Press Releases

Washington, DC – In the wake of growing concerns about the impact of speculation, U.S. Senators Dianne Feinstein (D-Calif.) and Ted Stevens (R-Alaska) have introduced legislation to require the Commodity Futures Trading Commission (CFTC) to impose the same position limits on institutional investors to which other investors now are subject.  This legislation would essentially level the playing field in energy futures markets.

Under current law, CFTC is required to impose speculation limits on the size of energy trader positions. However, in practice, CFTC regularly exempts institutional investors from position limits, when investors execute their trades through brokers or dealers. 

“It is becoming clear that rampant speculation in energy markets by institutional investors may be driving up the price of oil and gas. And yet, CFTC exempts these investors from the position limits that are imposed on all other speculators. This gives institutional investors an unfair advantage in the marketplace – and is contributing to the skyrocketing energy market prices,” Senator Feinstein said. “It’s time to level the playing field, and require position limits for all speculators. There’s no doubt that our energy markets are in crisis – and this is one important step we need to take to get us back on track.”

“These unsustainable fuel prices are crippling the economy and runaway speculation has a hand in bringing the cost of a barrel of oil towards $150. This bill will provide needed regulation of oil futures trading which Senator Feinstein and I feel has artificially driven up the prices,” said Senator Stevens. “This bipartisan approach, teamed with domestic energy innovation, is urgently needed to face America’s energy crisis.”
Last month, CFTC announced that it will review the trading practices for these investors to ensure that this type of trading activity is not adversely impacting the price discovery process.  The agency also announced plans to determine whether different practices should be employed. 

The legislation introduced by Senators Feinstein and Stevens would codify speculation limits in energy commodity futures markets for large institutional investors, ensuring that they are not able to drive up energy prices.

Specifically the bill  (S.3131) would:

  • Require CFTC to review the trading practices of institutional investors and their dealers within 30 days:
    • To ensure that their trading is not adversely impacting the market, with respect to price discovery;
    • To determine whether increased regulations are necessary; and
    • To propose to Congress regulations and legislation necessary to prevent the dramatic increase in fuel costs in futures markets.
  • Require institutional investors to report their energy market positions to the CFTC as other traders must do, even when trades are executed by a third party broker.
  • Force CFTC regulations and reports to begin distinguishing between the institutional investors and the “swaps dealers” or “index traders” who broker their trades.
  • Impose speculation limits on institutional investor and index trader positions, as CFTC imposes on more traditional market speculators.
  • Prevent CFTC from considering the positions of institutional investors or their brokers to be “bone fide hedges” that would be exempt them from speculative position limits.
  • Require that the Office of the CFTC’s Inspector General be removed from the CFTC Chairman’s Office and established independently.


Recent testimony before numerous Congressional Committees indicates that between 2000 and 2002, major institutional investors, like pension funds, began to view commodity futures markets as a new “asset class,” suitable to be used in large financial portfolios.  From 2003 to 2008, investments in commodity index funds rose from $13 billion to $260 billion.

As Daniel Yergin, one of the nation’s leading energy market experts put it: “Oil has become the ‘new gold’—a financial asset in which investors seek refuge as inflation rises and the dollar weakens.”