industry pounding the pavement in Washington to roll-back
any reforms.
"Wall Street looked at it and said; well, now this is law.
We've got these rules and there are three things we can do,"
Collura said. "Number one, we can push really hard against
the regulations through our meetings with CFTC commis-
sioners and their staffs and through the comment letters we
submit. And make those comment letters as lengthy and
complicated as possible. We have to question everything.
This drew out the rulemaking process tremendously. The
second thing Wall Street said was that if we lose and the rules
are finalized—let's sue them. And they've done that with the
speculative position limits, for example. And then the third
thing was let's tell members of Congress, particularly in a
newly Republican-controlled House, just how horrible this
bill is and how it's going to harm our ability to remain inno-
vative and competitive globally and how it is going to prevent
us from pushing the economic recovery."
Legislation was introduced to try to repeal Dodd-Frank, or
to intervene in the rulemaking process and force the CFTC to
change its rules. The industry was able to counter any effort of
consequence. Attempts have also been mounted to cut CFTC
funding, and thereby cut its efforts to enforce the rules. The
industry was successful in fighting off the proposed cuts but
unsuccessful in attempts to increase funding.
Opponents of Dodd-Frank were perhaps most successful in
influencing the rule on position limits.
"The first version of the position limits rule that we had a
huge influence on was struck down, and new position limits have
been proposed that are going to be more resistant to court chal-
lenge," Cota said. "It's not what we want, but it's better than
the alternative."
Collura agrees that the limits are still too high, and noted that
under the new limits if the spot month or front month for com-
modities is 25% of deliverable supply, and you have, for exam-
ple, 100 speculators, and each of them has 25% of deliverable
supply at a maximum position for crude oil those 100 specula-
tors would control 2,500% of the deliverable supply of crude oil.
"We've argued that creates an artificial demand for the product
and drives up the price," he said. "We also argued strongly for
an across-the-board limit on all speculation as a class of trade.
The CFTC said that was much too heavy of a lift, and it would've
guaranteed litigation and they were not comfortable with that.
We would probably need an act of Congress to make it happen,
which is not likely to happen anytime in the near future."
The successes have been notable. "I think the Dodd Frank
20 June 2014 | FueL OIL neWS | www.fueloilnews.com
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