WRAPUP 1-CFTC pushes for limits on energy positions

* Public comments could begin in late November

* Final rules still months away

By Jonathan Spicer

CHICAGO, Oct 21 (Reuters) - Limiting large players from
excessive speculation is needed to protect the energy markets,
said the chief regulator of U.S. commodities markets on
Wednesday, while another official said public comment on the
proposal could start as early as November.

The Commodity Futures Trading Commission (CFTC) and its
chairman Gary Gensler face intense pressure from Congress to
tighten limits on the size of positions traders take in energy
markets after crude oil futures hit a record near $150 a barrel
last year and gas prices topped $4 a gallon at the pump.

Speculation is an important part of trading on U.S.
exchanges but there need to be limits, Gensler said during a
panel discussion at the Futures Industry Association conference
in Chicago.

"Excessive speculation in terms of concentrated large
positions can -- particularly in stormy times, and we did have
a crisis last year -- (be) very tricky and treacherous for the
economy," Gensler said.

The CFTC could call for public comments on new position
limit rules by the end of November, said CFTC Commissioner Bart
Chilton on the sidelines of an energy conference on Wednesday
in Houston. [ID:nN21499540]

In some commodities, such as agricultural products, the
CFTC puts position limits on how many contracts an investor can
hold. In energy markets, the limits are set by the exchanges,
the largest of which are owned by the CME Group Inc (CME.O) and
the IntercontinentalExchange (ICE.N).

"It's a question of where is the level where fair and
orderly markets are best promoted, where you have a diversity
of speculators rather than two or three large ones," Gensler
said.

"This has been a very active dialogue between the exchanges
and the CFTC. We're trying to find the right balance."

Traders caution that limits could reduce the liquidity in
the markets and actually drive prices higher, or simply shift
trading to overseas markets with looser rules.

Large investors are bracing for the new regulations by
rebalancing their portfolios, often sharply reducing positions
in commodities that fall under U.S. regulation.

For more coverage, please see:

* CFTC taking aim at commodities speculation [ID:nCFTCREG]

* Global changes in financial regulation [ID:nFINREG]
(Writing by Lisa Shumaker; additional reporting by Christopher
Doering and Charles Abbott in Washington, Erwin Seba in
Houston; editing by Jim Marshall)