7.28.2009 The Commodity Futures Trading Commission (CFTC) held three hearings to address the current application of position limits and exemptions from position limits in energy markets. The energy markets have operated almost entirely free from position limits. There exists the fear from many interested parties that the unintended consequences of such limits would be disruptions in liquidity and in the markets generally.

In addition to looking at position limits, the CFTC is also looking to possibly scale back these types of exemptions for big banks, index traders and managers of exchange-traded funds (ETFs), which use shareholders’ investments to buy and sell commodities. Commodity ETFs (also called exchange-traded vehicles or ETVs) are not governed by the Investment Company Act of 1940 and are considered commodity pools under the Commodity Exchange Act. Commodity ETFs either physically hold the commodity in question or invest in futures contracts and seek to match the return of the benchmark commodity.

Click http://www.cftc.gov/newsroom/cftcevents/2009/oeaevent072909.html to access information about the hearings.