CFTC to push energy position limits at Jan 14 meet

WASHINGTON (Reuters) - The top U.S. futures regulator is poised to move forward next week on its long-awaited proposal on position limits in energy markets, a plan that has unsettled traders since last summer.

The CFTC will meet on January 14 to consider whether to issue the proposed rule to limit holdings by big energy traders, the cornerstone of its effort to curb volatility after prices of oil and other commodities soared to record highs in 2008.

Details of the proposal will not be released before the meeting, a CFTC spokesman said.

While many in Washington and some in the industry blamed the surge on big speculative funds, some analysts have argued that speculators were merely following supply and demand fundamentals. These critics say position limits could drive trading onto unregulated exchanges or to foreign markets.

The proposed rule, which would then be open to public comment, would apply to trading on regulated futures exchanges, derivatives transaction facilities and on electronic trading floors, the CFTC said.

The commission will also decide which players to exempt from the proposed limits, such as airlines, trucking companies and other companies that take delivery of the fuel itself and use futures contracts to hedge against price swings.

The risk of new regulations by the CFTC has loomed over oil, natural gas and metals markets for much of the past year, as commissioners and politicians trumpeted the need to overhaul financial markets and curb speculation, but traders aren't the only ones who will be relieved to end the uncertainty.

"I'm hopeful that this meeting will move us forward so that we can get on with doing our jobs to ensure efficient and effective markets and protect consumers from fraud, abuse and excessive manipulation," CFTC Commissioner Bart Chilton said.

The CFTC's action would also be a key part of the Obama administration's effort to stabilize financial markets.

Pressure on the CFTC to strengthen position limits surged after prices for oil, copper, platinum and other commodities soared to record highs in 2008.

The CFTC proposal would not be finalized until the agency receives the public comments and decides on whether it should be modified..

Some analysts believe the measures will not be as aggressive as Chairman Gary Gensler and Chilton pushed for when the agency announced last July it would review position limits.

Gensler and Chilton have found "it's more complicated and there is a lot more opposition to their course then was initially anticipated," said Craig Pirrong, a finance professor at the University of Houston.

"There definitely will be position limits. The anticipation, the political expectation from Congress is that they take some action."

(Editing by David Gregorio)