Old Rules – New Interpretations: Speculative Position Limits

Due to the rapid rise and rapid fall of the crude oil market in 2008, the CFTC has recently proposed a new rule on speculative position limits for the energy markets. Numerous comments have been sent to the Commission and the debate is ongoing over the economic, legal and philosophical merits of imposing position limits on these very liquid markets. It’s all very interesting and important, but rather than debating the merits of these proposed rules, in this article, I would like to demonstrate for you that the current rules on speculative position limits can have unusual and surprising consequences…

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