In August confidential information on crude oil futures trading positions from the Commodity Futures Trading Commission (CFTC) dating back to the summer of 2008 was leaked to The Wall Street Journal, causing the Futures Industry Association (FIA) to ask the CFTC to conduct an investigation to determine if any laws or regulations were violated.
The source of the leak is no mystery as Sen. Bernie Sanders (I-Vermont) proudly claimed responsibility in a statement he made to Reuters. Sanders, who has been a consistent proponent of the notion that speculators caused the 2008 spike in crude oil prices, wrote, "The CFTC has kept this information hidden from the American public for nearly three years. This is an outrage."
The FIA expressed some of its own outrage in a letter it sent to the CFTC. "The members of the (FIA) were shocked and outraged by the disclosure of confidential data on derivatives market positions published recently."
The letter went on to say the leak "poses a serious threat to the confidence of market participants in the CFTC’s ability to protect proprietary information."
CME Group supported the FIA position in a statement made to Futures. "We were disappointed in this incident that involved the intentional leak of confidential regulatory information regarding the identity of specific market participants and their trading positions in U.S. futures markets. Instances like these raise market participants’ concerns over the government’s ability to maintain strict confidentiality of regulatory information and customer trading information."
As to Sanders’ continuous claim that speculators caused the 2008 spike in crude oil along with current elevated prices, Neal Kottke, founder and chairman of Kottke Associates, calls it insane. "Speculators did not make the crude oil market do what it did. That as a notion deserves nothing but disdain."
Further, Kottke says the breach of confidentiality could harm markets. "If information like this is going to be available and you don’t know who all has it, that is another force to drive large capital away from trading with the exchanges. They will simply do a swap with an Australian bank and say ‘forget about it. I am not having information available like that,’" he says.
A proprietary trader we spoke with on background shared that position "Regulated businesses have a need to communicate with their regulators on a privileged and confidential basis," he says.
FIA President John Damgard called the leak disgraceful. "There is a difference between confidentiality and secrecy, just like there is a difference between manipulation and speculation, and there are some people who don’t understand markets who don’t know the difference."
At press time the CFTC has not responded to the FIA letter or made any comment on the leaked information.