According to Bloomberg, key members of the Commodity Futures Trading Commission (CFTC) will meet tomorrow to work on a new version of a proposal to limit speculation.
The rule was initially conceived by the CFTC as a way to limit the banks’ ability to control specific markets after speculators were blamed for huge price increases on commodities like wheat and oil in 2008. However, the rule was shot down by District Judge Robert L. Wilkins after being challenged by Wall Street groups, ruling that the CFTC did not provide enough reasoning to prove that the rule was necessary.
In order to create a proposal that has a chance of passing, the CFTC will have to include significant economic analysis that proves the need for limits on speculation.
While talk of reworking their rule had been around for a while, the CFTC had also filed for an appeal on the ruling of their previous proposal, which they now say they will drop in favor of their rewritten proposal.
It is possible that some aspects of the proposal might change. While both CFTC Chairman Gary Gensler and Commissioner Bart Chilton support the previous rule, Commissioner O’Malia has voiced contention with it.
Should the CFTC come to an agreement on a new proposal, businesses and other groups would have about a month to discuss it before it could be put up for a vote.