Commodity Futures Trading Commission

Guest Post: Don't Worry - They'll Just Change The Rules

The worst that might have happened - a systemic financial breakdown - did not happen, and we can be thankful for that. But the alternative has had costs that are only now becoming better appreciated. With constant bending of the rules, the only constant was that every bent rule favored the big banks, often uniquely so. With this special attention given to a favored few, the social mood darkened considerably among U.S. citizens, especially those far removed from the beneficial impacts of the Fed's largesse. Where states are struggling with extremely painful budget deficits measured in the single billions (in most cases), the Fed has been busy printing up and handing out some $75 billion per month to its coziest clients. While millions of people ran out of extended unemployment benefits and lost houses due to completely fraudulent and illegal banking practices, nothing was ultimately fixed and (seemingly) nobody went to jail or was charged with anything. Small, regional banks without access to unlimited and essentially free capital from the Fed are now forced to compete with big national banks that have been granted an unlimited backstop by the Fed. This is how too big to fail leads to too small to succeed.

Who Leaked Last Week's (Irrelevant) ADP Number?

In a rare example of forensic market analysis, the WSJ tackles the topic of market moving info leakage, focusing on some peculiar action ahead of last week's bombastic ADP number which ended up being the traditional contrarian indicator we have been saying for months that it is. The WSJ observes: "Data from two independent sources show that trading in select currencies and future contracts surged in the seconds before last Wednesday's unexpectedly strong private-sector jobs report from payrolls processor Automatic Data Processing Inc., raising suspicions that someone obtained the report ahead of its official release. Analysis of exchange-rate prices from foreign-exchange platform EBS revealed a disproportionately large 0.12-yen spike in the dollar versus the yen in the last tick period before the clock hit 8:15 a.m., the report's official release time. The tick data, provided by CQG, are broken up into small, intraminute periods as per the feed from EBS."And just in case someone is confused how illegal frontrunning works, here is the explanation: "Anybody who placed those orders stood to make large gains in the subsequent minutes as first high-speed trading platforms and then regular investors put through big buy orders after ADP reported an increase of 297,000 in private-sector jobs, nearly triple the consensus estimate for a 100,000 gain." We are confident the regulators are all over this most recent example of the Efficient Market Hypothesis meeting Johnny 5.

With Bart Chilton Suddenly On Board, CFTC's Position Limit Plan Is Now A Go

Was today's broad and very much coordinated selloff in commodities a result of the just announced news that the CFTC's position limit plan may, contrary to prior expectations, be enforced very soon? It appears that outspoken CFTC commissioner has flipped in his stalling tactic and instead is now endorsing the position limit plan. Per Reuters: "Under the system, if a trader's holdings in a commodity reaches a certain threshold, it triggers a new level of heightened regulatory scrutiny by the CFTC where commissioners could vote to require the trader to reduce their positions." This means that JPM's accumulated holdings in various precious and industrial metals are not only about to likely become public, but that the CFTC will be mandated to very shortly enforce a break up on those positions which are deemed too concentrated. It is unclear how foreign entities, to whom the recent accumulation in various precious metals has been attributed, will be impacted by the proposal which now appears may be shortly enacted.

Water, Meet Blood - JP Morgan Admits To, Reduces Massive Silver Short Position, Proves Millions Of Conspiracy Theorists Correct

In the latest example that virtually every conspiracy theory is almost always inevitably proven to be fact, the Financial Times reports that JP Morgan, the firm targeted by thousands of "tin foil hat" wearing, conspiratorially-oriented "gold bugs", has cut back on its US silver futures. "JPMorgan has quietly reduced a large position in the US silver futures market which had been at the centre of a controversy about its impact on global prices for the precious metal." And in what can only be considered an unprecedented victory for all those who have over the past year agitated to putting JP Morgan out of business, most recently spearheded by the likes of Mike Krieger and Max Keiser, by forcing a massive short squeeze on its commodities trading desk, we learn that "the decision by JPMorgan was an attempt to deflect public criticism of the bank’s dealings in silver, a person familiar with the matter said. The person added that the bank’s position in silver would from now on be “materially smaller” than in the past." Of course, the latter is pure and total bullshit: as Bart Chilton indicated over the weekend, it is JP Morgan who at one point or another (and possibly very recently) controlled as much as 40% of the silver market, via a massive short. Attempting to make others believe that this short could be covered without pushing the price of the silver metal to over $100/ounce is an indication of either how stupid JPM believes the general population to be, or just how desperate the firm is to end the ongoing short squeeze onslaught. Either way, we are confident that this first unprecedented confirmation that a) JPM is indeed massively short silver and b) that it is hurting bad, will merely redouble efforts to put the world's biggest financial company out of business.

Watch Latest Farcical Senate Hearing On Flash Crash

As we await confirmation of 31 consecutive domestic equity fund outflows, we have the displeasure of sharing the latest farcical spectacle from the Senate Banking Committee where a bunch of corrupt "regulators" will tell the world they have no idea what caused the Flash Crash, and have even less ideas on how to prevent it from happening, but that in the meantime nothing is allowed to change in the market structure as otherwise their tithes from the HFT lobby may end.

EB's picture

While Bernanke was putting the finishing touches on QE2 in DC, 50 global financial regulators met at the New York Fed to discuss regulation of world's largest market. Instead of financial reform measures, what is being created is simply a massive new power center headed by the CFTC from which those at the top will vainly attempt to manipulate market prices and entrench favored institutions within the new framework.

RICO Suit Filed Against HSBC And JPMorgan For Silver Market Manipulation

If JPM and HSBC hoped that the lawsuits filed a week ago by Brian Beatty and Peter Laskari, which we discussed previously, were going to be the end of their public exposure with regard to possible silver market manipulation, they are about to be disappointed. Today, in a separate lawsuit filed by Carl Loeb in the Southern District of New York, a new light on precious manipulation by the duo was shone, this time involving allegations of breach of the Racketeering Influenced and Corrupt Organizations (RICO) Act. And with the CFTC itself admitting of ongoing manipulation in the silver market, it appears this issue is not going to go away quietly any time soon. Per Steve Berman, co-counsel of plaintiff law firm Hagens Berman Sobol Shapiro: "The practice of naked short selling has long been a serious issue on Wall Street. What we know about the scope and intent of JP Morgan and HSBC's actions
in this short-selling scheme dwarfs any other similar attempt to
manipulate a commodities market.
" As this case is also seeking class action status for the class, readers who wish to join this particular case may apply to do so at the following link. Plaintiffs are seeking that the court enjoin JP Morgan and HSBC from continuing their alleged
conspiracy and manipulation of the silver futures and options contracts
market.

Pivotfarm's picture

The Commitment of Traders Report is created by the CFTC – The Commodity Futures Trading Commission and is published weekly every Friday. This body gathers and publishes the open futures positions on all publicly traded US futures contracts as well as the corresponding options. The data consists of 3 main categories.

Guest Post: The Stealth Coup D'Etat: U.S.A. 2008-2010

In the popular view, a coup d'etat is a sudden event, over in a few hours or at most days, a drama played out in impoverished Third World nations. The stealth coup which has occurred in the U.S. is an entirely different kind of coup--one that has operated in stealth mode for the most part, a process of gradual infiltration and opportunistic grasping of key levers of dependence and control.

William Black Tears Larry Summers Apart, Again Calls Out Obama To Place Bank Of America In Receivership

William Black continues with his campaign to not only bring sanity and transparency to an administration wrapped in secrecy, legacy cover ups and fraud, but to finally do what had to be down two years ago: bring down the big banks, force a balance sheet restructuring at the TBTFs, and force a systemic reset which is the only thing that could bring the much promised "change for good" to this country. " Don't talk about doing the right thing -- do it -- and do it to a major contributor. Don't do it because it's a contributor, but because a bank that commits tens of thousands of frauds should immediately be placed in receivership." We once again hope that more people like Bill Black (if not he himself) will decide to run for president, and make the difficult choices necessary to begin the impossible task of truly fixing the mess this country finds itself in.

smartknowledgeu's picture

Recently, in regard to the banker silver manipulation schemes, the CFTC's Mr. Chilton’s stated, “Under existing law, to prove manipulation, the government is required to demonstrate not only specific intent; we also need to prove that as a result of the intent and market control, that activity caused an artificial price.” I believe that the huge pricing anamolies in gold markets that existed on a regular basis during July, August, September of 2008 and that still occur today between the futures markets in Asia and those in London/New York intraday, as well as the significant anomalies between gold pricing in the futures markets and gold pricing in the physical markets is proof that the bankers’ price suppression schemes against gold create an artificial price.