Paul Volcker step aside.
The CFTC’s latest trading ruling will be named “Eddie Murphy” in homage to the actor’s famous role in the film “Trading Places”.
Which is apt, because the rule is not about proprietary trading at all, but rather prohibiting insider trading in commodities — one of the key plot lines in the legendary film, in which a couple of commodity brokers conspire to steal an Agriculture Department report on US orange crops to gain advantage in the market.
According to Reuters, the CFTC and Securities and Exchange Commission have proposed harmonised rules on the matter — including securities-style firewalls in commodities — which now need Congressional approval to be adopted.
The surprising fact perhaps is that the misappropriation of government data a la the wily ‘Duke & Dukes’ was never illegal before. As CFTC chairman Gary Gensler told reporters on Wednesday:
“Chief among these recommendations are reforms to fiduciary standards for investment advisors and prohibitions on using misappropriated government information to trade in the futures markets,” Gensler said.
The Senate banking and agriculture committees are each working on draft bills to tighten oversight of banks and capital markets in the wake of the recent financial crisis. The Agriculture Committee has jurisdiction over the CFTC.
“In real life, using such misappropriated government information actually is not illegal under our statute,” Gensler said.
Although, as Reuters added, much of that is down to the fact that USDA report-stealing has so far remained pure Hollywood fiction:
Commodities traders have said they are unaware of any modern real-life scenarios where a USDA report has been stolen and used for trading. The USDA has extensive measures to guard against the early release of its major reports.
Besides, we know the real reason for the rule;
Gary Gensler loves Trading Places as much as the rest of us: