New York (HedgeCo.Net) – SEC Chairman Christopher Cox said he was all for a merger between the Commodity Futures Trading Commission and the Securities and Exchange Commission.

Hopping on board with U.S. Treasury Secretary Henry Paulson, this was the first time Cox has publically supported a merger that was first brought to the table years ago.  The issue was brought up again in March, when Paulson laid out his regulatory reform blueprint which supported the merger of the two agencies.

The SEC and CFTC currently meet every quarter after signing a March memorandum in which they agreed to increase communication and cooperation.  While the CFTC oversees the futures market and the SEC serves as an overall police for the markets, many feel the two would perform best under one roof seeing as how their functions tend to overlap. 

“This would bring futures within the same general framework that currently governs economically similar securities,” Cox said during a Congressional hearing yesterday.

The House Oversight Committee hearing where Cox gave his public support for the merger was staged in hopes of holding Cox along with former Treasury Secretary John Snow and former Federal Reserve Chairman Alan Greenspan accountable for the lack of regulation that ultimately led to the credit crisis and the demise of several large financial institutions.

Cox, who has been notoriously lax on regulation ever since his appointment by Bush in 2005, reiterated that Congress must also act this year to finalize the regulation of credit default swaps, an act that both agencies have endorsed.

Met with a mix of agreement and disdain, questions remain as to whether the merger can actually take place.  Rep. Henry Waxman of California wasn’t about to look to the future without reminding Cox of the mess he helped get us in.  "The reality, Mr. Cox, is you weren’t doing that job of proposing these regulations beforehand. You either didn’t anticipate the problem or you agreed with the philosophy that we didn’t need regulation."

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Times Online – Several hedge funds face big financial losses after wrongly predicting that oil and gas prices would rise as a result of Hurricane Gustav slamming into the Gulf coast of the US earlier this week.

As Gustav swept towards New Orleans on Monday, catastrophe experts were predicting insured losses of up to $7 billion (£3.9 billion) as offshore oil rigs faced destruction and the storm threatened energy supplies.

Commodities hedge funds saw the glum prediction as an opportunity, betting heavily, using the futures market, that prices would surge in the wake of the hurricane chaos.

In New York, crude oil leapt to $116 a barrel in the hours before Gustav hit the US coastline. On Nymex, natural gas futures rose 45.3 cents to $8.278 per 1,000 cubic feet. However, the experts, and the hedge funds, were caught out. By the time the storm was sending water lapping over New Orleans’s flood barriers, Gustav had been downgraded by the National Hurricane Centre to a Category 1 event. Oil eased to $105.46, with dealers soon speculating that it would fall to $100.

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Daily Telegraph- The chief executive of the sugar refining group Tate & Lyle has hit out at hedge funds and other commodity speculators, calling for them to face greater regulation in a bid to hold back soaring food prices.

Hedge funds have been blamed for contributing to the rocketing price of commodities including oil, wheat and corn by speculating in the futures market with highly leveraged bets on forward prices.

Tate & Lyle boss Iain Ferguson called for limits to be placed on speculators’ involvement in the futures market and the way hedge funds and others finance their activity.

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