The US push to tighten oil market oversight risks scattering trade to less regulated overseas markets.Plans by US commodities regulator the CFTC to introduce federal position limits on oil and other energy futures markets to curb excessive speculation could result in liquidity migrating from the Nymex exchange to non-US trading venues. And efforts by US and European regulators to reduce systemic risk in over-the-counter (OTC) swaps markets could force corporate users to look elsewhere to avoid onerous capital costs imposed by mandatory exchange trading or clearing. The result would be "regulatory arbitrage", where market participants seek to trade in the most favourable regulatory climate.
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