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Washington: Significantly raising margin requirements on oil futures trading at the New York Mercantile Exchange would not rein in speculative investors and bring down crude prices, US Energy Secretary Sam Bodman said on Friday.
Many US lawmakers blame hedge funds, pension fund managers and other speculative investors for pushing up prices for crude oil and other commodities to record levels.
"I don't think that the margin requirements per se are going to have any impact on it," Bodman said in an interview on CNBC television.
Legislation is pending in the US Senate that would require the Commodity Futures Trading Commission, which regulates Nymex, to significantly raise the amount of money, or margin, that speculators have to put up to trade oil futures.
The bill does not specify how high margins should be increased, leaving it up to the CFTC to decide. However, the CFTC has told Congress that, while more speculators are doing business in the futures markets, the agency has no evidence they have caused prices to rise.
Stock requirements
When purchasing stocks, many brokerage firms require investors to have between 30 per cent and 40 per cent of the market value of the securities in margin accounts.
Margin requirements for futures are generally lower, less than 10 per cent for many contracts, and often change depending on the volatility of the contracts.
Separately, Bodman said he supported broadening some regulatory powers of the CFTC, which last week was given new authority from Congress to monitor and collect more information on some of the energy trading going on in exempt commercial markets, such as the Intercontinental Exchange.
Strong dollar: US sees no major impact
Strengthening the dollar wouldn't have a "major impact'' on soaring oil prices, US Energy Secretary Samuel Bodman said. Asked whether the US should buy dollars to help prop up the currency to lower oil prices, Bodman responded, "It might help, but I don't believe it's going to have a major impact.''
Oil futures traded in New York have doubled in the past year, touching a record $135.09 a barrel, boosted partly by a weakening of the dollar that increased demand for the contracts as a hedge. Increasing requirements for the amount of money oil traders must set aside to guarantee trades, known as margin requirements, also would have little impact on prices, Bodman said.
- Bloomberg
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