Summary of the Prevent Excessive Speculation Act

            The Prevent Excessive Speculation Act would:

Authorize Speculation Limits for all Energy and Agricultural Commodities. 

• Direct CFTC to impose position limits on energy and agricultural futures contracts to prevent excessive speculation and manipulation and to ensure sufficient market liquidity. 
• Authorize CFTC to permit exchanges to impose and enforce accountability levels that are lower than CFTC-established speculation limits. 

Close London Loophole by Regulating Offshore Traders and Increasing Transparency of Offshore Trades.

• Prohibit a foreign exchange from operating in the United States unless it imposes comparable speculation limits and reporting requirements as apply to U.S. exchanges. 
• Provide CFTC with same enforcement authority over U.S. traders on foreign exchanges as it has over traders on U.S. exchanges, including authority to require traders to reduce their holdings to prevent excessive speculation or manipulation. 
• Require CFTC to invite non-U.S. regulators to form an international working group to develop uniform regulatory and reporting requirements to protect futures markets from excessive speculation and manipulation. 

Close the Swaps Loophole and Regulate Over-the-Counter Transactions.

• Authorize CFTC to impose speculation limits on OTC transactions to protect the integrity of prices in the futures markets and cash markets. 
• Require large OTC trades that affect futures prices to be reported to CFTC.  Allow one party to a transaction to authorize the other party to file the report.  Require CFTC periodic review of reporting requirements to ensure key trades are covered.
• Direct CFTC to revise bona fide hedge exemption to ensure regulation of all speculators, and strengthen data analysis and transparency of swap dealer and index trading.
• Clarify definition of OTC transactions to exclude spot market transactions. 

Protect Both Energy and Agriculture Commodities.

• Cover trades in crude oil, natural gas, gasoline, heating oil, coal, propane, electricity, other petroleum products and sources of energy from fossil fuels, as well as ethanol, biofuels, emission allowances for greenhouse gases, SO2, NOX, and other air emissions.
• Cover trades in agricultural commodities listed in the Commodity Exchange Act.

Strengthen CFTC Oversight.

• Authorize CFTC to hire 100 new personnel to oversee markets.
• Direct CFTC to issue proposed rules within 90 days and final rules within 180 days.