Commodity Futures Trading Commission Chairman J. Christopher Giancarlo says that before he steps down, he hopes to repropose a rule that limits the ability of traders to speculate on commodities like oil.
Hopes of a US-Chinese summit this month to sign a trade deal have diminished with the release of Chinese President Xi Jinping's schedule for a visit to Europe, which does not mention a stop in the US. Progress toward an accord reportedly has been hindered by US demands for authority to impose tariffs unilaterally if China breaches the agreement.
President Donald Trump's latest tariff target may be cars from Europe. With that in prospect, The Wall Street Journal's editorial board looks at the employment and trade results of the 25% steel tariff imposed a year ago.
US Commodity Futures Trading Commission Chairman J. Christopher Giancarlo says regulators' inability to complete international swaps data harmonization is disappointing and he is "losing patience with the current process." If the G-20 swaps reforms are not forthcoming, the CFTC is prepared to "work with its key international counterparts and pursue a separate and more effective course," Giancarlo said during a speech at a conference.
Heath Tarbert, the Trump administration's nominee to head the Commodity Futures Trading Commission, told a Senate agriculture committee hearing that US clearinghouses and exchanges should "be exclusively supervised and regulated by US regulators." Tarbert said maintaining sovereignty to regulate doesn't mean the US can't collaborate with foreign regulators.
A Futures Industry Association white paper urges national and regional regulators to cooperate in supervision of cross-border activity, rather than direct regulation of third-country activity, which FIA says could increasingly fragment the derivatives market. FIA President and CEO Walt Lukken says markets are not defined by borders but "are defined by the needs of buyers and sellers no matter their location."
Monetary Authority of Singapore Managing Director Ravi Menon told a conference that the regulator and the Commodity Futures Trading Commission have come to a mutual recognition agreement for certain US and Singapore derivatives trading venues. Menon said the cross-border agreement will "provide US and Singapore market participants access to deeper pools of liquidity."
Market participants are concerned Brexit means off-venue trades between the EU and the UK must be reported twice under post-trade transparency rules of Europe's revised Markets in Financial Instruments Directive. Duplicate reporting for derivatives transactions could lead to misleading public data, dealers say.
A uniform approach to technology among regulators worldwide isn't something that should be pursued, Paul Andrews, secretary-general of the International Organization of Securities Commissions, and Eric Pan of the Commodity Futures Trading Commission said at FIA Boca. Self-regulatory organizations are closer to the market and therefore might have the advantage of reacting faster to emerging technology, Pan said.
Commodity Futures Trading Commission Chairman J. Christopher Giancarlo told reporters at a conference that it would be hard to work quickly through the comments received on the commission's swap execution facility proposals, and said it was conceivable the rules may be completed by his nominated successor, Heath Tarbert.
Officials with the European Central Bank say the EU's plan for greater supervision over clearinghouses violates the ECB's independence, and potentially affects monetary policy decisions and emergency liquidity provisions.
The Bureau of Land Management introduced new land-use rules that lift certain protections for the greater sage grouse in seven Western states, part of an effort to open more land for oil and natural gas exploration. Affected states include Nevada, Utah, Wyoming, Colorado and Idaho.
Next month's scheduled OPEC meeting may be off. Citing stable market fundamentals, Saudi Oil Minister Khalid al-Falih said that "on balance, we felt that a meeting in April would, perhaps, be unnecessary."
Crude exports from the US Gulf Coast climbed to an all-time high of 2.3 million barrels per day in December, while imports fell to a 32-year low, just under the 2 million bpd mark, reports the Energy Information Administration. The export growth is driven by booming oil production, which hit a record 7.7 million bpd in the region in November, and refiners' limited ability to process light, sweet crude.
The growth of US oil exports, powered by the shale boom, has led to US crude playing a bigger role in oil pricing around the world. "WTI is already being factored into the price of North Sea and West African crudes," says Morningstar analyst Sandy Fielden. "As long as there is too much WTI in the US, it will get demand from overseas."
Tech companies including Google, Amazon and Microsoft flocked to the CERAWeek energy conference last week to present solutions ranging from cloud computing to virtual reality that could accelerate the oil and natural gas industry's digitization efforts. Accenture estimates that digital transformation of the industry could produce $1.6 trillion of added value for companies and their customers, creating the opportunity for a new revenue stream for large tech companies.
US farmers are struggling with a steep drop in income over the past few years and are increasingly skeptical about the promised benefits of a seemingly endless trade war with China, said Mark Watne, president of the North Dakota Farmers Union. Meanwhile, farm bankruptcies are soaring, banks are growing wary and soybean prices are taking a particularly big hit.
A number of aluminum producers are shifting the focus of their production lines to higher-margin products, like aluminum sheeting for the automotive industry. Part of the issue stems from a lower number of cans being recycled into new packaging, Bob Tita writes.
Small farmers would find it easier to get their products included in the commodity derivatives market using blockchain technology since it would not require the large capital needed to trade on exchanges, says Manav Garg, CEO of tech firm Eka. Use of blockchain and cryptocurrency would lower the barrier to entry for smaller producers under the current exchange-owned system, Garg says.
CME Group plans to launch Japan crude cocktail futures March 31 for trading April 1, becoming to first exchange to offer the contract. The financially settled contract will be listed on CME Globex and cleared through CME ClearPort.
Morgan Stanley had the most commodity revenue among the 12 largest investment banks during 2018, followed by JPMorgan Chase, with Citigroup and Goldman Sachs sharing third place, according to Coalition data. Revenue from commodity trading, derivatives sales and other activities at all 12 banks increased 45% compared with 2017, reaching $3.6 billion.
Jesy Beeson reviews how the CME soybean market responded to fast-breaking developments last April 4, when China announced tariffs in retaliation for US measures. Liquidity was maintained throughout the day, Beeson notes, a crucial factor as markets look ahead to upcoming developments in the trade war.
Easing tensions in the trade war appear to be having little effect on the price of gold. Scott Bauer looks at other principal factors -- including economic data and the dollar -- that will figure in moving ahead.
The Federal Reserve has plenty of prominent central bank company in its failure over the past 25 years to generate inflation or boost growth rates. The latest idea is simply to raise the inflation target for a defined period, but CME Group Chief Economist Bluford Putnam says this is unlikely to work, especially if the economy slows and the Fed ends up cutting rates.