from stocks that do not exist 

suppresses prices. The CFTC has been investigating price manipulation in silver and gold for 

almost one year. The manipulators will be drawing a pension before you recognize 

manipulation. Meanwhile the US Senate can apparently recognize long side manipulation of 

wheat and even crude oil in a flash. Why have your hearings focused on how oil rose to $147/

Bbl and not equally how it fell to $35/Bbl and how the dollar made a magnificent rise in the 

middle of a credit crisis? A feat never before achieved in history. Mr. Bernanke testified in 

response to questions from Alan Grayson that the rise in the dollar was a total coincidence 

even though it occurred at the same time as half a trillion dollars of currency swaps were 

executed with foreign Central banks!? Oh really? And was it an equal coincidence that as a 

result of the USD rising from the dead that the entire commodity complex cratered, including 

the most time honored safe haven asset ...gold? 

Any limits you put on trading must be applied equally to short sellers. But your real 

investigation needs to dig into how markets are being manipulated at the behest and on 

behalf of the US Government to maintain dollar hegemony so that imports can be purchased 

for free and so the US doesn't have to compete in the global market place to manufacture 

anything any more except for a torrent of greenbacks.

My guess is that you will aid and abet the continuation of this Ponzi scheme because that is 

so much easier than doing what is right and what you are paid to do as a servant of the 

American people.

Regards

Adrian Douglas 

http://www.gata.org/node/7631

Adrian Douglas: CFTC conceals the real problem, 

the infinite dollar

Submitted by cpowell on Wed, 2009-07-29 01:58. Section: Daily Dispatches
By Adrian Douglas 

Tuesday, July 28, 2009

Today's hearing by the U.S. Commodity Futures Trading Commission to discuss 

speculation in futures markets is a sham, a kangaroo court.

Notice that the concern of the CFTC is only why oil went up last year. The 

commission has no concern as to why oil fell so abruptly from $147 down to $35 

even though Don Coxe was widely quoted at the time as saying the government 

had instigated a massive takedown. The commission's focus is on commodities of 

"finite supply" and preventing speculation.

Until about 10 years ago the world was always living with a glut of commodities, 

and particularly the most important one, oil. Technology had allowed the 

production capacity of oil to always grow much faster than demand. This is why 

OPEC was always trying to impose production quotas, but they had little effect as 

poor discipline always led to oversupply. In the first half of 2008 the world was 

struggling to produce enough oil to meet demand. In 2007 we saw a rice 

shortage and producing countries put restrictions on exports. We saw a shortage 

in corn as an ill-fated plan to solve the growing energy crisis involved making 

ethanol from corn.

Shortages in commodities lead to higher prices. The response of the U.S.-aligned 

crony capitalists over the last decade was to foster a derivatives monster to 

manipulate prices down even as shortages began. The over-the-counter 

derivative market grew to $1.4 quadrillion, 20 times bigger than the GDP of the 

whole world. This gets little discussion in the press.

Derivatives were the mechanism by which the United States and its allies tried to 

defy the laws of economics and push down the price of things in short supply. It 

worked for a while but it is now failing. Commodity prices and in particular oil 

prices are rising rapidly again. There is nothing to say that shortages can't exist 

in the middle of a recession. In fact it is the hallmark of inflation and 

hyperinflation. In Zimbabwe there is a shortage of everything.

History shows that when monetary inflation starts to be evident in the prices of 

real goods, the first thing governments do is impose price controls. Here we have 

exactly that in a new way. The CFTC is trying to find a way to disadvantage 

those on the buy side of commodities of "finite supply." In effect the commission 

is trying to control prices in the guise of preventing excessive speculation.

The very term "finite supply" means there is a supply crisis in commodities. If 

these commodities were in abundance, the free market would deal with 

speculators automatically, because as they drive the price up, the producers 

produce more and the price comes down and the speculators lose their shirts. 

What the government would likes to happen is that, as the speculators drive up 

prices, instead of the producers producing more, the anti-commodity cartel 

produces more paper promises of more production so that speculators lose their 

shirts. When the buyers are not speculators but buyers who want delivery, the 

game ends.

The implication of the CFTC's hearings is that this is the end of the game and the 

start of a super-bull market in commodities. The problem is not speculators. The 

problem is the commodity of infinite supply -- the U.S. dollar. Trillions are being 

created and are chasing commodities of finite supply. Economics tells us what 

the result will be with or without the King Canute policies of the CFTC.

-----
Adrian Douglas is editor of the Market Force Analysis letter (http://www.

MarketForceAnalysis.com) and a member of GATA's Board of Directors.
From: Wright

To: energyhearingcomments; 

Subject: “Energy Hearing Comments”

Date: Tuesday, August 11, 2009 6:46:02 PM

Dear Sir or Madam: 

As Chairman Gensler stated: 

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets 

do not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead 

of enhance it? I think we would all agree that if one party controls half the 

market, that party is more likely to lessen liquidity than enhance it. Position 

limits should enhance liquidity by promoting more market participants rather 

than having one party that has so much concentration so as to decrease 

liquidity.”

In considering the CFTC's own data (recent Commitment of Traders and Bank 

Participation Reports), the level of concentration on the short side of COMEX 

silver futures would appear to meet or exceed the level you imply threatens 

market integrity and liquidity. 

Ted Butler states: "The only effective means of ensuring market integrity and 

enhancing liquidity is for the Commission to impose legitimate speculative 

position limits. This will increase the number of traders on the short side of 

COMEX silver, as you stated. The level of the current accountability limit of 

COMEX silver futures (6,000 contracts), on an all months combined basis, is way 

out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether in 

relation to actual production or as a percent of total open interest, would dictate 

that the Commission impose a speculative position limit of no more than 1500 

contracts in COMEX silver futures. 

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not 

to those engaged in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the 
enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal." 

Please consider the above in your upcoming hearing. 

Bill Wright 

 
From: Gene Clark

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 6:33:10 PM

Chairman Gensler,The only effective means of ensuring market 

integrity and enhancing liquidity is for the Commission to impose 

legitimate speculative position limits. This will increase the 

number of traders on the short side of COMEX silver, as you 

stated. The level of the current accountability limit of COMEX 

silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any 

reasonable method of applying position limits consistently across 

all commodities of finite supply, whether in relation to actual 

production or as a percent of total open interest, would dictate 

that the Commission impose a speculative position limit of no 

more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation.I would respectfully remind you that while the thrust of the 

hearings involved the enforcement of position limits to guard against 

excessive speculation on the long side, commodity law requires you to 

guard against excessive speculation or manipulation on the short side as 

well. No other market comes as close to fitting the profile of a 

manipulated market than does COMEX silver on the short side. Once 

again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting 

any exemption to that limit to the actual producers and consumers of the 

metal.

Gene Clark
From: Alvarado, Cristobal

To: energyhearingcomments@cftc.gov.; 

cc:

Subject: Energy hearing comments

Date: Tuesday, August 11, 2009 6:26:19 PM

Attachments: ATT00001.txt

Mr. Gensler,

I have been following the developments in silver trading closely for several years.

As with most silver investors, I have a tremendous respect for Ted Butler.

His research on this issue is without equal. 

I don’t believe I could phrase comments any better than he already has, as 

reproduced below:

Chairman Gensler,

Thank you for the opportunity to comment on the issue of 

position limits in energy and other physical commodities of finite 

supply. The hearings you conducted were of great public service. 

I will confine my comments to one market – the COMEX silver 

futures market.

I have excerpted the following passages from your opening 

statement of August 5th. You said:

 “I believe that position limits should be consistently applied 

across markets for physical commodities of finite supply.”

 “..., I believe that at the core of promoting market integrity 

is ensuring markets do not become too concentrated.”
 “The very important question becomes: how much 

concentration is too much? At what point of market 

concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls 

half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by 

promoting more market participants rather than having one 

party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of 

Traders and Bank Participation Reports, both for positions held 

as of August 4, the level of concentration on the short side of 

COMEX silver futures would appear to meet or exceed the level 

you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are 

removed, the net short position of one or two US banks exceeds 

40% of the total net futures open interest. That same calculation 

indicates the net short position of the four largest traders 

exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in 

any other market for physical commodities.

The only effective means of ensuring market integrity and 

enhancing liquidity is for the Commission to impose legitimate 

speculative position limits. This will increase the number of 

traders on the short side of COMEX silver, as you stated. The 

level of the current accountability limit of COMEX silver futures 

(6,000 contracts), on an all months combined basis, is way out of 

line with any other commodity. Any reasonable method of 
applying position limits consistently across all commodities of 

finite supply, whether in relation to actual production or as a 

percent of total open interest, would dictate that the 

Commission impose a speculative position limit of no more than 

1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that 

speculative position limit to the bona fide producers or 

consumers of the actual commodity, and not to those engaged in 

financial trading through aggregation. 

I would respectfully remind you that while the thrust of the 

hearings involved the enforcement of position limits to guard 

against excessive speculation on the long side, commodity law 

requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes 

as close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you change 

that profile by establishing a speculative position limit of no 

more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers 

of the metal. 

Theodore Butler

Butler Research LLC

Thank you for your diligence in this matter. In the end, it is simply about fairness.
Cristobal G. Alvarado, MD FACS
From: dwight

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Tuesday, August 11, 2009 6:16:39 PM

Thanks for an opportunity to comment on these hearings. The only thing 

I want to bring your attention to is the especially concentrated short 

positions of large banks in gold and silver, most notably in silver. These 

do not occur in such drastic form in any other commodity you look at per 

your own data. I believe this is manipulating the price, and a good 

solution would be to put lower limits on how many can be held and not 

give banks or anyone else exception to this. I don't know what is the right 

number to put on the limits but it needs to be significantly lower. Thanks 

for listening, 

Dwight 
From: peter wilson

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 5:52:36 PM

Chairman Gensler, 

 

The Comex silver short position is way larger than any other commodity. 

 

When considering actual production or open interest this would dictate 

that the Commission should impose a speculative position limit of no 

more than 1500 contracts in COMEX silver futures. 

 

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

 

This will ensure that the market does not become too concentrated. 

 

Yours sincerely 

 

Peter Wilson 

Explorer 8
From: BOB CHEATLEY

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Tuesday, August 11, 2009 5:43:49 PM

Chairman Gensler

We feel very strong about this position and the longterm damage 

that is being done to the US Government reputation. 

We strongly urge you to restrict any exemption from speculation 

position limit to the bona fide producers or comsumers and not to 

those engaged in financial trading through aggregation of 

massive short positions.

Thank you

Bob and Carole Cheatley
From: rob hornr

To: energyhearingcomments; 

Subject: silver

Date: Tuesday, August 11, 2009 5:34:03 PM

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 

5th. You said:

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do 

not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls half the market, 

that party is more likely to lessen liquidity than enhance it. Position limits should 

enhance liquidity by promoting more market participants rather than having one 

party that has so much concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities.

The only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will 

increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 

across all commodities of finite supply, whether in relation to actual production or 

as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not to 
those engaged in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal. 

Theodore Butler ( Robert Horner)..investor in silver 8-11-2009 
From: ROSS NOGGLE

To: energyhearingcomments; 

Subject: STOP THE COMEX SILVER MANIPULATION please

Date: Tuesday, August 11, 2009 5:20:29 PM

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 

5th. You said:

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do 

not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls half the market, 

that party is more likely to lessen liquidity than enhance it. Position limits should 

enhance liquidity by promoting more market participants rather than having one 

party that has so much concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities.

The only effective means of ensuring market integrity and enhancing liquidity is 
for the Commission to impose legitimate speculative position limits. This will 

increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 

across all commodities of finite supply, whether in relation to actual production or 

as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not to 

those engaged in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal. 

 PHILIP NOGGLE
From: David Schlereth

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 5:04:36 PM

Please reduce speculative position limits in COMEX Silver futures to 1000 

contracts ( long OR short ). 

 

Please revoke the exemptions to the limits that have been granted to the 

one or two (as many as four?) U.S. Banks (JP Morgan and HBSC) that 

has resulted in the concentrated position of tens of thousands of COMEX 

Silver futures contracts (short) held by so few institutions and is 

CLEARLY MANIPULATIVE. 

 

In the future please restrict exemptions to these limits to BONA FIDE 

producers and consumers of Silver and NOT those engaged in financial 

trading through aggregation (traders such as JP Morgan and HBSC). 

 

I also believe that the CFTC must take back the responsibility for setting 

such speculative position limits (and the granting of exemptions to these 

limits)for commodities of finite supply from the exchanges immediately. 

 

Do these things and you will be heros of the Free Markets and the 

American people. 

 

Fail to do these things and prepare to be prosecuted as criminals. 

 

Sincerely, 

Dr. David Schlereth 
From: Quam, Gary 

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 4:55:03 PM

To Whom It May Concern, 

I applaud you for taking action to limit the speculative on commodities and 

other raw materials and attempt to limit the ownership of these limited 

resources to those that either consume or use them in their business or 

produce them as an end product. As an employee of a major 

conglomerate like GE, I realize that businesses need to be profitable but 

also believe that supply and demand should not be influenced by the short 

sightedness of those trying to "make a quick buck" vs trying to build a 

business for the long term.

As a father of two older, conservative teen age boys who are Eagle Scouts 

I always try to emphasize to them that though these times are difficult, 

the United States has been through worse times including wars and have 

came through usually a better country. While they will be burdened with 

the high debt of the federal gov't in the future, we also know we need to 

support the actions of our executive, legislative, and judicial branches to 

make the best decisions for our country's future. 

Please feel that the whole hearted appreciation of a nation and it's citizens 

are behind you and commend you for your actions to make our country a 

better and more stable environment to raise our children and become a 

strong and powerful country again.

Sincerely, 

Gary Quam 

Gary W. Quam, C.P.A. 

 

 
From: hmcintyre2

To: energyhearingcomments; 

Subject: “Energy Hearing Comments.” 

Date: Tuesday, August 11, 2009 4:51:12 PM

 As a small investor with out access to large sums of money to move markets I 

would like to see the issue of position limits both on the long and short side 

investigated. This is especially true in the silver market. How can it not be 

considered manipulation when the level of the current accountability limit of 

COMEX silver futures (6,000 contracts), on an all months combined basis, is way 

out of line with any other commodity. I also strongly urge you to restrict any 

exemption from that speculative position limit to the bona fide producers or 

consumers of the actual commodity, and not to those engaged in financial 

trading through aggregation. 

 Thank You for Your Consideration. 

 Harold C. McIntyre 
From: Doug Dillon

To: energyhearingcomments; 

Subject: Energy Markets Aren"t The Only Markets Where Genuine Price Discovery 

Is Valuable...

Date: Tuesday, August 11, 2009 4:46:59 PM

Please include position limits on not only energy markets but also the 

metal markets including gold and silver. Gold and silver are important 

markets signaling the health of the overall economy and allowing the 

manipulation of their prices (up or down) causes the misallocation of 

capital resources across the entire economy. In your limits on both energy 

markets (and all markets) please make sure that the playing field is kept 

fair to little players and prevent big players (especially large banks) from 

forming outsized, manipulative positions either long or short. 

Sincerely, 

Douglas M Dillon, private investor protecting his retirement savings, 
From: joseph decrescenzo

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 4:45:48 PM

Chairman Gensler, 

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments to 

one market – the COMEX silver futures market. 

I have excerpted the following passages from your opening statement of 

August 5th. You said: 

“I believe that position limits should be consistently applied across markets 

for physical commodities of finite supply.” 

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.” 

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one party 

controls half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by promoting more 

market participants rather than having one party that has so much 

concentration so as to decrease liquidity.” 

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, the 

level of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity 

and liquidity. After published non-commercial and imputed commercial 

spreads are removed, the net short position of one or two US banks 

exceeds 40% of the total net futures open interest. That same calculation 

indicates the net short position of the four largest traders exceeds 66% of 

total net open interest. Such levels of concentration do not exist, either on 

the long or short side, in any other market for physical commodities. 

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 
limits. This will increase the number of traders on the short side of COMEX 

silver, as you stated. The level of the current accountability limit of COMEX 

silver futures (6,000 contracts), on an all months combined basis, is way 

out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether 

in relation to actual production or as a percent of total open interest, 

would dictate that the Commission impose a speculative position limit of 

no more than 1500 contracts in COMEX silver futures. 

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. No other 

market comes as close to fitting the profile of a manipulated market than 

does COMEX silver on the short side. Once again, I urge you change that 

profile by establishing a speculative position limit of no more than 1500 

contracts in COMEX silver and by restricting any exemption to that limit to 

the actual producers and consumers of the metal. 

Theodore Butler 
From: JOHN W ENDERS

To: energyhearingcomments; 

Date: Tuesday, August 11, 2009 4:44:16 PM

Dear Chairman Gensler: Thank you for your comments regarding position 

limits in energy and other commodities of finite supply. I am a supporter 

of President Obama, and hope that change is in order in the Commodities 

Futures Trading Commission. I believe that unbridled speculation in 

energy and metals by very few institutions causes wide swings in prices 

that cannot be accounted for in a normal unmanipulated market. I hope 

that these speculators will be policed by your Commission. Thank you, 

John Enders
From: poetmster

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 4:35:53 PM

August 11, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market. I have excerpted the following 

passages from your opening statement of August 5th. You said: “I believe that 

position limits should be consistently applied across markets for physical 

commodities of finite supply.”

I believe that at the core of promoting market integrity is ensuring markets do not 

become too concentrated.”

The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one par ty controls half the market, 

that party is more likely to lessen liquidity than enhance it. Position limits should 

enhance liquidity by promoting more market participants rather than having one 

party that has so much concentration so as to decrease liquidity.

”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities.

The only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will 

increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the c urrent accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 
across all commodities of finite supply, whether in relation to actual production or 

as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not to 

those engaged in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal. 

Best, 

Pete Antico 
From: BFRF081488

To: energyhearingcomments; 

Subject: ENERGY HEARING COMMENTS

Date: Tuesday, August 11, 2009 4:32:38 PM

The country is in BIG TROUBLE, have the Courage to do the right thing. 

Everyone knows the manipulation in gas, gold and silver PLEASE. What is your 

purpose? Please make a differance! we need to get back to sound markets. 

Concerned PATRIOT, Brian R. Ferris
From: Suarez Morales, Raquel

To: secretary; 

cc: Juzenas, Eric; Holifield, Robert; Gizzarelli, Jason; Ritter, Elizabeth L.; Morton, Andrew S; 

Blase, Marcia K.; Chambliss, Bo; Dow, De"Ana; Klein Gray, Anne; Wolpert, Alison; 

Subject: CME Group Responses to Written Questions from Commissioner Dunn- For 7/28 Hearing Record

Date: Tuesday, August 11, 2009 4:25:40 PM

Attachments: DUNNQ&A.doc

Please find attached CME Group’s written responses to questions asked by Commissioner Dunn during 

the July 28 hearing, at which CME Group’s CEO Craig Donohue testified.

Thank you

Raquel 

Raquel Suarez 

CME Group 

A CME/Chicago Board of Trade/NYMEX Company 

701 Pennsylvania Avenue, NW 

Plaza Suite #01 

Washington, DC 20004 

T 202-638-3838 

F 202-638-5799 
VIA EMAIL 

TO: Secretary of the Commission 

Commodity Futures Trading Commission 

CC: Chairman Gensler 

 Commissioner Chilton 

 Commissioner Dunn 

 Commissioner Sommers 

FROM: CME Group 

 

DATE: August 11, 2009 

SUBJECT: Responses to Written Questions from Commissioner Dunn- For the July 28 Hearing 

Record

1. How many full time staff do you have on your surveillance staff? 

CME Group’s Market Regulation department includes 93 full-time employees in Chicago and an 

additional 36 full-time employees in New York. Additionally, Market Regulation has recently 

increased its 2009 budget and is adding 7 additional full-time employees in Chicago and 2 

additional full-time employees in New York, which will bring the total Market Regulation staffing to 

138. 

Of the current 129 employees, 37 are in the Market Surveillance area and 3 of the 9 additional 

positions currently being recruited will be in the Market Surveillance area. The other functional 

areas of Market Regulation include Investigations & Trade Practice Surveillance, Enforcement, 

Regulatory Systems and Data Quality Assurance. 

2. What is the annual budget of your surveillance program? 

The 2009 budget for CME Group’s Market Regulation Department is $19.5 million, not including 

the approved staff increase described above. Although the budget is not broken out by functional 

area, the approximate percentage apportioned to the Market Surveillance group is 29% or $5.6 

million. 

In addition to the direct Market Regulation budget, approximately $5-$6 million is budgeted from 

the Information Technology division to support the development and maintenance of the 

technology and applications which support Market Regulation’s surveillance activities. Additional 

resources in the Research, Products & Services and Legal departments also support Market 

Regulation’s functions as necessary. 
3. How were/are position limits and accountability levels set in all, single and spot months? 

NYMEX Energy and Metals: In energy & metals contracts position limits are established in 

compliance with guidance applicable to Designated Contract Markets (“DCM’s) set forth in Part 

38 related to Core Principal 5 of section 5(d) of the Act: Position Limits or Accountability.

Specifically spot or expiration limits are set at no greater than 25% of the deliverable supply for all 

physically delivered contracts. Further, with regard to financially settled contracts, NYMEX, with a 

few exceptions discussed with the CFTC in advance of implementation, also sets spot or 

expiration limits using the same formula. All new contracts listed for trading are self-certified with 

the CFTC and details related to the underlying physical or related market are supplied to 

substantiate the Exchange’s recommended limits. In many instances NYMEX sets the spot or 

expiration limits at more conservative levels than reflected in the core principles guidance. 

With regard to single-month and all-months-combined accountability levels, energy and metals 

contracts are generally set at 4-5 times the spot or expiration limit for the single-month level and 7 

times the spot or expiration limit for the all-months-combined level. These ratios are designed to 

yield very conservative accountability levels relative to open interest and we have found that 

utilizing these conservative ratios has been effective as a market monitoring tool. 

CBOT/CME Commodity Products: CBOT and CME agricultural products operate under a 

position limit regime. In the CBOT enumerated products (Corn, Wheat, Soybeans, Soybean Oil, 

Soybean Meal and Oats), the limits are established by the CFTC pursuant to Regulation 150.2 

and include spot-month, single-month and all-months-combined limits. 

Other than in the enumerated products, to which federal limits apply, limits for all other CME 

Group commodity products are established by the exchange and include spot-month and singlemonth limits for all products, as well as all-months-combined limits in certain products. The 

exchange-set speculative position limits have been established in accordance with the Core 

Principle guidance for designated contract markets that reference the CFTC’s Part 150 

regulations. As open interest changes, periodic adjustments to the speculative position limits 

have been made in accordance with the formulas described in the Part 150 regulations. 

4. Are position limits and accountability levels reviewed periodically to determine their 

adequacy/efficacy? 

NYMEX Energy and Metals: With regard to energy and metals contracts, NYMEX Market 

Surveillance and Research staffs maintain an active dialogue with the industry, including facility 

operators as well as market participants. Through this process NYMEX is intimately aware of 

physical capacities and general market structures which enable us to ensure that the position 

limits and position accountability levels are appropriate and support effective oversight of these 

markets. NYMEX also maintains an active dialogue with CFTC Division of Market Oversight with 

regard to significant structural changes in our markets. To the extent that changes are necessary, 

NYMEX makes such changes in consultation with DMO. An example of this was highlighted in 

the CFTC’s Rule Enforcement Review of NYMEX Market Surveillance dated May 19, 2008. 
Specifics of the NYMEX effort in monitoring the changes occurring in the unleaded gasoline 

market, which ultimately resulted in removal of all hedge exemptions, reductions in the spot limit, 

the delisting of this contract and the move to RBOB Gasoline Blend stock, are detailed on pages 

25-27 of such report. The CFTC report noted NYMEX’s careful handling of this situation. 

CME/CBOT Commodity Products: As noted, position limits in the enumerated CBOT products 

are established by the CFTC pursuant to Regulation 150.2. CBOT’s limits are the same as the 

federal limits. These limits were last increased in 2005. In 2007, the CFTC put out a proposed 

rulemaking that would have increased the limits, consistent with its Part 150 formula, but 

subsequently withdrew the proposal. 

For products with exchange-set limits, the speculative position limits are reviewed by the 

Exchange, generally on an annual basis, utilizing the formula in CFTC’s Part 150 Regulations, 

and adjustments are made if appropriate. With few exceptions, recent changes to speculative 

limits have generally been changes to the single-month and all-months-combined limits rather 

than to spot month limits. 

5. How are position limits and accountability levels monitored? 

NYMEX Energy and Metals & CME/CBOT Commodity Products: Market Surveillance staff 

conducts daily monitoring of position limits and accountability levels early each morning through 

the collection and review of Large Trader Data. Market Surveillance staff review exception 

reports which identify positions of participants in all its markets above accountability levels or 

position limits. Staff maintains procedures for identification of positions in excess of position limits 

and accountability levels and takes action where appropriate under its rules. 

6. How often are position limits and accountability levels exceeded? 

NYMEX Energy and Metals: The Exchange has maintained very conservative accountability 

levels as a technique to obtain an early alert within our Large Trader System. For example, the 

Natural Gas single-month accountability level is 6,000 contracts which is 6% of the current open 

interest in the most active contract month on a futures-only basis and 3.7% of the current open 

interest on a futures-equivalent basis. The low accountability threshold alerts the compliance 

staff to enhance its review of a customer’s position and prompts action prior to a situation 

becoming problematic. 

The staff considers position concentrations relative to open interest in implementing its 

accountability regime after contract months reach a threshold level of open interest, thereby 

supporting the establishment of market-making and trading in less liquid months. The specific 

application of concentration considerations in the context of accountability depends on various 

indicia including: specific market conditions (strong, prolonged demand, system problems unique 

to the contract’s delivery area...lack of deliverable supply etc.) as well as basic knowledge of the 

related positions and financial stability of the market participant. 
Additionally, in recent years NYMEX reduced the any one month accountability level for all its 

core energy and metals contracts and also structured accountability levels to focus on a futuresonly basis in addition to a futures-equivalent basis to enhance its regulatory authority. 

Based upon this conservative approach to accountability, is not unusual for these levels to be 

exceeded. The following excerpt from the CFTC’s May 19, 2008 Rule Enforcement Review of the 

NYMEX Market Surveillance program addresses positions in excess of accountability levels: 

p. 34 Holding a position that exceeds a position accountability level is a normal occurrence and 

not in itself a rule violation. However, Exchange rules give the Compliance Department authority 

to direct a participant to limit or reduce any position where the Exchange determines this to be 

necessary, and a participant’s refusal to comply with such a directive would be a rule violation. 

Position limit violations are handled pursuant to NYMEX rules. In the case where there is no 

underlying physical or swap exposure to act as the basis for an exemption, a position in excess of 

the limit would be a rule violation. Sanctions for such violations range from a warning letter for a 

first non-egregious offense to an automatic fine for subsequent violations. All egregious 

violations would be referred to an exchange disciplinary panel. 

For the period June 2008 to present there were 46 overages across all NYMEX Energy and 

metals markets resulting in the issuance of 33 warning letters, 4 fines and 9 open matters that are 

currently under review. 

CME/CBOT Commodity Products: There have been 25 speculative limit violations in 2009, 

resulting in 16 warning letters, 4 fines, 1 suspension and 5 open matters that are currently under 

review. The procedures for handling such violations are consistent with those described above for 

NYMEX. 

7. When exceeded, how much are they generally exceeded by and for how long? 

NYMEX Energy and Metals: Position accountability thresholds are not limits and as explained 

above are set at very conservative levels. Consequently, if the position poses no threat to the 

integrity or orderliness of the market, such position can be in excess of the accountability levels 

for an extended period of time without there being a regulatory or market integrity concern. When 

exceeded, position limits have been exceeded by 2 - 569 contracts, with an average of 122 thus 

far in 2009. 

CME/CBOT Commodity Products: When exceeded, position limits have been exceeded by 1 – 

1,731 contracts, with an average of 287 contracts (median 166). Further, position limits are 

typically exceeded for one day, although on occasion the limits have been exceeded for 2 days, 

generally because of the firm’s inability to communicate with its client. 

8. What internal process occurs at the exchange when position limits or accountability levels are 

exceeded? 
NYMEX Energy and Metals: Position limit violations are identified the morning after such 

position was assumed. Exchange staff quickly identifies if there is any basis for any type of 

exemption, and where there is not, the position is typically reduced by the close of business that 

day. 

NYMEX also maintains a program to address positions that exceed accountability levels. Of 

particular note is a weekly program which is a complement to the broad daily review of large 

trader data and market fundamentals which analysts conduct on a daily basis. This 

complementary program is focused around the core NYMEX/COMEX products as well as some 

of the large “Clearport” product offerings. Each Friday for these products, analysts enter into a 

permanent log the details of positions in excess of the accountability levels along with the 

recommended action. The senior team within Market Surveillance then reviews these logs and 

determines what actions will be taken. Additional log entries are made and records maintained 

for all related actions. 

CME/CBOT Commodity Products: Upon identifying position limits that have been exceeded, 

Market Surveillance staff immediately contacts the clearing firm(s) involved and confirms that the 

positions reported to the exchange are accurate. Staff then advises the clearing firm of the 

position limit violation and directs them to bring their position into compliance with exchange 

rules. Staff will follow up with the clearing firm and market participant by sending an email 

summarizing the conversation. The email will recap the position limit violation and demand 

compliance. Subsequently, a formal inquiry is opened and appropriate action is taken based 

upon the findings of the inquiry. 

9. How often are traders ordered to liquidate positions to comply with position limits or 

accountability levels? 

NYMEX Energy and Metals: Market participants are always ordered to liquidate positions in 

excess of position limits if no acceptable physical or swap exposure exists as the basis for an 

exemption. During the period June 2008 through mid-July 2009, NYMEX took formal action 

related to positions in excess of the accountability levels on 22 occasions across all 

NYMEX/COMEX markets. 

CME/CBOT Commodity Products: Speculative traders and their respective clearing firm(s) are 

directed to bring their position in compliance in every instance staff identifies a position limit 

violation. Market Surveillance issues both verbal and written directives to bring the position into 

compliance with exchange rules. 

10 & 11. How soon after position limits or accountability levels are exceeded is the Commission 

notified? When the Commission is notified, what procedures do you have in place for your 

interaction with the Commission? 

NYMEX Energy and Metals: While there is no formal requirement regarding notice to the 

Commission related to violations of position limits or accountability levels, NYMEX maintains an 
active dialogue with DMO staff. NYMEX Market Surveillance Staff routinely discuss market 

conditions with DMO staff who are also reviewing comparable large trader data related to NYMEX 

markets. During the course of these discussions it would be commonplace for NYMEX to 

highlight any interesting overage to DMO. Additionally, if there were a position that NYMEX felt 

was threatening to the market on a large scale basis it would raise this matter to the attention of 

DMO and possibly other divisions within the Commission. 

CME/CBOT Commodity Products: The Commission’s DMO staff, in addition to the exchange, 

monitors for speculative position limit violations. On the day that the violation is detected the 

exchange and DMO communicate with each other to confirm the findings regarding the apparent 

position limit violation. The Market Surveillance staff and DMO staff will review the positions 

reported to ensure both staffs agree that the market participant has exceeded the limit and by 

what quantity. For products with federal limits, in addition to any action taken by the exchange 

with respect to the violation, the Commission staff will, at minimum, issue a warning letter to the 

market participant and provide Market Surveillance with a copy. For products with exchange-set 

limits, the Commission staff issues a letter to Market Regulation requesting that the department 

communicate its handling of the matter to the Commission. 
From: Ray Emblau

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 4:08:38 PM

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in 

energy and other physical commodities of finite supply. The hearings you 

conducted were of great public service. I will confine my comments to one 

market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 

5th. You said:

“I believe that position limits should be consistently applied across markets for 

physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do 

not become too concentrated.”

“The very important question becomes: how much concentration is too much? At 

what point of market concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls half the market, 

that party is more likely to lessen liquidity than enhance it. Position limits should 

enhance liquidity by promoting more market participants rather than having one 

party that has so much concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders and Bank 

Participation Reports, both for positions held as of August 4, the level of 

concentration on the short side of COMEX silver futures would appear to meet or 

exceed the level you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are removed, the 

net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four 

largest traders exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in any other market 

for physical commodities.

The only effective means of ensuring market integrity and enhancing liquidity is 

for the Commission to impose legitimate speculative position limits. This will 
increase the number of traders on the short side of COMEX silver, as you stated. 

The level of the current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with any other 

commodity. Any reasonable method of applying position limits consistently 

across all commodities of finite supply, whether in relation to actual production or 

as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position 

limit to the bona fide producers or consumers of the actual commodity, and not to 

those engaged in financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the 

enforcement of position limits to guard against excessive speculation on the long 

side, commodity law requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as close to fitting 

the profile of a manipulated market than does COMEX silver on the short side. 

Once again, I urge you change that profile by establishing a speculative position 

limit of no more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers of the metal. 

Respectfully,

Ray Emblau
From: Don Adams

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 4:05:23 PM

Dear Chairman Gensler, 

Thank you for the opportunity to express my viewpoint on a 

matter of deep concern regarding the COMEX silver futures 

market. 

Your recent comments lead me to believe that you wish to 

ensure market integrity with regards to legitimate speculative 

position limits. Therefore, I respectfully submit to you that the 

level of current COMEX silver futures (6,000 contracts), on an all 

months combined basis, is blatantly disproportionate with any 

other commodity. 

It is unreasonable that the Commission would not impose a 

speculative position limit of no more than 1500 contracts in 

COMEX silver futures as it does with other commodity trading. 

What's more, your desire to enforce position limits to guard 

against excessive speculation on the long side does not excuse 

the Commission from guarding against excessive speculation or 

manipulation on the short side as well. 

The short side of COMEX silver has been manipulated by power 

brokers for far too long. Hopefully, your tenure will bring with it 

an end to dishonest activity that has been flagrantly endorsed by 

those in previous authority. They have done this by turning a 

blind eye to your own in-house statistical proof. 

In this age of overwhelming distrust of government officials, you 

would indeed be a breath of fresh air and show the worth of 

your new appointment by bringing to an end such massive and 
illegal speculation. 

Sincerely, 

Don Adams 
From: richard wismer

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 3:57:09 PM

Thank you for the opportunity to comment. I definitely think there 

should position limits on all finite commodities in order to reduce 

manipulation. I started trading commodities in the 70s and watched the 

Hunt Bros. fiasco and other problems. Many of the problems would have 

been been eliminated with position limits and strict enforcements. 

Thanks for listening. Richard Wismer 
From: Steve Cooke

To: energyhearingcomments; 

Subject: Energy hearing comments

Date: Tuesday, August 11, 2009 3:51:29 PM

Dear Commissioner Gensler, Please remember us small players and stop 

the manipulation in the Comex silver market by limiting position limits to 

at least 1500 and stopping the phony exemptions given the big shorters in 

silver. In this day and age it would be refreshing to see someone do the 

right thing. Thanks for your attention, Steve Cooke
From: Sigmund Latarski

To: energyhearingcomments@cftc.gov.; 

cc: Sigmund Latarski; 

Subject: CFTC hearings

Date: Tuesday, August 11, 2009 3:46:26 PM

With all the information being divulged concerning market 

manipulation, is it any wonder that the public is withdrawing from 

investing in the markets, both equities and commodities. We now learn 

that the precious metals markets are being manipulated by and for the 

banking sector. 

The government agencies refused to admit Excessive Naked Short Selling 

in equities, which ruined numerous start up businesses, only to later 

admitting to NSS because the common public who lost funds due NSS 

driving down stock prices refused to not be heard. 

The same is happening with precious metals. Our government is ruining 

America's once coveted living standard, due to market manipulation and 

the question is why? 

We have found out that the markets have been long rigged for the big 

money folks and the little guy be damed. Those involved should all 

rot in hell for ruining my country. 

Do you have the courage to correct the current precious metals 

manipulation immediately? 

S.J. Latarski 
From: Christian Bachofen

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 3:31:12 PM

Cher Monsieur,

Ci-après vous trouverez une copie de la lettre que vous avez reçue de Monsieur 

Theodore Butler.

J’approuve et je soutiens cette demande.

Christian Bachofen

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position 

limits in energy and other physical commodities of finite supply. 

The hearings you conducted were of great public service. I will 

confine my comments to one market – the COMEX silver futures 

market.

I have excerpted the following passages from your opening 

statement of August 5th. You said:

“I believe that position limits should be consistently applied across 

markets for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is 

ensuring markets do not become too concentrated.”

“The very important question becomes: how much concentration is 

too much? At what point of market concentration does a trader 

detract from liquidity instead of enhance it? I think we would all 

agree that if one party controls half the market, that party is more 

likely to lessen liquidity than enhance it. Position limits should 

enhance liquidity by promoting more market participants rather 

than having one party that has so much concentration so as to 

decrease liquidity.”
According to data contained in the most recent Commitment of 

Traders and Bank Participation Reports, both for positions held as 

of August 4, the level of concentration on the short side of COMEX 

silver futures would appear to meet or exceed the level you imply 

threatens market integrity and liquidity. After published noncommercial and imputed commercial spreads are removed, the net 

short position of one or two US banks exceeds 40% of the total net 

futures open interest. That same calculation indicates the net 

short position of the four largest traders exceeds 66% of total net 

open interest. Such levels of concentration do not exist, either on 

the long or short side, in any other market for physical 

commodities.

The only effective means of ensuring market integrity and 

enhancing liquidity is for the Commission to impose legitimate 

speculative position limits. This will increase the number of traders 

on the short side of COMEX silver, as you stated. The level of the 

current accountability limit of COMEX silver futures (6,000 

contracts), on an all months combined basis, is way out of line with 

any other commodity. Any reasonable method of applying position 

limits consistently across all commodities of finite supply, whether 

in relation to actual production or as a percent of total open 

interest, would dictate that the Commission impose a speculative 

position limit of no more than 1500 contracts in COMEX silver 

futures.

I also strongly urge you to restrict any exemption from that 

speculative position limit to the bona fide producers or consumers 

of the actual commodity, and not to those engaged in financial 

trading through aggregation.

I would respectfully remind you that while the thrust of the 

hearings involved the enforcement of position limits to guard 

against excessive speculation on the long side, commodity law 

requires you to guard against excessive speculation or 

manipulation on the short side as well. No other market comes as 

close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you change that 

profile by establishing a speculative position limit of no more than 

1500 contracts in COMEX silver and by restricting any exemption 

to that limit to the actual producers and consumers of the metal.

Theodore Butler
From: daniel anderson

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 3:25:25 PM

Dear Sir,

 There has been discussion on position limits as pertains to the 

commodities markets. I have written the CFTC over the years about the 

lack of position limits and the manipulative effects that they have on silver 

specifically. I have recently written the members of the House Agriculture 

Committee's Subcommittee on General Farm Commodities and Risk 

Management which is responsible for risk management of the commodity 

exchanges. The letter was faxed to the following representatives: The 

Hon. Collin Peterson, Leonard Boswell, Jerry Moran, Frank Lucas and the 

other dozen or so members of the subcommitee. Herein is the letter 

stating my position on the topic:

 

Dear Representative and member of the House Committee on Agriculture ,

 The silver price manipulation has been going on for years. This 

has not only compromised people who have legitimately invested in this 

precious metal, but also has created a false impression that silver is in 

abundance, thereby masking a potentially dangerous domestic strategic 

problem. As you know, we no longer have a strategic stockpile of US 

silver. Unlike the US strategic oil supply, if there is an emergency created 

by supply disruption vis a vis geopolitical or natural events our national 

security could be gravely threatened. Silver has vast applications in the 

defense, aerospace, industrial, and medical fields. The subsequent rise in 

the price of silver, after years of being surreptitiously held below true 

market prices, would create disruptions not only for entities in these 

sectors of the economy but also for financial markets and the institutions 

that participate in them. The financial entites I am referring to are the 

commodity exchanges, and specifically, the Comex, now part of the 

Chicago Mercantile Exchange.

 According to recent Commitment of Traders reports published by 

the CFTC, the June 2 2009 report shows two US banks with a short 

position equal to 26.2% of the total short position reported by the Comex. 

Past short positions by these two banks have been even larger. This is in 
stark contrast to the twelve non-US banks holding a short position of just 

3.8% of the short position reported by the Comex. The short 

concentration of silver by a few large entities is also obviously a red 

flag ( Eight or less traders: net 53.9%. Four or less traders net 47.2%) . 

These numbers alone highlighting the short concentration level is the very 

definition of manipulation. Commercial hedging by the mining industry is 

decreasing, yet the short positions reported by the Comex are increasing. 

 Repeated attempts by various groups of concerned citizens, small 

investors and taxpayers to enlighten the CFTC to this problem have 

resulted in investigations that have supposedly shown no evidence of 

manipulation. But, as I have stated above, the short concentration of 

the eight or less traders and the four or less traders in and of itself is the 

very essence of manipulation. How can this group of traders be 

continually short that much silver over a decade or so, with declining mine 

production, without ever covering their position? The answer is they 

cannot cover their position without causing the price of silver to skyrocket. 

They therefore have to keep the price of silver artificially low through price 

manipulation of the paper silver market on the Comex exchange, so as 

to protect themselves from financial ruin in the long run, and in the short 

run, creating trading opportunities to fleece the public.

 Recently, you passed HR 977,the Derivatives Markets Transparency 

and Accountability Act of 2009. Where is the transparency? Who are the 

two banks with the huge short positions? Who are the eight traders with 

the huge short positions? Has the Comex been audited to ensure they 

have the metal to deliver if the large shorts are called upon to 

make delivery? Or are we once again witnessing the groundwork for a 

massive meltdown of a financial entity, this time a commodity exchange, 

the Chicago Mercantile Exchange, due to poor oversight. A failure 

or default on the Chicago Mercantile Exchange(CME) would have dire 

consequences not just for the metals markets, but also the agricultural 

markets, as a lack of confidence in one market or exchange would 

inevitably lead to panic and mistrust in others. As a member of the 

Subcommittee on General Farm Commodities and Risk 

Management, including risk management of commodity exchanges, you 

have the obligation to see that this does not occur. The small investor/ 

American taxpayer has had enough of congressional hearings and 

contrived congressional outrage after the fact. As a small investor/ 

American taxpayer, and a person who transacts business regularly on the 
CME, the NYMEX, and the COMEX, I would like to see some real 

transparency and finally some real legal enforcement of commodity law 

and if deemed appropriate, the prosecution of those involved in any 

unlawful acts in regard to the Comex and other commodity exchanges. I 

am very interested in your views on this most important matter. I have 

enclosed my email, fax and address, and would kindly appreciate a reply. 

Thank you.

 

Sincerely,

 Daniel P. 

Anderson

 Warwick, 

 

 

 
From: Larry DelBane

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 3:18:26 PM

Dear Chairman Gensler, 

I have been following Ted Butler and his comments for 

years about the silver “shorts” and believe he has 

correctly identified a serious issue that you and your 

group are clearly in a position to address.

Many of us are proud that you are now willing to 

address this issue.

Thank you for listening.

Regards,

Larry DelBane
From: Jason McGinnis

To: energyhearingcomments; 

Subject: Comments Regarding CFTC Hearings on Speculative Position Limits in Energy Futures Markets

Date: Tuesday, August 11, 2009 2:59:58 PM

August 11, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits in energy and other 

physical commodities of finite supply. The hearings you conducted were of great public 

service. I will confine my comments to one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of August 5th. You said:

“I believe that position limits should be consistently applied across markets for physical 

commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring markets do not become 

too concentrated.”

“The very important question becomes: how much concentration is too much? At what point of 

market concentration does a trader detract from liquidity instead of enhance it? I think we 

would all agree that if one party controls half the market, that party is more likely to lessen 

liquidity than enhance it. Position limits should enhance liquidity by promoting more market 

participants rather than having one party that has so much concentration so as to decrease 

liquidity.”

According to data contained in the most recent Commitment of Traders and Bank Participation 

Reports, both for positions held as of August 4, the level of concentration on the short side of 

COMEX silver futures would appear to meet or exceed the level you imply threatens market 

integrity and liquidity. After published non-commercial and imputed commercial spreads are 

removed, the net short position of one or two US banks exceeds 40% of the total net futures 

open interest. That same calculation indicates the net short position of the four largest traders 

exceeds 66% of total net open interest. Such levels of concentration do not exist, either on the 

long or short side, in any other market for physical commodities.

The only effective means of ensuring market integrity and enhancing liquidity is for the 

Commission to impose legitimate speculative position limits. This will increase the number of 

traders on the short side of COMEX silver, as you stated. The level of the current 

accountability limit of COMEX silver futures (6,000 contracts), on an all months combined 

basis, is way out of line with any other commodity. Any reasonable method of applying position 

limits consistently across all commodities of finite supply, whether in relation to actual 

production or as a percent of total open interest, would dictate that the Commission impose a 

speculative position limit of no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative position limit to the 
bona fide producers or consumers of the actual commodity, and not to those engaged in 

financial trading through aggregation. 

I would respectfully remind you that while the thrust of the hearings involved the enforcement 

of position limits to guard against excessive speculation on the long side, commodity law 

requires you to guard against excessive speculation or manipulation on the short side as well. 

No other market comes as close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you change that profile by establishing a 

speculative position limit of no more than 1500 contracts in COMEX silver and by restricting 

any exemption to that limit to the actual producers and consumers of the metal. 

Respectfully, 

Jason McGinnis 

 
From: Bobby C. Sines

To: energyhearingcomments; 

Subject: Energy Hearing Comments to Chairman Gensler ***SILVER***

Date: Tuesday, August 11, 2009 2:48:48 PM

August 11, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of position limits 

in energy and other physical commodities of finite supply. The hearings 

you conducted were of great public service. I will confine my comments to 

one market – the COMEX silver futures market.

I have excerpted the following passages from your opening statement of 

August 5th. You said:

“I believe that position limits should be consistently applied across markets 

for physical commodities of finite supply.”

“..., I believe that at the core of promoting market integrity is ensuring 

markets do not become too concentrated.”

“The very important question becomes: how much concentration is too 

much? At what point of market concentration does a trader detract from 

liquidity instead of enhance it? I think we would all agree that if one party 

controls half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by promoting more 

market participants rather than having one party that has so much 

concentration so as to decrease liquidity.”

According to data contained in the most recent Commitment of Traders 

and Bank Participation Reports, both for positions held as of August 4, the 

level of concentration on the short side of COMEX silver futures would 

appear to meet or exceed the level you imply threatens market integrity 

and liquidity. After published non-commercial and imputed commercial 

spreads are removed, the net short position of one or two US banks 

exceeds 40% of the total net futures open interest. That same calculation 

indicates the net short position of the four largest traders exceeds 66% of 

total net open interest. Such levels of concentration do not exist, either on 

the long or short side, in any other market for physical commodities.

The only effective means of ensuring market integrity and enhancing 

liquidity is for the Commission to impose legitimate speculative position 

limits. This will increase the number of traders on the short side of COMEX 

silver, as you stated. The level of the current accountability limit of COMEX 

silver futures (6,000 contracts), on an all months combined basis, is way 
out of line with any other commodity. Any reasonable method of applying 

position limits consistently across all commodities of finite supply, whether 

in relation to actual production or as a percent of total open interest, 

would dictate that the Commission impose a speculative position limit of 

no more than 1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that speculative 

position limit to the bona fide producers or consumers of the actual 

commodity, and not to those engaged in financial trading through 

aggregation. 

I would respectfully remind you that while the thrust of the hearings 

involved the enforcement of position limits to guard against excessive 

speculation on the long side, commodity law requires you to guard against 

excessive speculation or manipulation on the short side as well. No other 

market comes as close to fitting the profile of a manipulated market than 

does COMEX silver on the short side. Once again, I urge you change that 

profile by establishing a speculative position limit of no more than 1500 

contracts in COMEX silver and by restricting any exemption to that limit to 

the actual producers and consumers of the metal. 

Signed,

RCS
From: Jack Lee

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 2:20:38 PM

I strongly support free markets, where neither long or short sellers (or even 

regulators) can manipulate prices. I believe the CFTC and it's Chairman 

Gary Gensler is on the 

correct path - but keep in mind too much government intervention is never a 

good thing. 

What has happened here is that the CFTC in the past, has allowed firms to 

exceed position limits through exceptions, thus distorting the free market. 

New Position Limits 

must be set, especially in commodies such as silver and oil. Then they must 

stricly enforced, or else position limits should be eliminated altogether. 

Whatever way this is done, it must be done in such a way that fraud cannot 

occur - not on your watch Mr. 

Chairman, or the next one. 

Sincerely, 

Jack Lee 
From: rob jackson

To: energyhearingcomments; 

Subject: Hearings

Date: Tuesday, August 11, 2009 2:10:08 PM

It is clear that Mr. Gensler understands the matter at hand . 

To Mr. Gensler and members of the committee: 

Please stand strong against opposition and: 

make sure ' position limits are consistently applied across 

markets for physical commodities of finite supply ' AND 

' promote market integrity by ensuring markets do not become too 

concentrated '. 

For example , the silver market is dominated by a few players. 

Hoping for a fair outcome , 

Rob Jackson 
From: michael.pires

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 11, 2009 10:30:27 AM

Greetings. I have read the testimony before the CFTC and would like 

to submit my comments as a proud, tax paying, American citizen.

I believe that trying to limit speculation in natural gas, specifically, is a 

mistake. I will not comment on oil because it is a cartel and very 

different forces drive the prices in that market. 

Speculation is a natural part of a free market, which natural gas 

should be, being that it is not controlled by a cartel. Speculation 

helps stabilize prices on the the way up and on the way down. I think 

it also puts top side limits and bottom side limits on prices. I thought 

the testimony of the CIO of the UNG was spot on. Look at the facts 

and the statistics and it seems clear that the speculation was the 

opposite of what prices were doing. It only makes sense... when 

prices are unrealistically high, speculators take a short position which 

offsets the rising prices and eventually brings prices back into check. 

The same goes for when prices are unrealistically low (meaning 

separated from demand and supply)... speculators help form a bottom 

by taking long positions, while everyone is running from the market.

I believe that no good can come from further regulation, positions 

limits, and the like when it comes to natural gas. The facts simply 

do not support the hypothesis that speculation was what drove prices 

up. It was supply and demand that caused all of this.

Thank you for your consideration. 

Michael Pires
From: Karen Morris

To: secretary; 

Subject: Comments on the CFTC Hearing Re Position Limits

Date: Monday, August 10, 2009 8:28:55 PM

COMMENTS ON THE CFTC HEARINGS TO DISCUSS POSITION LIMITS, HEDGE 

EXEMPTIONS AND TRANSPARENCY FOR ENERGY MARKETS 

My career in the financial services industry spans almost 30 years. I am 

writing as the owner/manager of a fund of hedge funds that actively 

invests in managers who access the futures markets. During my career I was 

both an institutional futures broker at Refco and Citibank and later an 

institutional foreign exchange salesperson at Citibank, Chemical Bank, and 

Morgan Stanley. I strongly support the CFTC and its current efforts to 

review position limits and hedge exemptions. 

I would like to highlight the August 5th testimony of John D. Arnold, 

managing partner of Centaurus Advisors. I feel his written testimony raises 

several important concerns relating to the Natural Gas market. Importantly, 

his argument could be more broadly applied to many commodity markets. 

In short, I think the structure of the current Natural Gas futures and cleared 

swaps market is a model for the industry. One of the most important points 

that Mr. Arnold makes about the Natural Gas market is the distinction 

between the physical commodity futures markets and financially settled 

instruments. This distinction is critical for the Natural Gas markets and is 

applicable to many other markets. His argument is vitally important when 

considering what constitutes a Significant Price Discovery 
Contract "SPDC". 

The current structure of the Natural Gas market is an accident of 

circumstance. The failure of Enron created a void from which a robust, 

mostly exchange cleared market evolved. In the post Enron void, the 

innovative ICE exchange developed a wide range of financially settled 

instruments. In consultation with industry participants ICE replicated 

much of the natural gas OTC market. The NYMEX responded with many 

of the same products. 

That brings us to the current situation which is a robust market mostly listed 

on competing exchanges. This market structure achieves many CFTC goals 

and may be a model for other limited supply commodity markets. The 

failure of Enron drove market participants to the exchange cleared market 

in order to mitigate counter party risk. This is exactly what the CFTC and 

most global regulators favor after the failure of Lehman. 

Most commodity markets have large financially settled-OTC markets which 

remain unregulated and opaque. In my opinion the CFTC should follow Mr. 

Arnold's recommendation to improve the natural gas market through strict 

limits with no hedge exemptions on physically settled contracts (true 

SPDC's), at the same time maintaining accountability levels for financial 

instruments (not SPDC's). 
Importantly this market structure could be more broadly applied to the 

futures industry. With incentives (maintaining tax benefits) combined with 

reporting requirements the CFTC could encourage/force the migration of the 

OTC commodity markets to exchange cleared platforms. Swaps dealers could 

continue to provide all of their services to producers and consumers by using 

listed financially settled instruments. 

In conclusion I strongly urge the CFTC to carefully consider Mr. Arnold's 

arguments. The current CFTC direction of imposing limits on financially 

settled instruments (not SPDC's) could destroy the one model market in 

existence. Along with destroying a vibrant market the CFTC could 

miss an opportunity to replicate a successful market which achieves many 

regulatory reforms. 

In the interest of full disclosure my fund Morris Global Strategies LP is 

invested with Centaurus Energy LP. As an investor I gain confidence from 

the fact that the vast majority of Centaurus' market risk is carried in exchange 

cleared physically and financially settled instruments. Exchange cleared 

products remove portfolio valuation issues and provide comfort to investors. 

I feel strongly that as the industry regulator, the CFTC should be promoting 

the use of exchange cleared products by all market participants. The idea of 

limiting the use of exchange products and forcing market participants 

offshore and into OTC markets seems to be a step backwards. 

 Best Regards, 
Karen Morris 
From: fasttedb

To: energyhearingcomments; 

Subject: Fwd: energy hearing comments

Date: Monday, August 10, 2009 11:37:09 AM

-----Original Message----- 

From: 

To: Energyhearingcomments@cftc.gov 

Sent: Mon, Aug 10, 2009 7:56 am 

Subject: energy hearing comments 

August 10, 2009

Chairman Gensler,

Thank you for the opportunity to comment on the issue of 

position limits in energy and other physical commodities of finite 

supply. The hearings you conducted were of great public service. 

I will confine my comments to one market – the COMEX silver 

futures market.

I have excerpted the following passages from your opening statement of August 

5th. You said:

 “I believe that position limits should be consistently applied 

across markets for physical commodities of finite supply.”

 “..., I believe that at the core of promoting market integrity is 

ensuring markets do not become too concentrated.”

 “The very important question becomes: how much 
concentration is too much? At what point of market 

concentration does a trader detract from liquidity instead of 

enhance it? I think we would all agree that if one party controls 

half the market, that party is more likely to lessen liquidity than 

enhance it. Position limits should enhance liquidity by 

promoting more market participants rather tha n having one 

party that has so much concentration so as to decrease 

liquidity.E2

According to data contained in the most recent Commitment of 

Traders and Bank Participation Reports, both for positions held 

as of August 4, the level of concentration on the short side of 

COMEX silver futures would appear to meet or exceed the level 

you imply threatens market integrity and liquidity. After 

published non-commercial and imputed commercial spreads are 

removed, the net short position of one or two US banks exceeds 

40% of the total net futures open interest. That same calculation 

indicates the net short position of the four largest traders 

exceeds 66% of total net open interest. Such levels of 

concentration do not exist, either on the long or short side, in 

any other market for physical commodities.

The only effective means of ensuring market integrity and 

enhancing liquidity is for the Commission to impose legitimate 

speculative position limits. This will increase the number of 

traders on the=2 0short side of COMEX silver, as you stated. The 

level of the current accountability limit of COMEX silver futures 

(6,000 contracts), on an all months combined basis, is way out of 

line with any other commodity. Any reasonable method of 

applying position limits consistently across all commodities of 

finite supply, whether in relation to actual production or as a 
percent of total open interest, would dictate that the 

Commission impose a speculative position limit of no more than 

1500 contracts in COMEX silver futures.

I also strongly urge you to restrict any exemption from that 

speculative position limit to the bona fide producers or 

consumers of the actual commodity, and not to those engaged in 

financial trading through aggregation. 

I would respectfully remind you that while the thrust of the 

hearings involved the enforcement of position limits to guard 

against excessive speculation on the long side, commodity law 

requires you to guard against exce ssive specula tion or 

manipulation on the short side as well. No other market comes 

as close to fitting the profile of a manipulated market than does 

COMEX silver on the short side. Once again, I urge you change 

that profile by establishing a speculative position limit of no 

more than 1500 contracts in COMEX silver and by restricting any 

exemption to that limit to the actual producers and consumers 

of the metal. 

Theodore Butler

Butler Research LLC
From: Ramani Stainless

To: energyhearingcomments; 

Subject: Energy Hearing Comments.

Date: Saturday, August 08, 2009 10:17:01 AM

Attachments: Comparision.xls

To, 

Office of the Secretariat, 

Commodity Futures Trading Commission, 

1155 21st St., 

NW, Washington, DC 

USA 

Dear Sir, 

RE: Hearing on Energy Position Limits and Hedge Exemptions 

Speculation is Universal Problem now, I've made 

certain comparisions and tried to find some reason behind this. 

More & More People, Businesses, Traders, Investors 

becoming Speculators around the world. 

Attached is Comparison and some reason which may be the 

may cuase of this Universal problem of Speculation in Energy, 

Metals and Agri Commodities. 

Incase, outsider views are not invited, I'm sorry to disturb 

you and this message to be dis-regarded. 

Attachment: Comparison (and reason) file. 

B rgds 

Mukesh Chandan 
Money required for Commodity Purchase

Fixed AssestJob CreationValue AdditionTransportationTaxation, Import DutyIncome TaxCredit CheckTotal InvestmentService To SocietyExit RouteIn Short, Speculator are in Great Position and most of Real Trader / Mfg / Wholeseller are not at Par with them.Resulting in, More & More business moving to Speculative Position / Business to earn quick money.Why - Any Specific Reason ?The Margin Money / Collateral Amount required by Any Speculator is just 5-10% of The Total Valueof there Position on Commodity Exchanges.Increse in Collateral/Margin Money by Regulators will Bring Parity to Real business and may Bring PRICE's to its real levels.Delivery Based Long Term Contract should be Allowed with Lower margins, but they are for Deliveryand not for Rollover or Cancellation or Re-Sale.Whenever there is Strikes, Draughts, Accidents or War like situation, Price Trend remains higher,this is Natural and Everybody knows that. Price tend to rise in long run and slowly but Speculators has a great speedand makes movement in the Prices to Too High = Too Low = Too Fast, making problem for Real Businesses.
SPECULATOR REAL TRADER / MFG / WHOLESELLER

5-10% of Total Value 100% of Total ValueNil Investment in Office, Warehouse, Mfg Units.Nil Staff, Labours, TransportationNil Warehousing, Packing, Retail SalesNil RequiredNil RequiredNil if operates from Tax Heavens RequiredNil Required5-10% of Total Commodity 100% of Commodity + Fixed Assest + Others.Nil Providing service to Mfg's and value added servQuickly within Hours/Days Slow and Steady.Yes, main problem is here....
For Example: 

If Weather Problem / Draughts arises: If Strike Called in at any Mfg's of Key Rawmaterials supplier OR any other trouble :Any trouble in Oil Exporting CountryOR If War Like Situation:End RESULT:Tools:
A normal household in Real Delivery Term cannot buy Stock over 100-200kgs of Food, for HomeConsumption.

But now the same household is buying 100's multiple time on Exch., Increases price Too quicker before Govt Responds.Why: no warehousing, Only 5-10% investment and Price trend is sure to be rising.Easy Exits and Knows that New Arrival is Next Year Only.A normal mfg's unit will buy only 1-2month Inventory in Real Delivery based term.Now, they buy for more then they need even in some cases for 1-2years forward.Why: no warehousing, Only 5-10% investment and Price Trend is sure to be rising.Easy Exit, No Vat/Taxes, No Transportation.Everyone around the world would use less and try to save as much as they can.Now, Every one BUY's on Commodity Exchange to make make super normal profit. (but forget to Save anything !)Surely Speculators can take this price to Over Usd 150 or Usd 200 p.b, under such condition.Why:100% confidence that price is going Upside only, Supported by Liquidity, Lower margin/collateral and quick Exits.Real Businesses are diverting towards Speculation business because of the Obvious reason given above.Someone must find Ratio of Actual Delivery based Volumes to Speculative Transaction Volume for last 10year.Higher Ratio of Speculative position to Actual business positions will Creat Bubble Again. Price Changes Quickly, Too High = Too Low = Too Fast which is not good for any Businesses.More Default, More Shut Down in Plant, More Job Losses possible.Money Power wins the game always..Make Actual Business/Mfg's/Trader = 

At Par with Speculators.

All Transaction without Actual Delivery Term should be treated as Speculative Transaction.

and Commodity Exch must have Higher Margin (Collateral Deposit) with Regulators, (like CRR for Banks Deposit) and Higher Income Taxes.Speculative long position should not have Easy Exit or Rollovers.Higher the Volume of Positions goes = Higher the % Margin/Collateral.It can be fixed up based on Value, Assets/Net Worth, Maturity of Position.e.gVolume/Maturity/Worth of Position % of Margin / CollateralValue of Position 1 million 10%Value of Position 10 million 20%Value of Position 100 million 30%.........and so on.Maturity of Position 1 Month 5%Maturity of Position 3 Month 10%
Maturity of Position 6 Month 20%

Maturity of Position 12 Month 30%Maturity of Position 3 Years 50%.........and so on.10% of Net Worth of Funds 10%25% of Net Worth of Funds 20%50% of Net Worth of Funds 30%.........and so on.Investor = has a long term view, 100% of Money invested. They help to create value.Speculator = No Lock In, No Firm Commitment, 5-10% Money invested.They create Bubbles.
Investor = Speculator :

Thanking YouMukesh Chandan
From: Ivar Christensen

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Saturday, August 08, 2009 7:12:39 AM

Please reduce the position limits in silver to between 1000 to 

1500 

contracts and do away with the phony exemptions granted to a 

few big 

shorts or make transparent the reason why they are short. 

Kind regards, 

Ivar Christensen 
From: secretary

To: energyhearingcomments; 

Subject: FW: Shaheen written testimony

Date: Friday, August 07, 2009 1:13:00 PM

Attachments: written testimony CFTC hearings energy position limits aug 7 09.doc

From: Stawick, David 

Sent: Friday, August 07, 2009 1:11 PM 

To: Ford, Mildred Y. 

Subject: FW: Shaheen written testimony

Please add to energy hearing comment folder. Thanks. DS 

From: Riley, John 

Sent: Friday, August 07, 2009 12:58 PM 

To: Stawick, David 

Cc: Leslie, Douglass 

Subject: FW: Shaheen written testimony

Hey David. Could you please see that Senator Shaheen’s attached testimony is 

made part of the record for the position limit hearings?

Thanks.

John

From: Reardon, Judy (Shaheen) 

Sent: Friday, August 07, 2009 10:21 AM 

To: Riley, John 

Subject: Shaheen written testimony

John, hi. I am attaching brief written testimony from Senator Shaheen.

Saw you at the briefing Tuesday on carbon markets. Wanted to introduce myself 

but had to leave before it was over.

Thank you for your assistance.
Judy E. Reardon

Counsel 

Senator Jeanne Shaheen

520 Hart Senate Office Building

202-224-2841
Testimony of U.S. Senator Jeanne Shaheen

Commodity Futures Trading Commission

Hearings on Energy Position Limits and Hedge Exemptions

August 7, 2009

Let me begin by commending Chairman Gensler for his initiative in 

addressing the issue of excessive speculation in energy futures markets. 

  

  Unreasonable volatility in energy markets has a deep impact in my home 

state of New Hampshire, where about 55 percent of families heat their homes with 

heating oil, one of the highest percentages in the country. Because of the cold 

climate, it is common for people to begin turning up their thermostats in October 

and not to shut off the heat until eight months later in May.  

  During the summer of 2008, heating oil dealers in New Hampshire were 

offering their customers fixed pre‐buy prices in the range of $4.70 per gallon for 

heating oil for the next winter. Frightened by the ever‐increasing price for gasoline 

they were paying at the pumps and Goldman Sachs’ widely‐reported prediction that 

the price of crude oil would reach $200 per barrel at some point in the next two 

years, many families and small businesses locked themselves into paying $4.70 per 

gallon for their heating oil for the upcoming winter. By October, however, the 

verage price per gallon for heating oil had dropped to under $3.70 and by the 

iddle

a

m  of December it had dropped to under $2.50 per gallon. 

This dramatic change in price over such a short period of time had little to do 

with the laws of supply and demand.  According to data from the Energy 

Information Administration, the supply and demand for crude oil remained steady 

over that period of time.  

  I don’t know how much profit large derivatives traders generated from that 

ild swing in crude oil prices, but I know that New Hampshire homeowners and 

mall b

w

s usinesses paid dearly.  

I appreciate the necessary role that speculation plays in providing liquidity 

and risk management for producers and consumers of energy. However, large 

speculative positions, even if there is no intent to unlawfully manipulate prices, can 

cause harmful price distortions.  I am confident the CFTC can strike the proper 

balance between curbing harmful excessive speculation and ensuring that 

appropriate speculative trading can continue. 
Testimony of U.S. Senator Jeanne Shaheen

CFTC Hearings on Energy Position Limits and Hedge Exemptions 

August 7, 2009

Page 2

It is time that the CFTC use the authority it now has to reign in excessive 

speculation in energy markets and that Congress grants the CFTC the additional 

authority it needs to regulate over‐the‐counter derivatives.  

I urge the CFTC to set strong aggregate position limits for all energy 

ommodities across all markets and restrict bona fide hedge exemptions for 

oncom

c

n mercial traders.  

By taking these actions, the CFTC will ensure that consumers in New 

Hampshire and across the country will be paying energy rates that reflect 

fundamental supply and demand, not the fluctuations of large aggregate speculative 

positions on Wall Street. 

I thank you for this opportunity to submit written testimony, and I pledge my 

efforts in the Senate to provide you with the tools the CFTC needs to ensure that 

energy futures markets work for producers and consumers. 
From: BVM

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Friday, August 07, 2009 10:48:35 AM

Dear CFTC And Mr. Gensler- Please include my comments in the record that the 

CFTC should be in charge of setting position limits, that those limits should be set 

in the 1.5%-of-contracts-to-total-open-interest range and that dubious exemptions 

should be disallowed. I know that the subject hearings have largely dealt with the 

energy sector but I trust that your reforms will extend to all markets, specifically 

the silver market where outsized limits have been wreaking havoc for decades. I 

certainly applaud your efforts and leadership, especially in a world where it is all 

too easy to become increasingly cynical about the government of my country- the 

greatest, noblest and most righteous in all of history. Good luck and God bless, 

Brad Coyer, 
From: teakoop

To: energyhearingcomments; 

Subject: speculative posistion limits

Date: Friday, August 07, 2009 12:24:00 AM

THE ENERGY INDUSTRY CANNOT BE TRUSTED, AS ALL HAVE SEEN. YOU 

MUST INSTITUTE POSITION LIMITS AND POSITION ACCOUNTABILITY 

LEVELS. THE EXCHANGES ARE ONLY INTERESTED IN HELPING TRADERS. 

WHAT THE DID TO ENERGY COSTS SHOULD BE CONSIDER ACT OF 

TERRORISM AGAINST AMERICA. THEY HOLD AMERICANS HOSTAGE FOR 

PROFIT . THEY SHOULD BE TRIED FOR SABOTAGE AGAINST AMERICA 

THEIR EXECUTIVES SHOULD GO TO JAIL FOR LIES TO CONGRESS 

SET POSITION LIMITS FOR ENERGY FUTURES AND PROTECT 

AMERICA CITIZENS 

THOMAS KOOPMAN 
From: Ronny Bennett

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Thursday, August 06, 2009 7:41:56 PM

It’s with a heavy heart as I read about this commission trying to rein in excessive 

speculation in the energy market which destroyed my trucking business. This action 

will be too late as I am in the process of shutting down a company I spent my life 

building due to the price of fuel in 2007/2008. The previous administration and 

CFTC told us it was pure supply and demand that was driving oil prices but I knew 

then as now that was an outright lie whether to protect oil co profits or funds we will 

never know.

 I tried hedging my fuel cost in the heating oil market and was forced out by a 

‘correction’ and lost $20,000.00 in the process,this market is too volatile for a small 

business.

 I have lost everything to these cold blooded speculators and while you cannot 

help me maybe your actions will prevent someone else from what I’ve been through.

 Thank you very much and I pray you will make the right decision.

 Ronny Bennett

 
From: Tom Adams

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Thursday, August 06, 2009 11:29:18 AM

Attachments: masters.xls

Yesterday, I sent a email on an error in Michael Masters testimony before 

the Senate Homeland Security Committee on 5/20/08. I am providing 

more details on the error.

This 5/20/08 testimony was cited in his testimony to the CFTC yesterday.

He miscalculated the change in Chinas demand for the 2003-2007 period. 

His calculation was too low by a factor of 3. As a result of this he 

mistakenly believes that in inventory growth for that 5 year period is equal 

to China's demand change. In fact, China's demand change what 3 times 

larger.

His error is in Footnote 8. He summed year over year demand change for 

the five years. He should have summed year over 2002 demand change 

because this represents the size of China's demand change as if the extra 

demand had been stored in a inventory. The attached spreadsheet 

contains the table in Footnote 8 with an extra column calculating the 

correct "Year over 2002" values.

Please discuss the matter with Michael Masters. I am not sure to what 

extent his confusion on this matter is coloring his position on the impact 

of futures trading. I have been able to find no evidence that Masters is 

aware of his error.
Footnote 8 from Master's 5/20/08 testimony to the Senate Homeland Committee

http://hsgac.senate.gov/public/ files/052008Masters.pdf

Increase in Chinese Demand for Petroleum

Year over year Year over 2002

Consumption change change

2002 1,883,660,777

2003 2,036,010,338 152,349,561 152,349,561

2004 2,349,681,577 313,671,240 466,020,800

2005 2,452,800,000 103,118,423 569,139,223

2006 2,654,750,989 201,950,989 771,090,212

2007 2,803,010,200 148,259,211 919,349,423

TOTAL CHANGE 919,349,424 2,877,949,219 <- the correct value for the change in Chinese

 ^ the erroneous value that Masters calculated
From: ahittjr11

To: energyhearingcomments; 

Subject: energy hearing comments

Date: Wednesday, August 05, 2009 7:24:28 PM

I agree with Mr. Graham the price of diesal fuel is ludicrus, and so with 

the price of gasoline, I refuse to pay these high prices from now on i will 

take the bus,PLEASE do something this time about the damn speculators 

and get the price of fuel down to a reasonable level, 1.99 is acceptable in 

todays markets not 2.55, and all the other speakers you had agree on the 

same thing inpose limits on all speculation, there should not be any in my 

opinion. 

Stan Hitt 
From: Felesky, Adam - HBP ETFs

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 05, 2009 4:00:56 PM

Attachments: July 30 followup with CFTC - final letter - August 4 09.pdf

Per below this was already sent to Robert but have received email error back so as 

caution sending via this route as well. Thanks. Adam

Adam Felesky

From: Felesky, Adam - HBP ETFs 

Sent: Tuesday, August 04, 2009 11:51 AM 

To: Holifield, Robert 

Subject: Follow-up to Testimony Q&A

Robert –

Thanks again for giving us the opportunity to have our voice heard in last week’s 

hearings. 

Please find attached further follow-up to the specific question posed by Chairman 

Gensler as relates to potential “fractualization”. 

I would welcome opportunity to discuss further if required. 

Regards,

 Adam

Adam Felesky
August 4th, 2009 

Chairman Gary Gensler 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, NW 

Washington, DC 20581 

Dear Mr. Gensler: 

Re: Follow-up to July 29th, 2009 Testimony at the CFTC Hearing on the 

“Application of Position Limits and Exceptions from Positive Limits in Energy 

Markets”

 I want to thank you again for the opportunity to testify before the Commission 

regarding the potential impact of position limits on the commodities markets and our 

business. Additionally, I wanted to follow-up with you specifically in regard to your 

question and comments on the ramifications of what I referred to in my written testimony 

as “fractualization”. 

 My impression is that you may believe that “fractualization” may in fact be 

positive for the market as it would result in increased participation by individual investors 

and dealers thereby reducing concentration risk, improving market efficiencies and 

reducing the likelihood of excessive speculation or market manipulation. 

 Although, I generally agree with the basic premise of this perspective, when this 

theory is extrapolated to the practicality of the exchange trade funds (“ETFs”) market and 

their role in the marketplace as a whole, I believe it would not achieve this result. Before 

going into my specific case, I would like to take a step back and speak to the dynamics of 

the exchange traded funds business itself. 

 As you are aware, ETFs are typically passive index based security products 

comprising of the aggregate assets of its unitholders. The initial premise of ETFs was to 

provide a single security which could provide exposure to the entire basket of securities 

of a specific underlying index in size increments and at costs significantly lower than 

what individual investors could replicate on their own. 

 The activity of an ETF as a result of issuing and redeeming securities as they are 

open-ended, represents the collective daily investment decisions of the individual 

securityholders who have bought or sold securities of that ETF on the exchange. As an 

ETF typically has a fixed passive investment objective (i.e. to track an underlying index 
2

in a particular way), it is the investment decisions of its individual securityholders, not 

the ETF, which dictates the impact an ETF may have on a marketplace, if any. As you 

can appreciate, this is quite different from a typical mutual fund that is actively managed, 

where a portfolio manager determines what investments to buy or sell on behalf of all the 

fund’s investors. The likelihood of thousand of unitholders in a particular ETF acting in 

unison (whether buying or selling) is remote. 

Indexed based ETFs are really nothing more than a microcosm of an exchange, providing 

investors cost effective exposure to the underlying index that it is tracking. ETFs are 

simply facilitators or agents to buyers and sellers for a given index exposure. 

 From our perspective as an ETF provider, there are two key factors that determine 

the success of an individual ETF: 

(1) is there investor demand for exposure to the specific underlying index? 

(2) is there an existing ETF that already provides this exposure to interested 

investors? 

 

 There have been numerous situations where ETFs have been launched by a 

Manager that saw investor demand for exposure to a particular index and sought to 

compete and capture assets from an existing ETF by undercutting cost, and failed. This is 

why, for example, there is not more than a handful of ETFs that track the S&P 500 index 

compared to the thousands of actively managed mutual funds with the same benchmark. 

 Why do traditional price dynamics of the marketplace (i.e. lower cost leads to 

higher demand) not apply? The answer is simple – liquidity. The first mover advantage in 

the ETF market, I would argue, is as important (or more important), than in any other 

industry. Investors in ETF’s are willing to pay higher fees for greater liquidity. Moreover, 

the liquidity itself tends to attract more liquidity as participants then become more 

comfortable with the level of liquidity of the ETF at that time. 

 Therefore in reference to fractualization, our contention is that if position limits 

were imposed on the ETF rather than, as we proposed, on the individual, it would likely 

result in the ETF having to break up into several ETFs. This fragmentation, we assert 

would result in disproportionately lower liquidity overall as the investors who were 

attracted to or relied on, the liquidity of the aggregate ETF would no longer be able to do 

so and would then turn to alternative liquid instruments such as OTC swaps which are 

less transparent and pose a higher degree of risk given their lack of full collateralization. 

 An appropriate analogy may be to compare this discussion to an exchange rather 

than an ETF. Would the forced fragmentation of the principal exchanges in both the 

United States and Canada result in increased participation and volume? Clearly the last 

decade would suggest that the global consolidation of exchanges has achieved this goal, 

rather than the opposite. 

 As indicated in my written testimony, dealer fractualization may also be a cause 

for concern depending on how position limits are imposed. If a dealer is also unable to 
3

flow position limits through to the end user there will likely be a dramatic scarcity value 

to the position limit at each dealer. This will inevitably result in increased risks and costs 

to the end users. We believe that the capacity of most tier 1 banks that have the credit 

worthiness and expertise to provide custom swap exposure to an ETF, will be consumed 

by their own index flow, asset management or proprietary business. As a result, an ETF 

may have to seek dealer counterparties with potentially less credit worthiness and 

expertise who do not currently partake in such activity. 

 Finally, I would like to take this opportunity to further respond to Commissioner 

Chilton’s assertion that there must be a maximum limit a single ETF should have in any 

market. While I agree in principle with his comment, I believe it again should only be 

considered by looking at an individual investor’s aggregate holding in ETF’s. The 

number of ETF’s available to, or held by, an investor is irrelevant; what is important is 

the overall exposure the individual investor has taken in a given market. This aggregation 

concept is the same as the view the Commission would take in looking at an investor who 

invested in commodities directly, as position limits would have to be applied across all 

listed and over-the-counter markets to be truly effective. Focusing on the ETF itself will 

not achieve the desired result and is structurally biased. 

 I hope this further clarifies our position and I would welcome any further 

questions or comments you may have. 

Regards, 

Adam Felesky 

Chief Executive Officer 

BetaPro Management Inc. 

/mp 

 
From: Tom Adams

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 05, 2009 4:00:16 PM

Micheal Masters has made an egregious error in his calculations 

concerning the impact of speculation. I think you need to clear up this 

matter before you take him seriously.

You need to ask Michael Masters the following question: 

“In your testimony to the CFTC on 8/5/2009, you refer to your early 

5/2/2008 testimony before the Senate Homeland Security. In that 

earlier testimony you made a calculation error. You calculated the 

total change in China's in the 2003-2007 period to be 919 million 

barrels. If you review the calculation, you will see that the total 

change in China's demand was 2,887,949,212 barrels. In other words, if 

China's demand change had all been stored in an inventory, that 

inventory would have contained 2,887,949,212 barrels at the end of 2007. 

In your testimony you said "The increase in demand from Index 

Speculators is almost equal to the increase in demand from China!" But, 

now that this calculation error has come to your attention, you will see 

that this is a false statement. In fact increase in global inventories 

(which you call an increase in demand from Index Speculators) was only 

one third of the increase in demand from China. 

Please review the implications of your calculation error. How does this 

change your views on the impact of index speculation?”
From: secretary

To: energyhearingcomments; 

Subject: FW: ICE"s response for the record

Date: Wednesday, August 05, 2009 2:30:59 PM

Attachments: Dunnresponse.pdf

From: Trabue Bland [mailto:Trabue.Bland@theice.com] 

Sent: Wednesday, August 05, 2009 12:39 PM 

To: Gizzarelli, Jason 

Cc: Stawick, David 

Subject: ICE's response for the record

Jason:

 Attached is ICE's response, on the record, to Commissioner Dunn's questions.

 Please call me if you have any questions.

 Trabue

Trabue Bland - Director of Regulatory Affairs and Assistant General Counsel

IntercontinentalExchange | ICE 

2100 RiverEdge Pkwy | 5th Floor | Atlanta, GA 30328 

Tel: 770.916.7832 | Fax: 770.857.4755 

trabue.bland@theice.com

24-hour ice helpdesk 770.738.2101

www.theice.com

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means of communication where privacy or a binding message is desired.
Attached below are the IntercontinentalExchange, Inc.’s responses to the written 

questions posed by Commissioner Michael Dunn. As background, ICE operates four 

regulated exchanges: ICE Futures Europe, which hosts trading in crude and refined oil 

futures; ICE Futures U.S and ICE Futures Canada, which list agricultural, currency and 

Russell Index markets; and ICE OTC which offers markets in both energy and credit 

default swaps. ICE serves customers in more than 50 countries and is headquartered in 

Atlanta, with offices in New York, London, Chicago, Winnipeg, Calgary, Houston and 

Singapore. 

1. How many full time staff do you have on your surveillance staff?

ICE Futures U.S. (“IFUS”) Market Regulation department consists of 19 full-time 

employees including the Vice President of Market Regulation. Six (6) of the employees 

are dedicated to the Market Surveillance function and the remaining twelve (12) are 

dedicated to Compliance (trade practice investigations and rule enforcement). The 

Market Regulation department receives additional support from members of the ICE 

Futures U.S. Legal and Technology teams as well as ICE Inc.’s Technology team. 

ICE Futures Europe (“IFE”) has a total Regulation and Compliance team of 26 people. 

This includes 13 market supervision staff and 7 compliance staff (including post trade 

surveillance). The 2008 amendments to the CFTC No Action letter required substantial 

changes to the scope and content of position reports and hence for the first half of 2009 

we estimate that the equivalent of 3 full time staff have been working on position 

monitoring and reporting. 

Staff at ICE Futures Canada (“IFCA”) perform a variety of functions, across 

departmental lines. IFCA has a total of five (5) employees who work on regulation and 

compliance matters as part of their job function. 

ICE OTC (“IOTC”) became a registered entity with the CFTC on July 24, 2009 as an 

Exempt Commercial Market with a significant price discovery contract (ICE Henry Hub 

Swap). As such ICE OTC is in the process of developing rules, procedures and programs 

to comply with CFTC core principles. As such the Market Surveillance Department 

consists of a Manager and Director with the ability to add 5 additional staff. 

2. What is the annual budget of your surveillance program? 

In total, ICE has $11.365 million dedicated to compliance and regulatory obligations. 

This excludes compliance and regulatory obligations for its five clearinghouses and 

outlays for technology resources. 
2

3. How were/are position limits and accountability levels set in all, single and spot month 

months?

IFUS: The position limits for cotton are set by the Commission, although the Exchange at 

one time did have smaller limits than the Commission. The smaller limits were 

recommended by the Exchange’s Cotton Committee. Position limits and accountability 

levels in all other Exchange products are set using the guidelines provided in 

Commission Regulation 150.5. These limits and levels are recommended by Exchange 

staff and approved by the Control Committee, the relevant product committee, the 

Exchange’s Board and the Commission. 

IFE: The CFTC No Action letter of June 17, 2008 mandates that in respect of IFE 

contracts settling against a DCM contract, the IFE imposes position or accountability 

limits comparable to the existing limits adopted by the DCM referenced by the IFE. 

Consequently IFE uses the same position limits and position accountability as those 

published by NYMEX for the relevant ‘linked’ contract (notably the NYMEX Light 

Sweet Crude Oil futures contract). 

IFCA: ICE Futures Canada sets and enforces speculative position limits in the nearby 

contract, during the spot month. These limits take effect on the first day of spot month, 

which begins at the close of business on the trading day prior to first notice day. There 

are no speculative position limits for non-spot contracts. The levels of spot-month 

speculative position limits are set based on an analysis of the trading volume and open 

interest of the pertinent futures contract, as well as an examination of the cash (physicals) 

market 

IOTC in similar fashion to IFE will impose position limits and accountability levels 

comparable to the existing levels adopted by NYMEX for the Henry Hub natural gas 

swap. 

4. Are position limits and accountability levels reviewed periodically to determine their 

adequacy/efficacy? 

IFUS: Yes, attached is a history of the changes to the Exchange’s position limits and 

accountability levels since 2001. 
3

IFE: Limits and accountability levels are set with reference to those of the linked 

contract, which are kept under review and are in line as described in response to the 

previous question. 

IFCA: Position limits are reviewed by the Regulatory Division of ICE Futures Canada, 

in conjunction with the Special Regulatory Committee (regulatory oversight committee) 

as well as certain exchange committees such as the Contract Committee. This review 

does not occur at prescribed intervals, but is reviewed regularly and adjusted when 

necessary. For example, the speculative limit in the ICE Futures Canada canola contract 

was increased from 500 contracts to 1000 contracts in early 2008, based on increases in 

trading volume and open interest levels. Similarly, the speculative limit for the ICE 

Futures Canada barley contract was recently reduced from 500 contracts to 250 contracts, 

due to significant contract specification changes which the exchange and its committees 

felt necessitated a more conservative approach. 

IOTC has determined to apply equivalent limits and accountability levels for our Henry 

Hub Swap as CME Group has put in place for its financially and physically settled Henry 

Hub contracts. 

 

5. How are position limits and accountability levels monitored?

For all of our markets the following response applies: 

ICE has developed a Market Surveillance Application which generates alerts that are 

preprogrammed if a trader has a large percentage of either volume or open interest 

beyond a predetermined threshold. The application, as well as staff, have the capability 

of aggregating positions held by related parties. This allows our staff to determine if 

someone is spreading positions across firms or accounts in an attempt to circumvent a 

position limit. Staff monitors large trader positions for concentrations of ownership and 

potential collusive or concerted activity by market participants. Staff will contact the 

trader or account controller if it appears that any one trader or account controller has a 

concentration in a given commodity to determine the reason for the position. 

6. How often are position limits and accountability levels exceeded?

IFUS: Position limits are exceeded relatively infrequently. If a position limit is exceeded 

due to unforeseen bona fide hedging needs, the trader has a set number of days to apply 

for an exemption. If the exemption is approved, there is no position limit violation. 

For accountability levels, there are a certain number of commercial traders, swap dealers 

and index funds who typically have positions in excess of accountability levels. These 
4

entities are considered hedgers under current guidelines and would be eligible for 

exemptions if the Exchange granted them for products with accountability. Noncommercial traders infrequently exceed accountability levels. In all of 2009 across all 

softs products, fewer than 10 speculative/non-commercial firms have exceeded the 

accountability level for a given product and fewer than five of these firms have been in 

excess of either the single month accountability level or the all months accountability 

level for more than two consecutive weeks. 

IFE: Since the introduction of mandatory position limits in respect of IFE contracts 

linked to DCM contracts in December 2008 there have been 8 contract months that have 

expired and a total of 7 breaches of the 3000 lot limit applicable to the 3 days prior to 

expiry not covered by hedge exemptions – the largest breach was 1458 lots and the 

smallest 93 lots, the average being 602 lots. In each case the Member has been issued 

with a written warning, in accordance with the policy adopted by NYMEX. The 

Exchange has powers to fine members in the event of further breaches. 

IFCA: Since the implementation of formal speculative position limits in 2003, it has been 

our experience that the limits are rarely exceeded. This is due in large part to the ongoing 

dialogue between the Market Surveillance Group and market participants, prior to the 

beginning of spot month. In the few circumstances when speculative limits are exceeded, 

it has usually been due to: (a) a misunderstanding of when spot month begins; (b) a shortterm situation arising from miscommunication between trading divisions/departments 

within a company, or; (c) failure by a firm to update their Annex 17 information to 

support their hedge exemption. In virtually all cases, upon identification of the error, the 

firm immediately brings the position below the speculative limit, or files the necessary 

documentation to support a hedge exemption. 

IOTC: As this market was recently designated this question does not apply as of yet. 

7. When exceeded, how much are they generally exceeded by and for how long?

IFUS: Traders with positions in excess of a position limit who are not eligible for an 

exemption are required to bring their position in compliance with the position limit 

immediately, i.e. the day on which the instructions are received. It is extremely rare 

when a trader does not immediately comply with the Exchange’s instructions. With 

respect to accountability levels, non-commercial customers rarely exceed an 

accountability level by more than a small amount in relation to the accountability level 

and open interest for the contract. Commercial users (including swap dealers and index 

funds) exceed accountability levels to the extent that they have underlying business that 

they are required to hedge. 
5

IFE: In the case of the 3,000 lot expiry limit in each case the breach was detected by IFE 

staff who instructed that the position be reduced to comply with the limit immediately 

and on each occasion the account was in compliance by close of business that day. 

Accountability limits do not automatically trigger an order to reduce the position. Since 

December 2008 there has been one instance where a Member in excess of the relevant 

accountability limit was instructed not to add to a position. 

IFCA: see response to question 6 

IOTC: As this market was recently designated this question does not apply as of yet. 

8. What internal process occurs at the exchange when position limits or accountability 

levels are exceeded?

IFUS: If a trader exceeds a limit, staff immediately attempts to contact the trader by 

telephone. If the account is a non-member and the entire position is carried through a 

single clearing member, the clearing member is contacted by telephone. Contact is 

either made with the trader, clearing member or reporting firm as soon as staff becomes 

aware of the position, which is generally the morning following the day on which the 

position limit was exceeded. When a trader initially exceeds an accountability level, 

staff contacts the trader for the purpose of obtaining information about the nature of the 

position, including the trading and/or hedging strategy and the trader’s internal guidelines 

and procedures for insuring compliance with the Exchange’s spot month position limits 

and for generally monitoring the position. 

IFE: Members with substantial positions who do not have appropriate hedge exemptions 

are contacted prior to the final three days in the run-up to each expiry to remind them of 

the applicable limits. In the event that the position limits are exceeded the Member 

concerned is contracted immediately. The CFTC is notified of breaches of position limits 

on a quarterly basis, but will also be immediately aware as a result of daily position 

reporting. The Exchange reviews accounts in excess of accountability limits regularly, 

and contacts the Member concerned where appropriate. 

IFCA: In a situation where an entity exceeds the speculative limit during spot month, the 

Regulatory Division contacts the entity and/or their clearing firm immediately to discuss 

resolution. As noted above, these situations are almost always resolved the same day, or 

the next trading day if the issue is identified when the market is closed.. 

IOTC: Staff is in the process of providing procedures and rules to the CFTC in order to 

show compliance with the SPDC core principles published by the CFTC. 
6

9. How often are traders ordered to liquidate positions to comply with position limits or 

accountability levels?

IFUS: Traders are infrequently ordered to liquidate positions because position limits are 

rarely exceeded by traders who are not eligible for exemptions. In the case of 

accountability levels, traders are instructed, on occasion, to stop increasing their position. 

IFUS last instructed a trader to stop increasing its position earlier this spring and last 

ordered a trader to reduce its position in early 2008. 

IFE: On average once per month are traders ordered to liquidate positions, in addition 

IFE staff contact holders of positions above or near the limit and ensure they are aware 

of the mandatory limit and when it is effective. 

IFCA: In a situation where an entity exceeds the speculative limit during spot month, the 

Regulatory Division contacts the entity and/or their clearing firm immediately to discuss 

resolution. As noted above, these situations are almost always resolved the same day, or 

the next trading day if the issue is identified when the market is closed. 

IOTC: Not applicable as of yet. 

10. How soon after position limits or accountability levels are exceeded is the 

Commission notified? 

IFUS: The Commission receives the same large trader data as the Exchange does, so 

there is no reason to notify them. However, Exchange staff will, and frequently does, 

share information with Commission staff about positions. 

IFE: The Commission receives daily information on all client positions in excess of 100 

lots. In addition, the CFTC No Action letter of 17 June 2008 mandates that IFE informs 

Commission in a quarterly report of any breaches of position limits, whether a hedge 

exemption had been granted and if not what action was taken. IFE has complied with this 

request and has adopted a similar regime to that operated by NYMEX in respect of 

treatment of breaches. 

IFCA: Not applicable 

IOTC: This is not applicable at this time. 

11. When the Commission is notified, what procedures do you have in place for your 

interaction with the Commission?
7

IFUS: Market surveillance staff speaks with the Commission economist responsible for 

the product, as necessary, and frequently during expiration periods. 

IFE: In addition to the quarterly report, IFE staff has a weekly call with CFTC staff 

where any issues (usually technical) are discussed. Other information would be routed 

via the FSA in accordance with memorandum of understanding between FSA and CFTC. 

IFCA: Not applicable 

IOTC: Not applicable as of this now as the market was deemed to have a SPDC on July 

24, 2009. 
From: Ray Jeanfreau

To: energyhearingcomments; 

Subject: Energy hearing comments

Date: Wednesday, August 05, 2009 2:06:52 PM

I did email yesterday concerning limiting speculative positions in the 

Energy Futures Market but wanted to email again. Today is a prime 

example of the effects of speculators on the price of crude. The Energy 

Department's report came out today showing that crude stockpiles rose by 

1.7 million barrels and that this was more than double what was 

expected. Common sense and supply and demand would make you think 

that the price of crude would fall. However, because of greed and the 

speculators, the price of crude is actually up as I am writing this email. 

Who can help out the consumer? Why do we have to pay for someone's 

greed? Please limit the speculative positions in the Energy Futures 

Market. With the stockpiles increasing and the price of crude increasing 

too, can you only imagine how much it will go up if the Energy 

Department's report ever shows a decrase in the crude stockpile? Its 

absolutely ridiculous that speculating can affect so many people. 

Thank you. 

-- 

------------------------------------------------------------------------ 

Raymond T. Jeanfreau III, CPA

------------------------------------------------------------------------ 
From: Michael Golden

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Wednesday, August 05, 2009 1:16:48 PM

Honorable Chairmain Gensler & Members of the CFTC:

It befuddles the American public that our federal government seems intent to 

regulate so many aspects of our lives, yet fails to regulate the one area which 

mandates regulation - energy. Let me state in clear & concise terms that I am a 

supporter of the free market and of capitalism. However, the energy futures 

trading markets do not represent free market capitalism.

Much has been said regarding excessive speculation when it comes to liquid 

commodities trading. I beg to differ with the term "excessive speculation". What 

is occurring is not excessive speculation, but rather, market manipulation. 

Opponents of my position would argue that removing speculation from the liquid 

commodities markets would decrease monetary liquidity in these markets and 

subject these markets to greater volatility. Many so called "experts" have stated 

that they would take their business overseas to the I.C.E. if the CFTC imposed 

limitations on liquid commodity trading. Others state that oil needs to trade at 

above $70 per barrel just to break even. My response to these ludicrous 

statements is "so what".

Never in the history of our country has their been a greater transfer of wealth 

than there has with regards to liquid commodities. Reigning in market 

manipulation is not only good for the economic well being of our nation, but it is a 

matter of national security. It is the responsibility of the CFTC to take the lead in 

this matter, and put an end to market manipulation once and for all. To use liquid 

commodities as an investment avenue at the expense of the American public 

and American commerce is simply absurd.

I urge to the CFTC, in the strongest of terms, to take the following actions with 

regards to the liquid commodities markets it oversees: (a) Impose strict position 

limits on orders in an effort aimed at eliminating the use of liquid commodities as 

an investment avenue for hedge funds; (b) Increase the margin limits from 

current levels to 50%, at a minimum, which will discourage investors, primarily 

hedge funds, from manipulating the markets with little equity in the transaction; 

(c) restrict trading in the liquid commodities markets to those who will take 

delivery of the commodity itself. 

To permit the pricing in the liquid commodities markets to be controlled by hedge 

funds and energy traders is simply ludicrous. How we have gotten to this point 

without some form of normal regulation as we see in agricultural commodities is 
beyond belief. It is of the utmost importance that your body acts in the best 

interest of the nation and the public, regardless of the arguments you may hear 

from energy traders and the investor class. The reality is that their actions are 

harming our economy in the worst of ways.

At present, this country is sitting on an excess of oil both on land and at sea. Yet 

at present, oil is being driven up by investors who manipulate the market. The 

law of supply & demand is non-existent as a result of the futures market being a 

free for all. I recently read that the amount of oil in storage is at a 25 year high, 

and consumption of oil has fallen dramatically. Logic would dictate that oil prices 

should be at a range of $20-35 per barrel at present. But instead, we're looking 

at $70+ oil with "talk" by energy traders that we're going to $100. This certainly 

doesn't help any economic recovery, and it actually hinders any recovery when 

the futures market is out of sync with the actual supply & demand of the product.

Thank you in advance for considering my comments set forth herein. I pray that 

the CFTC will act on this matter for the good of our country.

Respectfully,

Michael Golden 
From: Dom Cast

To: energyhearingcomments; 

Subject: Don"t let speculators ruin the world

Date: Tuesday, August 04, 2009 5:14:38 PM

I hope this reaches the office of your recently confirmed Chairman Gary 

Gensler

In recent years I hounded both Senator Reid and Barack Obama with pleas to 

oust the big oil speculators from the NYMEX. My primary contention was 

that by controlling 70% of the contracts between 2003 and 2008 these 

gamblers were effectively cornering the market. My personal belief was that 

they were also colluding to do so. After all it's not hard to guess who's 

buying or selling by looking at the size of the bids, asks, and recent trades.

I contend all futures markets were instituted for the benefit of big producers 

and consumers of the commodity in question so that through the market 

action of supply and demand a fair price may be discovered. They are not in 

business for the benefit of big conceiving speculators, who neither produce 

nor consume a thing.

The damage they've done to the world economy is beyond measuring. 

Would the international housing crisis have been this bad if homeowners had 

something left after paying for the lopsided cost of energy? I doubt it.

You know the ancient bromide: Fool me once, shame on you. Fool me twice, 

shame on me. 

At the last G-20 meeting President Obama promised to clean up our financial 

markets and make them safe havens for investment.

Bounce those hedge funds and other institutional sharks from our energy 

markets, ASAP. The world is watching and won't forgive another Bush era 

stumble.

Should gasoline, for example, be allowed to sell for $3/gallon or more for as 

little as six months, a second downturn in world economies will surely occur 

and this time the United States oil market will clearly be to blame. There 
won't be a financial crisis or a housing bubble to muddy reasonable 

identification of the cause for this additional disaster.

The world already has America on notice. If our crooked financial markets 

are to blame for extortionate energy costs while the world is awash in 

petroleum products they will retaliate by first sinking the dollar; not exactly 

sleight of hand given our outrageous twin deficits. When the dollar is no 

longer the world's reserve currency, there will be unprecedented capital 

outflows with concomitant destruction of our securities markets. The mighty 

USA will be sunk without a shot being fired. 

When the smoke clears, the rest of the world will begin trading for oil on a 

new non-American bourse, in a different currency, where real controls will 

be in place and prices will be set by the free market action of supply and 

demand- unlike the capers being cut on the speculator plagued NYMEX 

today.

Our just deserts will take the form of a hyperinflation racked third world 

society where- like the former Soviet Union- the Federal Government will 

collapse. Fill in your own scenario from there!
From: Ray Jeanfreau

To: energyhearingcomments; 

Subject: Energy Hearing Comments

Date: Tuesday, August 04, 2009 11:55:12 AM

To whom it may concern: 

I sincerely hope that you will help the American public out by limiting 

Speculative Positions in the Energy Futures Markets. Supply and demand 

should be the only determinant of the price of crude. In the last couple of 

years this has been ignored and only pure GREED has taken over. 

Speculators run up the price of crude without any justification and affect 

everyone living in the United States. Unless someone tries to limit this 

unwarranted run up in the price of crude we are all in for a nightmare at 

the pump just like last year. 

Thank you. 

-- 

------------------------------------------------------------------------ 

------------------------------------------------------------------------ 
From: Carl Loeb

To: energyhearingcomments; 

Subject: comment

Date: Tuesday, August 04, 2009 10:42:23 AM

Dear Sirs,

Thank you for the excellent hearings on position limits. It is 

refreshing to see someone running those hearings with such 

clear vision on the fundamental issues. It appears that it doesn’t 

matter how much smoke is pumped into the room by witnesses, 

Chairman Genzler is staying focused on the most important 

issues, which he has identified as:

1. Position limits are necessary to prevent the kind of 

concentration that distort the price of commodities.

2. Those position limits should be rationally calculated and 

not subject to endless exemption.

3. They should be set by the regulatory agency to avoid the 

fox guarding the chicken house problem.

My particular interest is in the silver market, and I am heartened 

because whatever formula you come up with for calculation of 

position limits, silver will stand out as the greatest aberration 

demanding immediate adjustment. The short side concentration 

of two U.S. bank, who at your last report held around 25% of 

world production, clearly distorts the price discovery mechanism 

the futures markets are supposed to provide. This is so because 

as long as a couple of traders are willing to sell into any rally, 

artificial supply of silver will meet any demand and the price will 

be lower and much more volatile than it should be. If in the 

crude oil market a couple of traders held 25% of world 

production, you’d be looking at an average position for each of a 

couple of traders of around 3.5 million contracts. Now that level 
of concentration would get even Mr. Obie’s attention!

Some would argue the a low price of silver is good for the market 

and the economy. My response is that it is not the CFTC’s job to 

make such macro decisions on ‘fair pricing’, but rather to ensure 

that a fair and free market exists that will itself set the fair price. 

I would also point out that silver is a vital and in many 

applications irreplaceable industrial commodity whose supply 

has been consistently dampened as a result of the market 

dominance of a few short traders. Government stocks of silver 

are almost gone, ETF holdings of silver are steadily increasing, 

and a collision between industrial demand and remaining supply 

is on the horizon. When a realignment of fundamental issues of 

supply and demand in silver are resolved, the disruption to the 

marketplace will be severe and damaging, and the sooner the 

CFTC allows fair pricing to occur by imposing position limits on all 

market participants – short or long – the less disruption the 

inevitable conclusion of this problem will be.

Again, thank you for finally doing your job.

Carl Loeb

 
O.F.T.C. 

OFFICE OF THE SECRETARIAT 

2009 JUL 2 8 Ar111 59 

27 July 2009 1·5 StMary Abbot's Place 

Mr David Stawick 

Secretary 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 2151 Street, NW 

Washington, DC 20581 

Re: Energy Position Limits and Hedge Exemptions 

Dear Sir, 

0 

london W8 6LS 

Tel: +44 (0)20 7610 5350 

Fox: +44 (0)20 7610 5301 

www. WintonCopitol.com 

In response to the Commission's request for public input into whether federal speculative 

position limits ("speculative position limits"} should be set by the CFTC for commodities of 

finite supply, Winton Capital Management Limited ("Winton"}, a CFTC registered CTA and 

CPO, would like to make a number of observations about the energy markets, which we 

hope you will find helpful. 

Formation of Speculative Position Limits in the Energy Markets 

Winton naturally believes that the commodity futures markets provide a valuable price 

discovery and risk transfer mechanism, in which futures prices follow current and future 

expectations of physical market fundamentals. Notwithstanding that belief, Winton 

acknowledges that excessive speculation has the potential to impinge on the efficient 

functioning of those mechanisms in the short term. 

In the event that the Commission determines that energy market speculative position limits 

are necessary, consideration ought to be given to implementing a set of tapered position 

limits. Appropriately narrow limits would be applied to the front months, with limits 

becoming progressively more relaxed further out along the expiry curve and potentially 

unlimited for those months furthest out. 

Winton believes that this configuration of limits is supported by the following observations1: 

1 2008 01 data sourced from the relevant exchange. Sugar includes Sugar and London Sugar; Cocoa Includes Cocoa and London Cocoa. 2008 Production data 

sources: FAO (coffee, sugar, cocoa, wheat & crude), USDA (coffee, sugar, cotton, soybean & corn), USGS (gold & aluminium). ISO (sugar). ICCO {cocoa). 
);> In absolute terms, speculation in the energy markets, as measured by open interest (01} 

as a proxy, is not significant compared to the level of production. 

o Crude oil 01 (incl. Crude, E-mini Crude & Brent Crude} amounted to 

approximately 2.4bn barrels of oil, the equivalent of only 8% of annual world 

production, which stood at approximately 31bn barrels in 2008. 

);> Relative to levels of speculation in other commodity markets, the degree of speculation 

in the energy markets is not exceptionally high, as shown in Figure 1. 

o Crude oil 01 as a percentage of annual world production (8%} is significantly 

lower than that of, for example, Soybeans (28%} and Aluminium (43%}. 

);> 01 in the energy markets is heavily concentrated in the front months. 

o 01 in the first six Crude contracts accounted for approximately 58% oftotal Crude 

01. 

o 01 in the Crude front month contract was approximately 16% of monthly world 

production; double the value of total Crude 01 as a percentage of annual world 

production. 

Figure 1: Commodity Markets' Average 01 as a percentage of Annual Production (based on 

2008 data) 

r·· -----------------------·-------------.............................. --..... _ ................ , 

I Al•m~: tj::d::::1:::t-:-'···n "• '. ·t : 

Sugar t ..... )., mJ s J I 

Coffee 1. ... · 1

·-•r w11

· tt m 1 

11

1 

·I I I . I ' Soybean ,_.., · · w·'·m··· i ' 1 . I 

Co~o ~m l:~i' I ., : 'I! ; [ I : 

•c~:,~; ... ___ J __ L_L_j __ J --- .J I 

l 0% 10% 20% 30% 40% SO% 60% 70% 80% 90% 100% I 

Avg 01/ Ann Production 

-·-~-_..,_.......,. __ --~- ..---__ ""___..........._._..,._.,._....,~•~~----~~-~ --~ ~~- ___ ,_w~----------.-_._.,_ ~,...--- --· 

By tapering the size of speculative position limits towards the spot month, greater control 

may be exerted over the front months where 01 is concentrated and the potential for 

market dislocation is most acute, whilst encouraging greater participation further along the 

curve, helping to preserve and possibly enhance the risk transfer mechanism. 

In order to increase the potential effectiveness of tapered position limits, Exchanges could 

be encouraged to construct incentive programmes designed to promote increased levels of 

trading in the further out contract months. 

As the Commission holds its hearings on energy speculative position limits over the next two 

weeks, we hope that consideration may be given to the comments contained in this letter. 

We at Winton would be pleased to speak with any Commissioner, CFTC staff member or 

member of the Energy and Environmental Markets Advisory Committee who has questions 

or would like further elaboration of our thoughts. I and Nicola Malhotra, Winton's Head of 
Risk Management, may be reached at 011-44-20-7610-5350. US Counsel, Patricia Gillman, is 

reachable at 773.665.9787. 

Yours sincerely, 

David W. Harding 

Chief Executive Officer and Head of Research 

cc: The Honorable Gary Gensler, Chairman of the CFTC 

The Honorable Michael Dunn 

The Honorable Jill E. Sommers 

The Honorable Bart Chilton, Chairman, Energy and Environmental Markets Advisory 

Committee 

Mr. Jeff Harris, Chief Economist 
From: questions

To: Ford, Mildred Y.; 

Subject: FW: Current hearings on new energy trading regulations

Date: Thursday, July 30, 2009 3:58:32 PM

From: Erika Heumann 

Sent: Wednesday, July 29, 2009 9:38 AM 

To: questions 

Subject: Current hearings on new energy trading regulations

Mr. Gensler,

I was thrilled to read the article in today's NYT about your group's 

efforts to rein in the worst of the speculative abuses in our energy 

markets. Over the past 2-3 years it has been easy to watch the end-users 

price paid for gasoline (and with that, the cost of airline tickets, food and 

clothing) spike each time markets bid up the cost of oil. There was no 

shortage, and no refining constraint - there was merely greed, and the 

scramble for profits in an unregulated trading environment. Each time that 

price hit a new high, we suffered a little more. 

I suppose we should be glad that the airlines and municipal power companies 

are also behind your attempts to control the purely financial trades in 

energy - they have lobbies and money enough for the federal government 

to listen to them. As citizens (and even as voters) our lobbying power lags 

pitifully behind the big business concerns. I doubt our interests in this are 

totally in alignment, but if they and their might can get you to put a stop to 

the speculation, we will cheer loudly.

Thank you, and good luck with this effort.

Erika Heumann
From: questions 

Sent: Thursday, July 30, 2009 3:54 PM 

To: Ford, Mildred Y. 

Subject: FW: Urgent: Please help me get this chart to Mr. Gensler

From: Richard Fassinger 

Sent: Tuesday, July 28, 2009 12:27 PM 

To: questions 

Subject: Urgent: Please help me get this chart to Mr. Gensler

I have to tell you that this discussion on setting limits on trading 

has really made me question the direction that the CFTC is taking. 

Look at the attached chart and as you can see very clearly how a 

weak dollar has influenced the volatility in commodities. The 

CFTC should be recommending strong dollar policies to 

our government officials so that we may restore the metric for 

energy trading back to supply and demand. I can tell you that 

with record low interest rates many people in charge of securing 

a return for their clients have to get creative in order to achieve 

that goal. Once interest is paid on cash again the speculative nature 

in energy markets will cease. 

The dollar strength has an inverse relationship with Oil. The day 

that the Oil market collapsed last year is the very day that the 

dollar strengthened. This occurs over and over again. Strengthen 

the dollar and restore energy markets to a supply and demand metric.

Please feel free to contact me for further details.

Thanks for your help

Richard Fassinger
From: questions

To: Ford, Mildred Y.; 

Subject: FW: Congratulations

Date: Thursday, July 30, 2009 3:51:19 PM

From: Darryl Goodreau 

Sent: Tuesday, July 28, 2009 12:00 PM 

To: questions 

Subject: Congratulations

I congratulate you on your position with excessive oil speculators. You are doing a 

far greater service to our country's future than the average citizen understands. Job 

well done.

D. Goodreau
From: David Najarian

To: Enforcement; 

Date: Thursday, July 30, 2009 12:40:46 AM

Dear Sir or Madam,

I am writing to protest the CFTC’s recent push to impose energy futures 

positions limits. According to one article I recently read: “"No longer must 

we debate the issue of whether or not to set position limits," Gensler said 

during the second day of CFTC hearings on excessive speculation in the 

energy markets.”” 

Well, I totally disagree. What does he mean by “no longer must we debate.” 

Gensler says this as if he is absolutely right and wants to deny others their 

freedom of speech. 

I have read too much nonsense about how speculators are responsible for 

excess volatility and the high price of oil last year. Too many people calling 

for trading limits because of excess speculation. Too many people blaming 

index funds for the high price of oil last year.

First of all, why are you singling out the Energy market as an inappropriately 

volatile market? I’ve been trading in all sorts of markets since 1991, and 

with the exception of one day in 1987, I’ve never seen volatility in the stock 

market, bond market, and all sorts of commodity markets like I saw last 

year. Do we therefore also need to now blame speculators for excessive 

volatility in stock markets? Bond markets? How about other commodity 

markets? There is no good reason why the energy market should be picked 

on. In fact, there were very good reasons to have volatility and high prices 

in the energy market last year. Oil supplies were tight...the largest oil fields 

in the world are declining in production, yet demand was growing...

especially from large economies like China. When it looked like the US 

housing market might fall apart, along with the rest of our economy, there 

was a great deal of economic uncertainty. Recall Ben Bernanke saying he 

doesn’t see problems in subprime affecting the rest of our economy? 

Remember how suddenly we realized he was wrong? Remember how our 

economy, the largest consumer of oil, fell off a cliff suddenly? Are these not 

rational reasons to have had a very volatile market in energy (as well as 
stocks, bonds, and other commodities) last year? 

Placing trading limits on energy futures trading to curb excess speculation (e.

g. by those who don’t take possession of the physical commodity) does not 

appear to be in the best interests of the industry. As far as I know of, there is 

no good evidence that anyone cornered the market, unfairly manipulating the 

price of oil for everyone else. If there was such evidence, then new rules 

surely would be needed. The fact is however, there is no such evidence. In 

addition, there are good reasons to believe that in the absence of such 

inappropriate market manipulation the more speculation allowed the better. 

Why? Speculators do a great deal of research to uncover investment ideas. 

Some of that research is important and would never have been completed 

without lucrative incentives for speculators. For example, take a look at 

Matt Simmons book, “Twilight in the Desert.” This book, written by an 

investment banker, is a masterpiece of fine, original research of the Saudi Oil 

fields that I doubt would ever have been written if purely financial 

speculators were not allowed to participate in the markets. Yet findings 

published in this book are truly important for anyone involved in Energy 

policy. The fact is, allowing speculators to participate in the energy markets 

leads to more research into the field’s supply and demand dynamics...how 

can this be a bad thing? More research would lead to more appropriate 

prices. However, curbing the ability of speculators to make money from 

trading in energy futures would likely reduce the amount of research done in 

the field, decreasing the visibility of supply and demand trends, and thus lead 

to greater distortions of supply, demand, and prices in the future. 

 

Finally, placing trading limits on energy futures by threatening the ability of 

index funds to invest in them is blatantly unfair to many Americans like 

myself. For example, I commute a long distance by car every day. Maybe 

I’d like to hedge against a possible rise in gas prices? How can I reasonably 

do that without investing in an index fund that invests in the energy futures 

markets? The fact is, index funds, ETNs, and ETFs that invest in energy 

futures are an important way that small investors can hedge themselves 

against a possible rise in the price of energy in the future. If I want to invest 

in oil, I should be able to. If I want to invest in gas, I should be able to. And 

so should all other Americans.
Sincerely yours,

David J. Najarian