Wednesday, January 19, 2011
The failure of derivatives regulation of precious metals
The regulatory failure of precious metal contracts in US derivative markets will have important systemic consequences, and nowhere is the problem becoming more obvious today than in silver. Several banks have been running a substantial short position for a considerable time. This position has been permitted to continue because of weak management by both Comex as the principal dealing exchange and by poor oversight from the US Commodity Futures Trading Commission as regulator.