CFTC Attack on Gold/Crude Prices to be Delayed Until Dec 16; Possibly Jan 2011

Engineering the command and control structure for the $600 trillion global derivatives is proving no easy feat, even for ex-Goldmanite Gary Gensler, Chairman of the Commodity Futures Trading Commission (CFTC). For background, see our previous posts here and here, which explain how the CFTC will attempt to keep Bernanke's mad money printing out of hard assets. The last post alerted the postponement from December 1 to the 7th or 16th. It looks like now it will be December 16th at the earliest, and possibly January 2011. Any later than January 17th, and the CFTC will be in violation of Frank-Dodd. Reuters explains below and, curiously, adopts a shifting stance on just when, exactly, the new position limits will be announced (emphasis ours):

WASHINGTON (Reuters) - The U.S. futures regulator intends to unveil on December 16 its long-awaited revised plan to limit speculative positions held by commodity traders, a source with direct knowledge of the matter said on Monday.

The Commodity Futures Trading Commission is grappling with how to set and police the controversial limits. Furthermore, due to its complexity there could be further delays, said another source closely monitoring the issue.

It would be unsurprising if the proposal was postponed until the new year -- one of several items that may be delayed as the CFTC races to meet deadlines set under the Dodd-Frank financial reform law, the industry source said.

The position-limit rule was supposed to be one of the first items tackled by the CFTC after the Wall Street reform act passed in July.

However, the matter will now be left to the agency's last scheduled rule-making hearing for the year, reflecting the difficulty the CFTC has had in writing a draft regulation.

The CFTC is pushing to release by the end of the year the first draft of 50 to 60 rules required to implement the Wall Street reforms -- a self-imposed timeline designed to ensure it meets July deadlines to finalize the regulations.

But Chairman Gary Gensler has said the agency could fall behind while other commissioners have complained the agency was moving too fast in its deliberations.

POSITION LIMITS "COMPLICATED"

The law required the CFTC to finalize speculative position limits for commodities futures and swaps by mid-January.

"The agency needs to get on with it and put forth a position limit proposal ASAP," CFTC Commissioner Bart Chilton told Reuters.

"We are required by law to move on implementation in January. Getting public comments prior to that time is critical as we finalize a thoughtful final rule," he said.

The CFTC is almost certain to miss the January deadline, however, because the agency will not have data on the size of swaps markets until it puts some of its other new rules for over-the-counter derivatives in place.

Full story here.