The Nature of Investing by Katherine Collins

Author:Katherine Collins [COLLINS, KATHERINE]
Language: eng
Format: epub
ISBN: 9781937134952
Publisher: Bibliomotion, Inc.
Published: 2014-08-14T16:00:00+00:00

Derivatives activity in commodities markets rose steadily through the 1990s and became a source of concern for the Commodity Futures Trading Commission (CTFC).8

However, rather than increasing restrictions, in 2000, the Commodity Futures Modernization Act was passed, which exempted certain markets (such as energy futures) from CFTC oversight.

The Gramm, Leach, Bliley Act was passed around the same time, which allowed all sorts of new financial players to participate in commodity markets.

The Chicago Board of Trade (CBOT), the primary agricultural exchange in the United States, raised speculative limits on grain and oilseed contracts too.

Encouragement for the idea of “commodities as an asset class” rose in both academic and financial circles, which contributed to a rise in commodity index funds from $13 billion in 2003 to $317 billion in 2008.9 By 2008 it is estimated that these funds accounted for 41 percent of open long interest in commodities markets.10

Perhaps as important as the data above, the perceptions of many participants in food commodities markets seem to have shifted as well. Whereas many individuals involved in these markets historically had some sort of personal tie to agriculture, or at least direct knowledge of how their markets linked to the world, a senior exchange official was quoted in 2010 as saying, “I view what we’re working with as widgets.”11 In my experience, this disconnected point of view is very common.

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