U.S. regulator to identify hedge fund bets in commods

Date: Wednesday, July 8, 2009
Author: Barani Krishnan, Reuters

The regulator of U.S. commodity markets said on Tuesday his agency's weekly Commitments of Traders report will be revamped to include hedge fund positions for better transparency.

"Enhancing the quality of information in these weekly reports will better inform market participants and the public about the positions of the various types of traders," Gary Gensler, chairman of the Commodity Futures Trading Commission, said in a statement.

Gensler said the positions of noncommercial and commercial traders in the COT reports will be broken down to categorize swaps dealers, or individuals who act as counterparties in a swap agreement.

In the noncommercial sector -- which groups some of the biggest speculators in commodities -- there will be a new category for professionally managed market participants, such as hedge funds, he said.

Gensler said the CFTC would be implementing the new version of the COT report "in the near term."

Hedge funds attracted huge attention -- and controversy -- in recent years for their supposed role in driving up prices of oil and other raw materials that provide the basic necessities of life.

The CFTC did a probe last year on the activity of hedge funds and other speculators in commodity markets, as oil hit a record high of nearly $150 a barrel in July, just before the recession brought prices down.

The commission said then it could not find any conclusive evidence in the investigation.

In Tuesday's statement, Gensler said the CFTC would hold hearings in the next few weeks with various industry sources to determine whether to set position limits on all commodity futures contracts.