The anticipated moment is finally here: the Commodity Futures Trading Commission (CFTC) has unveiled its proposed rules on position limits. The impact on exchange traded funds (ETFs) may be much ado about nothing, though.
The CFTC’s goal was clamping down on the nearly-$600 trillion derivatives market. Although no one has ever found a conclusive link, commodity speculation has been blamed in the oil price run-up of 2008.
The speculator market is even larger today, having grown to 15%, up from 10% in 2008.
With that in mind, the CFTC is seeking to limit the number of futures or swaps any speculator can own, and this is likely to include ETFs. But is there cause for worry?