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* Vast disapproval shows CFTC on right track: O’Malia* Sanders: CFTC must end excessive speculation for goodBy Christopher DoeringWASHINGTON, Oct 17 (Reuters) - U.S. regulators this week will finalize their toughest crackdown yet on volatile oil and metal markets, concluding nearly four years of fierce debate over whether limits on speculative trade can tame prices.As Wall Street bemoans the measure as a sop to politicians who have vilified speculators for driving grain and oil prices to painful peaks since 2008, the Commodity Futures Trading Commission will push through a groundbreaking rule to restrict the number of commodity contracts a trader can hold.”I think both sides are going to be a little upset with this rule,” Scott O’Malia, a Republican commissioner at the CFTC, told reporters at a Futures Industry Association conference in Chicago last week.”I guess the old hallmark of policy is if you’ve offended everybody then you’re in the right space.”For many big commodity traders, it will be a case of having won some battles after losing the war: the use of rigid caps on positions is one of the most contentious pieces of the Dodd-Frank financial overhaul law for many, and may force big players like Morgan Stanley to curb some customer business.Yet a draft obtained by Reuters last month suggested banks and traders had won big concessions after lobbying hard against more oversight. Whether those measures are retained in the final version will be one of the most important facts to emerge from Tuesday’s session, the latest in a rule-making marathon.Assuming the rule is approved, the caps will mark the start of a new era, one that should eventually help answer the question of whether limits will cap prices by stemming the surge of investment into commodity markets — or whether they will simply drive activity overseas, where rules are laxer.While the limits are nominally intended to prevent market manipulation and excessive concentration, CFTC Chairman Gary Gensler has also been under intense political pressure to impose the measures as a way of tempering prices.He has worked tirelessly to win support from the commissioners, and as Reuters reported last week, he finally won over enough votes to push through the rule on Tuesday.In August, Senator Bernie Sanders, a staunch critic of oil speculators, intentionally released oil-trading data that exposed the extensive positions speculators held in the run-up to record prices in 2008. He has long criticized the CFTC for missing a January 2011 congressional deadline to finalize rules on speculators.”The bottom line is that we have a responsibility to ensure that the price of oil is no longer allowed to be driven up by the same Wall Street speculators who caused the devastating recession that working families are now experiencing,” Sanders said in a statement.”That means that the CFTC must finally do what the law mandates and end excessive oil speculation once and for all.”But will position limits stop $5-a-gallon gasoline or prevent the cost of bread from skyrocketing?Critics say no. Instead, they argue, it will will harm U.S. markets by curtailing volume, increasing volatility and sending traders to overseas markets.”Position limits are like short sale bans: it’s trying to influence asset prices when they’re not to your liking,” said Remco Lenterman, a managing director at Amsterdam-based IMC Trading BV. “And the evidence is abundant that it’s counterproductive.”“We have politicians trying to influence asset prices when they think they don’t like the fact that they’re too high, or the public doesn’t like that they’re too high,” he added.Critics say the CFTC has yet to produce economic analyses to connect speculators to spikes in oil prices.The rule does have supporters in the private sector. Airlines and some farm groups have loudly complained that hedging is now near impossible because of the huge influx of money into commodity markets.Just last week, more than 450 global economists pushed for action on position limits in order to curb the effect of excessive speculation on global food prices. In a letter to the Group of 20 finance ministers, they said excessive financial speculation is “contributing to increasing volatility and record food prices, exacerbating global hunger and poverty.”Much will depend, however, on just how tight those caps are set. A previous version of the rule published nearly two years ago suggested that no more than a handful of companies would have been affected by limits on oil and gas markets.Dozens of academic, government and bank studies on the subject have differed on whether speculators influence prices long-term or whether they simply respond to market conditions.That argument is likely to rage on for months if not years: The limits may be phased in gradually as the CFTC gets a better handle on the vast $600 trillion swaps market that is now under its authority.”IT’S A LONG MARCH”The draft final rule indicates the CFTC will still snag large passive index funds, which critics have blamed for causing a massive run-up in oil prices in 2008 by buying and holding futures contracts without regard to market fundamentals. Whether these changes remain in place in the final version voted on this week remains to be seen.”I suspect there are going to be a large number of positive changes in the rule,” said Paul Pantano, a partner at Cadwalader, Wickersham & Taft, pointing to changes in account control and easing of some reporting requirements.”But until we see the final rule a lot of that could be changing. It’s a long march,” he said.A paper from the St. Louis Federal Reserve released this month has said speculators were partially responsible for influencing the price of crude from 2004 to 2008.After scouring through a host of economic and oil data to find the major factors, they found the surge was mainly driven by growing global thirst for oil. But traders also were to blame with 15 percent of the price increase due to so-called “financial speculative demand shocks.”During this same time, they found a rise in investing by hedge funds, large financial institutions, and other investors into the oil futures market, with assets allocated to commodity index trading strategies surging to $260 billion as of March 2008 from $13 billion four years earlier.Exchanges and other traders have long argued that limits are unnecessary and will curtail market volume, reduce volatility and send traders fleeing to overseas markets. All this, they argue, would create a ripple felt from Wall Street down to main street.”I want to see what is considered a hedge, and I want to see who can be the counterparty to certain hedges because we have a lot of farmers,” said Tammy Botsford, vice president and deputy general counsel at Penson Futures, in an interview in ahead of the position limits release.”Protecting their ability to participate in the (over the counter) market and the futures market, and not have them forced out of either, is important,” she said.

Reuters Digital Editor Chrystia Freeland interviews General Electric CEO Jeffrey Immelt on the U.S. economy, the jobs crisis and GE’s future on Monday October 17 beginning at 8:30am EDT. What would you like to ask Immelt? Post your questions as comments on this post or tweet them to #newsmaker.

By Tim McLaughlinOct. 14 (Reuters) - In a sign of shifting power inside Fidelity Investments, Chairman Edward C. Johnson III has relinquished a central role, giving his daughter Abigail Johnson the title of chairman of the company’s flagship mutual fund business.Abigail Johnson in late February became chairman of Fidelity Management & Research Company, which manages about $700 billion in discretionary client assets, according to disclosures made with the U.S. Securities and Exchange Commission.That change, until now, slipped by unnoticed in individual mutual fund prospectuses that have trickled out over the course of a number of months. But analysts see the title change as yet another sign that Abigail Johnson is a leading candidate to run a family-held company with $1.54 trillion in total managed assets.”Incrementally, they continue to position her to run the whole of it because the whole of it will eventually belong to her,” said John Bonnanzio, who edits a newsletter for Fidelity investors.Edward “Ned” Johnson is 81 and has been running the parent company, FMR LLC, since 1977. But in January, he relinquished his role as trustee and chairman of a board that oversees stock and income mutual funds. His longtime top lieutenant, FMR Vice Chairman James Curvey, stepped in as acting chairman. Curvey is 76.Then about a month later, Abigail Johnson, 49, added the Fidelity Management & Research chairman’s title, according to disclosures to the SEC. Fidelity spokeswoman Anne Crowley downplayed the change, describing it as a “corporate formality.”“Abby has for many years served as director of FMR LLC, the parent company, and also as vice chairman of the board of directors for the entire firm,” Crowley said in an email message. “These are much higher profile roles at the parent company” than the new role at Fidelity Management & Research.Last year, though, Fidelity fanned the flames of succession talk when it named Abigail Johnson and Ronald O’Hanley to top executive roles that essentially split the duties for running the company. Analysts said the move made sense because of Fidelity’s size and Edward Johnson’s age.”Clearly, (Edward Johnson) is stepping away from Fidelity duties,” Bonnanzio said. “He has to … It’s a big company with big responsibilities. I don’t know too many people in their 80s who can do all of that.”Indeed, several former Fidelity senior executives who have left the company in recent years say that Edward Johnson’s duties are more part time than anything else. Of course, Fidelity has maintained, as recently as May, that the octogenarian is “active and fully engaged in running the company and has no plans to retire,” according to a company statement issued then.Nevertheless, Fidelity last year plucked O’Hanley from the senior management ranks of Bank of New York Mellon to play a major role inside the company. He is Fidelity’s president of asset management and corporate services while Abigail Johnson runs Personal, Workplace and Institutional Services, Fidelity’s largest business organization.

LONDON Oct 12 (Reuters) - The global nickel market will move into over-supply from 2012/2013, pushing prices for the metal lower in the medium term as a host of new projects come on line and build up to capacity, Wood Mackenzie said on Wednesday.With a total of some 300,000 tonnes a year of capacity recently started up or planned, a move into a sustained period of supply surplus has been anticipated for the past three years.But delays to projects, particularly those using high pressure acid leach (HPAL) technology, have forced analysts to defer the predicted timing on several occasions.”The difference now is that these projects are built and ready to go…We’re looking at over-supply from 2012/2013 and anticipate downward pressure on prices going forwards,” Wood Mackenzie’s Senior Nickel Analyst, Andrew Mitchell said at a briefing.China is seen key to global demand for the metal, used mainly in stainless steel. Consumption there is expected to grow by 9 percent a year, propping up global growth at a still healthy 5-6 percent annually.But with supply the key, Mitchell expected nickel prices by 2015 to fall towards marginal cost production levels of around $7.50 a lb ($16,500 a tonne.)The London Metal Exchange (LME) three-months nickel price was last at $19,122 a tonne. In September, nickel fell below $17,000, its lowest since December 2009, and down over 40 percent from levels close to $29,500 in February, as demand worries pummeled industrial metals.Wood Mackenzie takes a cautious view on new projects, allowing six to seven years for an HPAL project to reach capacity and around four years for a ferro-nickel operation.Bearing this in mind, Mitchell said further project delays to projects could reduce global supply by up to 25,000 tonnes next year. Those delays would not last longer than 6-12 months he added.The progress of Sherritt International’s Ambatovy nickel-cobalt project in Madagascar will be most keenly watched as an indication of the future success of HPAL technology, given the company’s expertise in the field.In June, the Canadian company said it expected a roughly six-month delay and a 16 percent increase in costs at the project. It now expects first production in the first quarter of 2012.CHINA’S NPIPrices at $7.50 a lb would start to affect some higher cost producers of nickel in pig iron (NPI) in China, Mitchell said.”We could see an immediate reaction, acting as a buffer for the market. They can switch off and come back on quite rapidly,” he said.Indonesia’s plans to ban ore exports by 2014 could also have an impact on China’s NPI industry, which is heavily reliant on nickel imports from Indonesia and the Philippines.Such a move could reduce China’s nickel in NPI output by 200,000 tonnes a year, Mitchell estimated.”I don’t think they’ll stop all ore exports, there’s too much revenue to lose, but I see some stemming of the flow,” Mitchell said.

* Miners retreat as Alcoa results miss expectationsBy David BrettLONDON, Oct 12 (Reuters) - Britain’s top share index fell early on Wednesday, as Slovak lawmakers rejected a plan to expand the euro zone rescue fund and growth worries continued to stifle momentum after Alcoa kicked off the earnings season in the U.S. with whimper.The parliament of tiny Slovakia — the only country in the 17-member currency zone that has yet to approve the plan — stalled the expansion of a bailout fund to rescue the euro zone from its debt crisis on Tuesday.Deutsche Bank said although there maybe some near-term uncertainty it is still inclined to doubt that this is the end for the EFSF.”Another ‘no’ vote would be likely to put some pressure on the ECB, with ‘intervention’ by the European Central Bank in bond markets perhaps needed in order to ensure some stability in markets while policy makers work through the issues,” Deutsche Bank said.But the ‘no’ vote raised fears among investors that governments keen to look after their own interests would only exacerbate the debt crisis.”Concerns are growing amongst traders that this is another sign that Europe’s bureaucratic process is just too cumbersome to deal with the debt crisis,” Jonathan Sudaria, a dealer at Capital Spreads, said.”The fact that countries are beginning to resort to protectionism as a policy tool to stimulate their stagnant domestic economies has traders worried that an era of trade wars could be looming, hitting global growth.”Evidence the fallout from the ongoing troubles in the euro zone was reaching beyond its boarders came as third-quarter results of U.S. aluminium group Alcoa, the traditional curtain-raiser for the U.S. earnings season, disappointed.Alcoa’s chief executive CEO Klaus Kleinfeld warned of weak economic conditions through the year, particularly in Europe, “as confidence in the global recovery faded.”In the UK, riskier assets such as financials and miners led the fallers, as London’s blue chip index continued to retreat away from the psychologically important 5,400 barrier.The index was down 23.49 points, or 0.4 percent at 5,372.21 by 0751 GMT, having snapped a four-day winning streak on Tuesday.Banks were among the top fallers, as Societe Generale cut target prices across the sector.Europe’s banks will have to achieve a significantly stronger capital position under a quick-fire regulatory health check and may need to raise some 100 billion euros, banking and regulatory sources said on Tuesday.VOLATILE MARKETSThe tumultuous market conditions continued to be a problem for the world’s largest listed hedge fund manager Man Group , which reported its flagship AHL fund fell 5.5 percent last week.Man’s shares fell 6 percent, while Goldman Sachs cut its target price on the firm to 230 pence from 290 pence.Miners continued to beat a retreat having the led the index higher during its brief bull run — the sector gained near 20 percent in four days - as Credit Suisse cut its near-tem rating on the sector to “benchmark” from “overweight” citing headwinds seen in key emerging markets.London-listed Fresnillo fell 5 percent after precious metals miner cut its cut its silver production guidance for 2011.”Fresnillo has delivered its first disappointing production results since listing,” Oriel Securities says in a note.But Gold miner Randgold Resources topped the short list of FTSE 100 gainers, up 1.5 percent reflecting an edge higher in the price of the yellow metal as investors fled to so-called safer assets.Elsewhere, Europe’s biggest defence contractor BAE Systems fell 1.4 percent as it warned its sales could be hit from U.S floods and budget doubts.Utilities suffered as brokers downgraded their ratings on firms across the sector. Traders said United Utilities , down 1.4 percent, was being hit after Morgan Stanley cut its recommendation on the firm to “equalweight”.Scottish and Southern (SSE) fell 1.2 percent as Goldman Sachs added the firm to its conviction sell list, while International Power (IPR) shed 1.2 percent as the same broker cuts its rating to “sell” from “neutral”.”SSE Trades at a sector premium despite below average growth, high leverage and strong gearing to UK spreads. On our estimates, IPR trades at a premium, despite a weak UK spread outlook and recent FX weakness,” Goldman Sachs says.Ex-dividend factors knocked 2.70 points off the FTSE, with Capital Shopping Centres , Old Mutual , Smith & Nephew , Tesco , Wolseley , and WPP Group all losing their payout attractions.On the macro front, British jobless numbers will be released at 0830 GMT, with the claimant count seen rising by 25,000 in September, after a 20,300 increase in August, while August ILO unemployment rate is forecast to rise to 8.0 percent, up from 7.9 percent in the previous month.

* Miners retreat as Alcoa results miss expectationsBy David BrettLONDON, Oct 12 (Reuters) - Britain’s top share index fell early on Wednesday, as Slovak lawmakers rejected a plan to expand the euro zone rescue fund and growth worries continued to stifle momentum after Alcoa kicked off the earnings season in the U.S. with whimper.The parliament of tiny Slovakia — the only country in the 17-member currency zone that has yet to approve the plan — stalled the expansion of a bailout fund to rescue the euro zone from its debt crisis on Tuesday.Deutsche Bank said although there maybe some near-term uncertainty it is still inclined to doubt that this is the end for the EFSF.”Another ‘no’ vote would be likely to put some pressure on the ECB, with ‘intervention’ by the European Central Bank in bond markets perhaps needed in order to ensure some stability in markets while policy makers work through the issues,” Deutsche Bank said.But the ‘no’ vote raised fears among investors that governments keen to look after their own interests would only exacerbate the debt crisis.”Concerns are growing amongst traders that this is another sign that Europe’s bureaucratic process is just too cumbersome to deal with the debt crisis,” Jonathan Sudaria, a dealer at Capital Spreads, said.”The fact that countries are beginning to resort to protectionism as a policy tool to stimulate their stagnant domestic economies has traders worried that an era of trade wars could be looming, hitting global growth.”Evidence the fallout from the ongoing troubles in the euro zone was reaching beyond its boarders came as third-quarter results of U.S. aluminium group Alcoa, the traditional curtain-raiser for the U.S. earnings season, disappointed.Alcoa’s chief executive CEO Klaus Kleinfeld warned of weak economic conditions through the year, particularly in Europe, “as confidence in the global recovery faded.”In the UK, riskier assets such as financials and miners led the fallers, as London’s blue chip index continued to retreat away from the psychologically important 5,400 barrier.The index was down 23.49 points, or 0.4 percent at 5,372.21 by 0751 GMT, having snapped a four-day winning streak on Tuesday.Banks were among the top fallers, as Societe Generale cut target prices across the sector.Europe’s banks will have to achieve a significantly stronger capital position under a quick-fire regulatory health check and may need to raise some 100 billion euros, banking and regulatory sources said on Tuesd