Why doesn't the UK have position limits?

Discussion in 'Professional Trading' started by heech, Dec 21, 2010.

  1. heech


    Yet another story of a speculator trying to corner a market.


    A few months ago, "cocoa-finger" cornered the London market in cocoa. Earlier this year, we saw Ebullio drop by 96% in 2 months after it tried, and failed, to corner the market in some industrial metals. The resulting market disruption is often severe.

    Why is the UK allowing this sort of ridiculous, market-disrupting activity to go on? It wouldn't be possible in the US (or at least not as blatantly) because of position limits and government regulation. It makes me hesitate to get into any commodities traded out of London.
  2. LeeD


    Because anyone who took too large a position in commodities has to deliver the physical commodity (or take delivery). That's a serious limitation.
  3. heech


    Not that serious for a large speculator, which is why history on both sides of the Atlantic is filled with examples of attempts. And which is also why the US resorted to position limits.