Action against oil speculators could backfire

"If you take them out you will thin out the markets massively and that will have adverse consequences for the physical players."

He also said suggestions from some quarters that margins should be increased for speculators and not on others was unacceptable.

"If you start artificially interfering with the markets, the outlet for doing the dealings will simply emerge elsewhere in some other jurisdiction in another market in another place," he said. "You play around with these markets at your peril."

Belchambers said he did support greater transparency in futures markets as they become more global.

"The flows of information between regulators have to be comprehensive and more timely than they are."

The U.S. Commodity Futures Trading Commission has acted to seek more data on trade in U.S. oil futures in Britain. It is also in talks with the FSA on the imposition of trading limits on U.S. crude contracts traded on ICE Futures Europe (ICE.N). ID:nN2348691

Belchambers said there was always wariness about the United States' "extra-territorial regulatory reach," and that the focus on speculators would not get to the root of the problem, which was a structural shift in supply and demand and prices of commodities.

"The real issue is understanding that the whole economics around commodities is changing."

(editing by Barbara Lewis)