Goldman Sachs and Morgan Stanley, were founding partners of ICE. This exchange was probably created to hide speculative positions in energy futures without any oversight by the US regulators - said Greenberger. Do you see indictments for conspiracy to corner the energy market by manipulating and hiding energy futures for GS and MS ? http://www.cbsnews.com/stories/2008/06/17/broadcasts/main4188620.shtml
This is actually probably true, and the reason why GS met and beat earnings. They are now going to have regulatory scrutiny like they've not experienced before if inflation keeps roaring, essential commodities don't break, and Bernanke remains in this unenviable position of not being able to raise rates, as the public gets angrier and angrier (while unemployment continues to rise). This GS linked to commodity dark pool story is going to be the story for the next few months.
can someone explain exactly how this manipulation works? they are tradfing in private markets. so what? arbitrage ensures that prices are the same as the contracts traded at the exchange.
Nobody here will be able to explain you that. These conspiracy clowns have no idea that there is a number of futures markets for crude each with underlying spot markets that Goldman doesn't control but who cares?
Michael Greenberger is a conspiracy nut? " If you can trade out of the sight of U.S. regulators, you can manipulate these markets," said Michael Greenberger, a former top staffer at the Commodities Futures Trading Commission, or CFTC, which regulates the trading of commodities like oil in this country. He recently told Congress that speculation is placing a huge premium on the price of oil. "How much per barrel?" Keteyian asked. "Well, there have been various estimates - anywhere from 25 percent to 50 percent," Greenberger said"
Then why don't commercial oil companies not exploit this supposed market inefficiency (an artificially high price in the futures market compared to the spot market) and sell a couple months worth of oil supply right to the evil speculators? Simply hitting all the bids in the CL book? If all this crude futures conspiracy BS were true then then futures would trade at a sizable premium to the spot price but they don't.
I second that. Also dark pools are usually designed to cross orders at or near the prevailing price anonymously so are not good environments for manipulation. The goal is to find liquidity without moving the price. At least that's what THEY want us to think.
Far from being designed to manipulate prices, ICE was instrumental in breaking the previously-antediluvian NYMEX's monopoly on certain North American energy futures markets, thereby dramatically reducing trading costs for crude. ICE, and the CME's going electronic, are, in my opinion, the best things to happen to the US futures markets since their inception.
The manipulation is clear.. Say a pension, endowment fund or some other large wad of cash wants to invest in crude..say they have 5 billion to put into it.. Goldman, or Merrill, or some other IB creates an index for these investors, and then sells the index to the client, and then, to hedge the position, BUYS crude or whatever futures contract required. They have to 'hedge', right? Since the IB's are acting as AGENTS to the investors, the banks are classified as COMMERCIALS, and thus, have no position limits.. The swap loophole bullshit is all that needs to get closed for some kind of normalcy to be returned to the markets... We should be trading ABOUT 70-90 in crude. But the big banks have to make back their losses in the credit markets somehow.. This is manipulation and cornering at its finest...