CFTC majority is said to favor position limits rule


By Christopher Doering
Tuesday, October 11, 2011

CHICAGO -- The head of the U.S. futures regulator has the support he needs to pass a long-awaited rule that would curb excessive speculation in commodity markets, a source with knowledge of the agency's rule-making told Reuters on Tuesday.

The U.S. Commodity Futures Trading Commission announced on Tuesday that it would vote on October 18 on a rule limiting the number of contracts any one speculative trader could hold in commodity markets.

The source said the agency was still making changes to the position limits rule and there was a chance changes could upset the balance of support among the five commissioners before next Tuesday.

"I think he does have the votes," the source who closely follows the rule-making process told Reuters.

The CFTC has postponed two scheduled meetings on the position limits plan, with the most recent canceled due to a lack of the three votes needed for its approval.

Curbing excessive speculation is part of the CFTC's efforts to enact sweeping reforms in the Dodd-Frank financial reform overhaul of 2010 that required the agency to regulate the $600 trillion over-the-counter derivatives market.

Gary Gensler, the chairman of the CFTC, told reporters on the sidelines of a Futures Industry Association conference in Chicago that position limits were next on the agency's to-do list, but he declined to say whether he had the support needed to pass it.

The CFTC has estimated it will cost the industry more than $100 million to comply with the position limits rule, Scott O'Malia, a Republican commissioner, told reporters after speaking on a panel in Chicago.

Most of the cost for the industry is expected to be soon after the rule goes into effect.

"You have to look beyond the implementation costs and look at the larger costs," Craig Donohue, chief executive of CME Group Inc, told Reuters Insider.

"If we create an environment where people fundamentally can't manage within the constraints of the new position limit requirements ... that will result in much more fundamental costs to the industry in terms of their commercial activities."

O'Malia expressed concern the cost to comply with the rule could be too expensive, especially for bona fide hedgers, or companies that use physical commodities themselves and seek to lower risk by entering into contracts in order to guard against price increases.

"That would be expensive for them and I'm a little bit concerned about the burden that we're placing on commercial hedgers to justify why they shouldn't have limits," said O'Malia. "They have to have the compliance and reporting mechanism to show why they're not," he said.

The commission has never presented a unified front on position limits, one of the most contentious pieces of the financial overhaul for big commodity traders.

In January, Republican Commissioner Jill Sommers opposed releasing the draft rule for public comment, while Democrat Michael Dunn and O'Malia expressed skepticism on how effective the rules would be. Gensler and Bart Chilton have been staunch supporters throughout.

Some CFTC commissioners also are skeptical that the limits would prevent a run-up in prices. The agency's economists have not been able to find a causal link between speculation and price volatility. One study concluded commodity index traders are not causing price volatility and may actually help reduce it.

The Dodd-Frank legislation gave the CFTC the power to set position limits to curb excessive speculation in 28 commodities, including energy, metals and agricultural markets, "as appropriate."

The law required the CFTC to have position limits in place by mid-January.


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Golden Phoenix Signs Definitive Agreement to Acquire and Reopen Santa Rosa Gold Mine in Panama

Company Press Release
Monday, September 19, 2011

SPARKS, Nevada -- Golden Phoenix Minerals Inc. (OTC Bulletin Board: GPXM) has signed a definitive agreement to acquire a 60 percent interest, with an option to buy an additional 20 percent interest, in the Santa Rosa gold mine in Panama, now owned by Silver Global S.A., a Panamanian corporation.

Santa Rosa produced more than 100,000 ounces of gold from 1996 to 1998 before being closed in part to low gold prices, which are now more than five times higher.

Golden Phoenix intends to acquire its initial 60 percent interest in Santa Rosa by acquiring 60 percent of the share capital of a recently created company under the name Golden Phoenix Panama S.A., formed to hold and operate the mine.

Tom Klein, CEO of Golden Phoenix says: "The agreement establishes a solid framework from which we can advance Mina Santa Rosa to production-ready status."

For Golden Phoenix's complete statement, please visit: