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Some impediments to fulfilling G-20 economic governance commitments with examples of U.S. opposition to regulation affecting commodity markets

The financial services industry opposition to financial and commodity market reform raises doubt about the likelihood of effective oversight recommendations by the G-20 financial ministers for the Heads of State summit in November in France.

Used under creative commons license from seemakk

The financial services industry opposition to financial and commodity market reform, supported by some elements of the U.S. government, raises doubt about the likelihood of effective oversight recommendations by the Group of 20 (G-20) financial ministers for the Heads of State summit in November in France. This overview focuses on two regulatory issues that affect commodity markets directly: aggregate limits to the numbers of contracts that can be held by one entity during a trading period (“position limits”) and proposed exemptions to ‘pushing’ over-the-counter (OTC, i.e., unregulated, bilateral) derivatives trades on to regulated exchanges. The recent decision of the U.S. Department of Treasury to exempt OTC foreign exchange derivatives from the Dodd-Frank requirements is briefly mentioned, insofar as that exemption may have consequences for the physical and futures market commodity trades that are often denominated in U.S. dollars. Furthermore, analytic differences among the intergovernmental agencies advising the G-20 financial ministers may result in ineffectual commitments to address commodity price volatility. The second part of this input paper surveys some impediments to strong G-20 commitments on commodity market regulation.