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High-frequency trading confirmed as big influence on futures markets

Section: Daily Dispatches

CFTC Data Reveal Day Traders' Role in Volatile Oil Markets

By Gregory Meyer
Financial Times, London
Tuesday, July 5, 2011

The Commodity Futures Trading Commission has for the first time revealed that almost 95 per cent of US crude oil futures volume is generated by day trading or betting on arcane price relationships, suggesting long-term bets on whether prices will rise or fall have little effect on energy price volatility.

The US regulator released data showing that only 5.5 per cent of crude trading volume on the New York Mercantile Exchange involved net changes in large traders' stance on price direction. Changes to net positions also involved a minority of volumes in metals and agriculture and in financial futures on markets such as Treasury notes, stock indices, and exchange rates.

The detailed volume data from the CFTC's trader reporting system followed a review of the "flash crash" of May 6 2010, when stock and other markets momentarily plummeted and prompted calls for the reform of electronic trading. The day traders who contribute to the majority of oil futures volume include so-called high-frequency firms, which typically exit the market without a net position at the end of the day.

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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit:

The data appear after oil prices climbed to their highest levels in three years, prompting some lawmakers to redouble efforts to rein in investment funds pumping money into commodities as an asset class. Crude has since pulled back in a series of nerve-rattling moves, with the Nymex contract rising or falling more than 4 per cent on five days in May and June.

The CFTC, which has proposed rules limiting commodity investment, said the data for the first time show how much trading results in daily changes to net positions.

"The balance of trading is due to day trading or trading in calendar spreads," said Gary Gensler, CFTC chairman. "The data show that, in many cases, less than 20 per cent of average daily trading volume results in traders changing their net long or net short" positions.

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Lewis E. Lehrman on How to Solve the U.S. Debt Problem

Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, advises that to reduce the $1 1/2 trillion U.S. deficit, the Republican Party must initiate an investment program.

Working Americans are not saving, which enables the banks to lead the country into a cycle of debt, leverage, boom, panic, and bust.

Lehrman says: "Eliminating the budget deficit of a trillion and a half dollars cannot be done overnight. The proposal by U.S. Rep. Paul Ryan was very dramatic -- one Republican called it radical -- but it was not happily received. The solution, of course, is to design an American program for prosperity, because you can solve these entitlement problems with a growing economy. We need a tremendous program of investment, and investment comes from savings. When you pay savers, middle-income professionals, and working people 0 percent at the bank, you are not going to encourage them to save. Then we are left with a bank cycle of debt, leverage, boom, panic, and bust."

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