CME Group has intervened in the debate about controlling energy speculation by publishing a detailed paper on the merits of imposing position limits. The 14 page document is at once a tactical retreat and a vigorous defence of CME’s view that speculation is entirely beneficial to markets.
A large part of the paper is devoted to arguing that there is no evidence “excessive speculation” led to the boom and bust in commodity prices in recent years.
Since crude oil soared to $147 a barrel in 2008, political momentum has been building in the US for action to control the burgeoning “commodity investment” industry. CME and many other futures market organisations believe this is an ill-considered kneejerk reaction that would only drain liquidity from markets.
But CME appears to have given up hope that it can win this argument completely and prevent politicians and regulators...