Rising market prices underscore the need for Dodd-Frank Actderivatives rules to curb speculation in commodities such as oil,gold and natural gas, Commodity Futures Trading Commission ChairmanGary Gensler told lawmakers.

“Though the CFTC is not a price-setting agency, rising pricesfor basic commodities highlight the importance of having effectivemarket oversight,” Gensler wrote in response to a May 11 letterfrom 17 senators seeking a CFTC plan for curbing crude-oilspeculation. Gensler's letter said he was writing on behalf ofCommissioners Michael V. Dunn and Scott O'Malia.

Regulators and lawmakers have attempted to rein in speculationsince 2008 amid concern that investors contributed to oil's rise toa record $147.27 a barrel. The CFTC has proposed so-called positionlimits in agricultural, metals and energy derivatives, underrulemaking authority granted by Dodd- Frank, the regulatoryoverhaul enacted last year.

“American consumers are hurting, at the gas pump, at the grocerystore, at their local bank, and it's our responsibility asregulators to do all we can to the fullest extent of ourauthorities to ensure that the prices consumers pay are 100 percentfair and accurate,” Bart Chilton, one of three Democrats on thecommission, said in a statement yesterday.

The CFTC has “ample basis” to proceed with limits on speculationin fuel commodities, starting with crude oil, the 17 senators wrotein their letter to Gensler.

“Congress gave the CFTC the power to rein in excessive oilspeculation and the CFTC should use it,” Senator Maria Cantwell, aWashington Democrat, said in a statement released with theletter.

12,000 Comments
The agency's proposal,approved on Jan. 13, prompted about 12,000 comment letters fromsupporters including Delta Air Lines Inc. and opponents such asBarclays Capital and Cargill Inc.

Dunn, a Democrat who voted to propose the limits, questionedwhether speculation is affecting market prices.

“To date, CFTC staff has been unable to find any reliableeconomic analysis to support either the contention that excessivespeculation is affecting the markets we regulate or that positionlimits will prevent excessive speculation,” Dunn said in astatement at the time.

O'Malia, a Republican, also approved proposing the rules in theCFTC's 4-1 vote. Republican Commissioner Jill Sommers cast the onlyopposing vote.

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