The US should impose new limits on oil and gas futures trading to prevent distortions in prices, two big Wall Street speculators told an official hearing.
The support from two hedge funds, coming from an industry that has often resisted regulation, boosts efforts by the US government to impose limits on the number of positions, or contracts, that investors can take, in the name of preventing market manipulation.
Investors seeking to profit from commodities had harmed buyers of physical oil and natural gas, such as airlines, manufacturers and haulage firms, and caused wild swings in the oil price, said Michael Masters of Masters Capital Management, a hedge fund.
"Investors' desire to turn the commodity derivatives markets into something they are not, namely a valid investment vehicle, must be subjugated to the needs of bona fide physical hedgers to hedge their risks and discover fair prices," Mr Masters told the Commodities and Futures Trading Commission (CFTC), in the last of three hearings on possible limits on trading.
He said the cure for excessive speculation was a limit on speculative positions.
Critics of the present system, including OPEC, say that speculators such as hedge funds and exchange-traded funds (ETFs) have increased the volatility of oil prices by buying and selling thousands of contracts at a time with the goal of turning a profit. Increased interest in oil futures outside the circle of traditional oil buyers drove prices up to record levels last summer, they say, and are threatening to do so again this year.
Many fund managers, however, say that speculators are a crucial component of determining a fair price for any commodity. More limits on market participation, they argue, will reduce the liquidity of the market and actually increase volatility.
John Arnold, the head of Centaurus Advisors, a $5 billion (Dh18.3bn) commodity-focused hedge fund, urged the adoption of position limits on physically traded gas, saying they would eventually work in his interest because it would preserve faith in the market.
"Our primary role in the market is to provide liquidity to the commercial hedger," he said. "Undue influence in the market creates distrust, and that distrust can lead to withdrawal of commercial hedgers from the market."
Opponents of new regulations say that regulators have little hard evidence that speculators are to blame for volatility.
John Hyland, the chief investment officer of US Commodity Funds, one of the country's largest ETFs, said criticism of ETFs, which are indexed to oil price movements, amounted to "self-serving statistical gibberish".
He said analysis showed that investors in his fund had tended to sell contracts when oil prices were increasing, and buy contracts when prices were falling, which proved, he said, that the fund had not unduly influenced prices.
"Any time anybody tells you that 'common sense' tells you something, it means you don't have the data to support it," he said.
This year's rise in oil prices, for example, was due to optimism about the state of the economy, not the involvement of speculators, Mr Hyland said.
"If you believe in green shoots, this is rational," he said. "If the green shoots are real, maybe oil goes up to $100, if the green shoots are not real, maybe oil goes to $40."
cstanton@thenational.ae
Fund-raising tips for start-ups
Develop an innovative business concept
Have the ability to differentiate yourself from competitors
Put in place a business continuity plan after Covid-19
Prepare for the worst-case scenario (further lockdowns, long wait for a vaccine, etc.)
Have enough cash to stay afloat for the next 12 to 18 months
Be creative and innovative to reduce expenses
Be prepared to use Covid-19 as an opportunity for your business
* Tips from Jassim Al Marzooqi and Walid Hanna
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
Women%E2%80%99s%20Asia%20Cup
%3Cp%3E%3Cstrong%3EUAE%20fixtures%3C%2Fstrong%3E%3Cbr%3ESun%20Oct%202%2C%20v%20Sri%20Lanka%3Cbr%3ETue%20Oct%204%2C%20v%20India%3Cbr%3EWed%20Oct%205%2C%20v%20Malaysia%3Cbr%3EFri%20Oct%207%2C%20v%20Thailand%3Cbr%3ESun%20Oct%209%2C%20v%20Pakistan%3Cbr%3ETue%20Oct%2011%2C%20v%20Bangladesh%3Cbr%3E%3Cbr%3E%3Cstrong%3EUAE%20squad%3C%2Fstrong%3E%3Cbr%3EChaya%20Mughal%20(captain)%2C%20Esha%20Oza%2C%20Kavisha%20Kumari%2C%20Khushi%20Sharma%2C%20Theertha%20Satish%2C%20Lavanya%20Keny%2C%20Priyanjali%20Jain%2C%20Suraksha%20Kotte%2C%20Natasha%20Cherriath%2C%20Indhuja%20Nandakumar%2C%20Rishitha%20Rajith%2C%20Vaishnave%20Mahesh%2C%20Siya%20Gokhale%2C%20Samaira%20Dharnidharka%2C%20Mahika%20Gaur%3C%2Fp%3E%0A
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
John%20Wick%3A%20Chapter%204
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Al Jazira's foreign quartet for 2017/18
Romarinho, Brazil
Lassana Diarra, France
Sardor Rashidov, Uzbekistan
Mbark Boussoufa, Morocco
Company%20Profile
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COMPANY%20PROFILE%20
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COMPANY%20PROFILE
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UAE currency: the story behind the money in your pockets
Fifa%20World%20Cup%20Qatar%202022%20
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COMPANY PROFILE
Name: Rain Management
Year started: 2017
Based: Bahrain
Employees: 100-120
Amount raised: $2.5m from BitMex Ventures and Blockwater. Another $6m raised from MEVP, Coinbase, Vision Ventures, CMT, Jimco and DIFC Fintech Fund
EMIRATES'S%20REVISED%20A350%20DEPLOYMENT%20SCHEDULE
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Company%20Profile
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JOKE'S%20ON%20YOU
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Sri Lanka's T20I squad
Thisara Perera (captain), Dilshan Munaweera, Danushka Gunathilaka, Sadeera Samarawickrama, Ashan Priyanjan, Mahela Udawatte, Dasun Shanaka, Sachith Pathirana, Vikum Sanjaya, Lahiru Gamage, Seekkuge Prasanna, Vishwa Fernando, Isuru Udana, Jeffrey Vandersay and Chathuranga de Silva.
Tailors and retailers miss out on back-to-school rush
Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”
A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.
“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
Company%20profile
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Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
COMPANY%20PROFILE
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The%20specs
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The specs
Engine: 77.4kW all-wheel-drive dual motor
Power: 320bhp
Torque: 605Nm
Transmission: Single-speed automatic
Price: From Dh219,000
On sale: Now
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
ENGLAND SQUAD
Goalkeepers Henderson, Pickford, Pope.
Defenders Alexander-Arnold, Chilwell, Coady, Dier, Gomez, Keane, Maguire, Maitland-Niles, Mings, Saka, Trippier, Walker.
Midfielders Henderson, Mount, Phillips, Rice, Ward-Prowse, Winks.
Forwards Abraham, Barnes, Calvert-Lewin, Grealish, Ings, Kane, Rashford, Sancho, Sterling.
The biog
Name: Samar Frost
Born: Abu Dhabi
Hobbies: Singing, music and socialising with friends
Favourite singer: Adele
Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey