Commodity Futures Trading Commission Chairman Gary Gensler said last week that there was general consensus among regulators and various players in the energy futures market that position limits should be imposed to avoid concentration of the market in the hands of a few traders.

The consensus comes after the CFTC conducted three hearings—two in late July and the third on Aug. 5, on whether and how the federal energy regulator should improve market transparency and efficiency and on how to stamp out excessive speculation.

Gensler said position limits were already in place in the agricultural market and should now be extended to the energy markets to protect the consumer who have had to deal with the consequences of the volatility in the prices of oil and natural gas.

“I believe that at the core of promoting market integrity is ensuring markets do not become too concentrated,” said Gensler. “This is even more relevant today because financial markets have become more concentrated since the first exemptions were allowed in 1991 and the position accountability level regime was first implemented.”

He added, “The financial crisis highlighted the risk to the market and to the American public brought about by large concentrated actors on the financial stage.”

To those concerned about more regulations, Gensler said they shouldn’t worry because position limits should enhance liquidity by promoting more market participants rather than having one party that has so much concentration so as to decrease liquidity.

In their testimonies, representatives of index funds said they should be exempted from any position limits, while consumer groups supported the CFTC’s move.

John Hyland from U.S. Commodity Funds, an exchange-traded-fund, said index funds shouldn’t be vilified because they provide the market with steady liquidity that ultimately reduce price volatility.

“Our funds are widely held, with 75 percent of them being ordinary investors, not speculators,” Hyland said.

Paul Cicio from Industrial Energy Consumers of America and Steven Graham from American Trucking Association said excessive speculation was to blame for the sharp increases in oil and gas prices last year.

“They destroy price discovery,” said Cicio. “What they do has nothing to do with supply and demand. They roll over their portfolios every month; they announce when they want to buy and when they want to sell and in so doing they damage price formation by reducing the unpredictability of how market functions.”

Added Graham, “We take exception to what the index funds’ position on this matter. They always have long positions and that impacts market fundamentals.”

Graham said the CFTC should also seek to determine who is a bona fide hedger and who’s a commercial market participant because those roles have become fluid.