Obama Does not Heart CME Group (CME) or IntercontinentalExchange (ICE)

Looks like the regulatory noose tightening we've been speaking of on speculators in the commodities markets, specifically that of the energy kind, are really spanking the 2 large trading pits - CME Group (CME) and IntercontinentalExchange (ICE)


Via Reuters

• The top regulator of U.S. futures markets is considering a clampdown on excessive speculation in energy and commodity trading by restricting holdings of big players, part of a broader move by the Obama administration to stabilize the financial markets.
• William Blair and Co said in a research note that the stocks sank on fears of CFTC imposing restrictions on futures trading, noting that energy futures comprised up to a quarter of revenue for each of the exchanges.

Interesting side note

• Also on the CFTC's radar was commodity ETFs such as the United States Oil Funds(USO) and the United States Natural Gas Fund (UNG). Those ETFs have become so big that at one point USO held more than 20% of Nymex's front-month oil futures contracts.

As we've been stating over and over, we've created Frankensteins in our "financially innovative" system - ETFs are dominating physical markets, and the stock market as a whole I'd argue. What you own means less and less; what ETFs own the stocks you own on the other hand mean more and more... program trades and the vehicles they invest in have changed the game.

• Passive investors increased their crude-oil holdings to the equivalent of more than 600 million barrels in June, up more than 30% from the end of last year, a MarketWatch analysis of Commodity Futures Trading Commission data and the most popular commodities indexes shows. See detailed description of MarketWatch's findings.

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