On Thursday, the U.S. House of Representatives passed an amended H.R. 6604, The Commodity Markets Transparency and Accountability Act of 2008, which aims to prevent manipulation and excessive speculation in energy markets.
Some experts estimate that excessive speculation could be artificially inflating oil prices by anywhere from $20 to $60 a barrel.
The bill was defeated by 13 votes in July under a rule that required a two-thirds vote to pass. This time the bill only required a simple majority, and passed 283-133.
The bill’s sponsor, Bob Etheridge is the chair of the Subcommittee on General Farm Commodities and Risk Management of the House Agriculture Committee, which has jurisdiction over the Commodity Futures Trading Commission (CFTC). The CFTC is responsible for protecting the public from fraudulent practices in commodity futures trading, including oil and gasoline.
The bill amends the Commodity Exchange Act and requires foreign boards of trade to adopt position limits, requires the CFTC to make public on a weekly basis the number of positions and total value of index funds and other passive, long-only and short only positions and requires detailed reporting from index traders and swap dealers. The legislation will give the CFTC 100 additional staff people and will provide more transparency and disclosure from investors. The CFTC is currently at the lowest staffing level in the agency’s history, while trading has increased six fold since 2001.
In a letter to House Speaker Nancy Pelosi before the vote, Futures Industry Association President John Damgard said “H.R. 6604 sends the wrong message by limiting [worldwide financial institutions’] ability to hedge on the U.S. futures exchanges. If the House must act, then H.R. 6604 is the wrong approach. H.R. 6604…would encourage traders to move overseas, lead to distortions in price discovery and undermine international regulatory cooperation.”
Click here for the full text of the bill.
