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Issue link: https://read.dmtmag.com/i/42588
TOP OF THE NEWS Coalition welcomes CFTC's Move toward limiting commodities speculation Speculative position limits trading is being applauded by a national coalition that includes the New England Fuel Institute (NEFI), the National Association of Truckstop Operators and the Petroleum Marketers Association of America. Officials at the Commodity Futures Trading Commission A (CFTC) have indicated that a final rule on position limits is likely sometime in September, with a vote to be held as early as Sept. 22, according to a statement distributed Aug. 25 by NEFI. "This development should please consumers and busi- nesses across the country," said Michael C. Trunzo, presi- dent and CEO of NEFI, a Boston area-based home-energy trade group and a leading member of the coalition. "Position limits should renew certainty, stability and confidence in the commodity markets, provided the CFTC gets the rule right and implements it in a timely and com- prehensive manner," Trunzo added. "We will continue to follow developments closely and with great interest." Limits on the size of positions that speculators can hold in commodities from oil to wheat were required under last year's new reform law, the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the law, the Commission was to have completed work on these rules back in January and April for energy and agricultural com- modities, respectively, but the Commission's progress on these rules has been delayed. n ConocoPhillips pursuing plan to separate into two stand-alone, publicly traded companies Consistent with ConocoPhillips' (Houston) previously stated strate- gies and focus on value creation for its shareholders, ConocoPhillips' board of directors has approved pursuing the separation of the company's Refining & Marketing and Exploration & Production businesses into two stand-alone, publicly traded corporations via a tax-free spin of the refining and marketing business to ConocoPhillips shareholders. Following the completion of the pro- posed separation, ConocoPhillips will be a large and geographically diverse pure-play exploration and production company with 6 SEPTEMBER 2011 recent decision to move forward with a proposed rule on speculative position limits in commodities Speculative position limits along with across the board transparency and prohibitions on fraud, manipulation, and disruptive trading practices are tools to prevent excessive speculation and anti-competitive business practices. Members of the coalition have for years warned that the futures, options and swaps markets for commodities have become opaque, virtually unregulated and subject to exces- sive speculation. They argue that the resulting volatility, disconnect from supply and demand fundamentals and "financialization" of these markets has added uncertainty and impeded their hedging activities. The coalition released a revised list of more than 75 studies, reports and analyses showing the effects of exces- sive speculation. The list of studies is available online at: www.nefiactioncenter.com/PDF/evidenceonimpactofcommod- ityspeculation.pdf The Commodity Markets Oversight Coalition (CMOC) is an independent, non-partisan and non- profit alliance of groups that represents commodity- dependent industries, businesses and end-users, includ- ing consumers, that rely on commodity derivatives mar- kets as a hedging and price discovery tool. The CMOC advocates in favor of government policies that promote stability and confidence in the commodities markets, that seek to prevent fraud, manipulation and excessive speculation, and that preserve the interests of bona fide hedgers and consumers. strong returns and investment opportuni- ties. The company's strategy of enhancing returns on capital through developing new resources, growing reserves and pro- duction per share, continuing the asset sale program and increasing shareholder distributions will not change. As a separate company, the Refining and Marketing business of ConocoPhillips will be a leading pure- play independent refiner with a compet- itive and diverse set of assets. In addition to executing the company's initiatives to improve downstream returns through portfolio rationalization and other oper- ating efficiencies, the new downstream company will be able to further position its portfolio by pursuing transactions and investments across the value chain. Under the contemplated plan, both companies will be well positioned with financial strength and flexibility and experienced management teams com- mitted to continued value creation. "Consistent with our strategy to create industry-leading shareholder value, we have concluded that two independent companies focused on their respective industries will be better positioned to pursue their individually focused business strategies," said Jim Mulva, chairman and chief executive officer. "Both companies will continue to benefit from the size and scale of their significant high-quality asset bases and free cash flow generation, allowing them to invest and create shareholder value in a changing environment." NPN Magazine n www.npnweb.com