On Wed, Jul 6, 2011 at 7:53 AM, brad <babscritique at gmail.com> wrote:
> Financial Times-
>
> The Commodity Futures Trading Commission has for the first time
> revealed that almost 95 per cent of US crude oil futures volume is
> generated by day trading or betting on arcane price relationships,
> suggesting long-term bets on whether prices will rise or fall have
> little effect on energy price volatility.
>
> The US regulator released data showing that only 5.5 per cent of crude
> trading volume on the New York Mercantile Exchange involved net
> changes in large traders’ stance on price direction. Changes to net
> positions also involved a minority of volumes in metals and
> agriculture and in financial futures on markets such as Treasury
> notes, stock indices and exchange rates.
>
> The detailed volume data from the CFTC’s trader reporting system
> followed a review of the “flash crash” of May 6 2010, when stock and
> other markets momentarily plummeted and prompted calls for the reform
> of electronic trading. The day traders who contribute to the majority
> of oil futures volume include so-called high-frequency firms, which
> typically exit the market without a net position at the end of the
> day.
>
> The data appear after oil prices climbed to their highest levels in
> three years, prompting some lawmakers to redouble efforts to rein in
> investment funds pumping money into commodities as an asset class.
> Crude has since pulled back in a series of nerve-rattling moves, with
> the Nymex contract rising or falling more than 4 per cent on five days
> in May and June.
>
> The CFTC, which has proposed rules limiting commodity investment, said
> the data for the first time show how much trading results in daily
> changes to net positions.
>
> “The balance of trading is due to day trading or trading in calendar
> spreads,” said Gary Gensler, CFTC chairman. “The data show that, in
> many cases, less than 20 per cent of average daily trading volume
> results in traders changing their net long or net short [positions].”
>
>
> http://www.ft.com/intl/cms/s/0/b29b2b1e-a743-11e0-b6d4-00144feabdc0.html#axzz1RKwrozTx
>
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-- Michael Perelman Economics Department California State University Chico, CA 95929
530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com