I disagree with this guy. If we run a futures market that is different than in, say, London, the futures market will simply move across the pond and we’ll have a lot of people out of business in this country. Only if all markets trading oil futures do the same will this make an impact.
If we do something stupid such as raising margins to prohibitive levels (say, 50% of gross contract value), you're right, the big specs will move offshore. That, however, is not what is being discussed by CFTC right now, only by a few idiots such as Sen. Bunghole Bingaman.
The problem here is not mkts, but that enormous capital pools have been allowed to skirt the position limits in mkts, and have created a huge artificial demand component, thus driving price well above what it would be due to strictly actual supply/demand considerations.
The proper move, and CFTC are considering it now, is to reclassify investment banks as specs (as they are classified in their own trading accounts) not ''commercials'' (as they are classified when acting as agents for a client, like, say CALPERS or one or another pension fund).
The second move is to tell these bloody pension funds that, no matter what their lawyers tell them, ERISA prohibits their participation in speculative mkts. In short, get them entirely out of the futures game. They don't belong there in any case (you've heard of the ''prudent man'' rule, I'm sure), and nobody who receives or expects to receive a pension from these chaps would approve of their dealing in crude and copper and bean futures.
Nobody (for once) is proposing mucking around with mkts; reclassifying some big players and enforcing position limits will put the affected markets' price at clearing levels in very short order.
Nor will there be any incentive to trade on other futures exchanges outside the US. Why? Because every exchange in the world has position limits in place for physical futures mkts, and would-be expatriate traders will see no advantage in dealing offshore.
FReegards!