Price discovery of crude oil can not be left entirely unregulated: Jaipal Reddy
February 23rd, 2011 - 6:11 pm ICT by ANIRiyadh, Feb 23 (ANI): Petroleum Minister S. Jaipal Reddy on Wednesday said
there is a need to improve the understanding of inter-linkages between the physical
and financial markets to address the issue of price volatility and price discovery.
Speaking at the International Energy Forum (IEF) in Riyadh, Reddy blamed
unregulated over-the-Counter (OTC) transactions and trading in ‘paper barrels’,
along with unbridled speculation activity for the unprecedented oil price rise in
2008.
The minister emphasized the strengthening of current regulatory framework for
commodity futures and derivatives market.
“We need to consider establishing position limits and moving OTC activity on to
regulate exchanges.” Mr. Reddy said
“The initiatives being taken in the US, UK and other countries are steps in the right
direction, to bring in regulatory oversight of the physical and financial markets” he
added.
Reddy extended Indian support for further initiatives by IEF and other international
organisations, for putting in place suitable regulatory mechanisms, to prevent a
occurrence of 2008.(ANI)
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Tags: commodity futures, crude oil, derivatives market, energy forum, financial markets, international energy, international organisations, jaipal reddy, mr reddy, oil price rise, otc, position limits, price discovery, price volatility, regulatory framework, regulatory mechanisms, regulatory oversight, right direction, riyadh, unbridled speculation