Category Archives: Commodities

Commodity Futures Trading Commission Issues Temporary No-Action Relief for CPOs

Commodities, ,

Last month, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight issued a temporary no-action relief for commodity pool operators of securitization vehicles.

Lexology.com explains: “The March No-Action Letter is one in a series of no-action letters issued by the Division providing relief for securitization vehicles from the requirement that their operator register as a CPO.”

Last year, the Division issued CFTC Letter No. 12-14 which excluded several securitization vehicles in its definition of “commodity pool.” March’s letter states that CPOs must comply with the following provisions during the no-action period:

  • The CPO of a securitization vehicle comprising a static pool of assets that does not have either an equity tranche or debt issuances rated lower than BB will not be required to comply with the performance disclosures required under Regulation 4.25 with respect to that securitization vehicle

  •  With respect to the calculation of net asset value with respect to the securitization vehicle, fixed income securities rated BB and higher should be treated as debt and all other fixed income securities and equity tranches should be treated as equity

  • With respect to the “de minimis” exemption under Regulation 4.13(a) (3), the commodity pool operator of a securitization vehicle that did not or does not pay any initial margin with respect to the vehicle’s swaps positions must use the alternative net notional test under Regulation 4.13(a)(3)(ii)(B) to determine eligibility for exemption from registration under that section

  • In lieu of the financial statement requirements under Regulation 4.22 for the operated securitization vehicle, the commodity pool operator of that securitization vehicle provides basic, material information concerning the structure of the securities and distributions thereon; the nature, performance, and servicing of the assets supporting the securities; and any swaps held in that securitization vehicle’s portfolio, including a discussion of that vehicle’s counterparties

  • The CPO of a securitization vehicle need not comply with the specific requirements of the reporting obligations under Regulation 4.21(b), the disclosure obligations under Regulations 4.24(a) and (s), or the requirement under Regulation 4.23 that books and records be maintained at the main business office with respect to the operated securitization vehicle

  • The CPO of a securitization vehicle with an amortizing pool of assets need not comply with the performance disclosures required under Regulations 4.25(a)(1)(F) and (G) with respect to the operated securitization vehicle

  • With respect to the requirement under Regulation 4.24(h) that the CPO of a securitization vehicle disclose the percentage of that securitization vehicle’s assets used to trade commodity interests, the commodity pool operator of that securitization vehicle that holds static swap positions must provide full and complete disclosure regarding the swaps positions and their functions within that securitization vehicle in addition to a percentage.

 

Oil Prices Climb in Face of Federal Reserve Meeting

Commodities, Economy, , , ,
Oil Up on Nymex

The price of oil lurched upwards on Tuesday despite the fear that the Chinese economic recovery may not be everything investors wished for. Driving the upward direction of oil is the hope of investors that the US Federal Reserve will implement new strategies which will help give the US economy a bit of a jump start.

The January delivery price for Benchmark crude was $85.80 per barrel, representing a 23 cent rise during late afternoon Bangkok time electronic trading on the New York Mercantile Exchange. The same contract had fallen only the day before by 37 cents on the Nymex, closing at $85.56.

Brent crude, which is used more to establish the price of international types of oil, was also up. On the ICE futures exchange in London the price was $107.66, an increase of 33 cents from the previous day’s closing price.

The Federal Reserve began a two day policy meeting on Tuesday. The results of the meeting are widely believed to be the purchase of more long-term Treasury bonds in an effort to replace the program which expires with the coming new year.

Oil Prices Climb to $99 Range

Commodities, Investments, , , , ,

The price of crude oil approached just below $99 a barrel on Wednesday in Asia due to investor’s reaction to a surge in US oil supply inventories combined with slower than hoped-for economic growth.

The price of benchmark crude, to be delivered in March, climbed by 15 cents to $98.63 per barrel in Singapore in the late afternoon, just in time to make the electronic trading deadline on the New York Mercantile Exchange. By the end of the trading day the contract’s price fell by 30 cents to rest at $98.48 on Tuesday.

Brent crude also rose by 19 cents per barrel, to settle at $111.17 on the ICE Futures Exchange in London.

According to the American Petroleum Institute, crude inventories went up by 2.1 million barrels last week. In a survey conducted by Platts, the energy information section of McGraw-Hill Companies, of analysts’ predictions, they found that there had been a prediction of an increase in the inventories of 3.0 million barrels.

"U.S. economic releases tilted toward the bearish side, and that these figures followed last Friday's negative GDP guidance conjured up images of some disappointing employment data," energy consultant Ritterbusch and Associates said in a report. "A difficult, choppy trading environment could be sustained well into February."
 

Survey Shows Gas Prices Climbing in the US

Commodities, Economy, ,

The average price of gasoline at the pumps has been steadily climbing for the past five

Going Up

weeks, a survey conducted by Trilby Lundberg has shown.

In the latest survey, which covers the two weeks ending on January 20, the average price of gas went up by an average of 3.48 cents, reaching the price of $3.3944 per gallon. The survey polled 2,500 gasoline stations located throughout the continental United States.

This is considered a modest increase, especially compared to the huge jump the price of gas took during the prior three week period ending on January 6. During those 21 days gas prices shot up by 12 cents per gallon.

Part of the reason for the increases is higher prices for crude oil. The price surge can also be attributed to crisis developing in Iran and Nigeria which has put pressure on the supply of crude oil. However, there has been a slowing of demand for oil coming from Europe due to their debt crisis, so it is hard to say whether or not prices will continue to climb, hold steady, or even drop.

Last week’s slight rise in crude oil prices leads Lundberg to say that gas prices could easily continue to increase, perhaps by another 5 cents, at least in the short term.

The survey showed that, among the cities taking part in the survey, Salt Lake City, Utah, had the lowest gas prices on average, of about $2.94 per gallon; Los Angeles had the highest price of $3.71 per gallon.

Its Black Friday, Have Fun

Commodities, Consumerism

Tomorrow is Black Friday, the post Thanksgiving shopping day. Stores open their doors at 12.01 AM on Friday morning and will be giving great sales on Friday, Saturday and Sunday. Statistically, retailers earn 30% of their November profits during these three days. There are good deals in all of the major department stores. But why do people want to go to these stores when they could probably pick up the same deals on the stores’ internet sites?

My personal opinion is that people love to shop. You go through the merchandise, seeing things that perhaps you don’t really need, but, you know, it’s always good to have and its such a bargain, and if you don’t use it you can always give it as a gift, so, well, why not? That’s how people buy when the price is right and that’s how corporate America makes its money.

All of the stores are doing it: J.C.Penney, Walmart, Macy’s etc so go and have a good time. One thing that I would advise you is to set a spending limit, spend “x” dollars and no more. Remember the holiday season is coming up in December. If that’s not enough to help you discipline yourself then remember that in January you have to pay off the credit card debt that you rang you in November and December.