Deutsche Bank - New energy trading rules could boost OPEC’s power

Deutsche Bank AG, Germany’s largest bank, said proposals to curb speculation in energy markets may boost the power of OPEC by reducing liquidity.

“Focusing on regulation to curb speculative activity may possibly increase the pricing power of OPEC over time at a time when the U.S. government is attempting to do the exact opposite,” Deutsche Bank commodity analyst Michael Lewis said a report dated Aug. 14.

Reduced overall turnover and liquidity in markets has been the result of attempts to tackle speculative activity in the past, the report said. It’s likely new energy-trading rules will reduce trade on the New York Mercantile Exchange, serving to increase OPEC’s influence in the market, the report added.

Deutsche Bank said US legislation will likely force traders to increase the amount of money, the so-called margin, that’s required as a cash deposit to guarantee an over-the- counter or OTC trade.

Proposals to keep more trading on electronic exchanges are expected to be tabled by the Commodity Futures Trading Commission in October, the bank said.