Federal regulators took a step Thursday to limit speculative trading of oil, food products and other commodities, responding to critics who say that has driven up consumer prices.
The Commodity Futures Trading Commission proposed limiting the volume of futures contracts that financial investors can trade for 28 commodities. The panel voted 4-1 to advance the rule, which opens it to public comment.
The restrictions are aimed at Wall Street firms and others who trade them to profit from swings in market prices. Agricultural companies, airlines and others who use futures trading to hedge against price changes would not be affected.
Lawmakers had proposed establishing limits on speculative trading of commodities as part of the financial overhaul law enacted last summer.
But they left the details of the rules to regulators to sort out.
Eight senators — seven Democrats and one Independent — sent the regulatory commission a letter Thursday raising concerns about lobbying efforts by the financial industry aimed at watering down rules.
The senators urged regulators to enact rules that place limits all traders other than those with "bona fide hedge positions."
The letter was sent on the same day that the Labor Department reported that higher oil and food costs pushed wholesale prices up last month by the biggest amount in nearly a year.
"The growing role of hedge funds, financial traders, and long-term passive investors in energy and other commodity markets has had devastating consequences for the average American," the senators wrote.
"These speculators have contributed to rising volatility and periodic price spikes in the cost of gasoline and food."
© Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.