New research from U.S. derivatives regulators finds that commodity futures markets are not increasingly fragile and that rapid price swings in those markets are not becoming more common.
The U.S. Commodity Futures Trading Commission’s (CFTC) division of market oversight issued a report on Friday that examined the phenomenon of sharp price moves in commodity futures markets. The report, which is based on an analysis of 2.2 billion transactions in the most actively traded futures contracts from 2012 through 2017, found that episodes of sharp price movements have not increased in frequency, or intensity, over time.
Moreover, the report finds that these sharp price movements are “linked to volatility, market fundamentals, and news and data releases.”
In addition, the regulator’s research “does not show signs of weakness or fragility in the futures markets causing disruptive price movements.”
Finally, the report concludes that the U.S. commodity futures markets are “very efficient, incorporate new information quickly, and continue to support the price discovery process.”