Two leading investment banks argued that they should not be subject to position limits on their commodities swap dealing businesses, in the second day of hearings at the Commodity Futures Trading Commission on reforming commodity markets.
Senior representatives from Goldman Sachs and JP Morgan argued that they should keep their “hedge exemptions”.
These entitlements allow firms that are considered to have a bona fide need to hedge to escape the usual position limits that the CFTC is empowered to set for commodity futures traders.
Gary Gensler, the new chairman of the CFTC, is reviewing the liberal way that hedge exemptions have been granted in recent years, which has allowed firms that are not themselves primary users or producers of a commodity to obtain exemption.
The debate has come to a head because the incoming Obama administration and...