Tighter Control on Oil Futures Trading OKd

Trading in crude oil futures would be temporarily suspended in response to large price swings, under a plan approved today by the New York Mercantile Exchange.

“For the first time, the exchange will be imposing trade cessations as circuit-breakers,” President R. Patrick Thompson said. The proposed changes would allow crude oil futures to rise or fall by up to $15 per barrel each day, far more than they have ever moved.

Exchange officials said they are not trying to predict movements that big but rather setting up rules that will keep trading orderly through a crisis.

The exchange also offers futures contracts for two refined petroleum products--unleaded gasoline and home heating oil--that will be affected.

The possibility that war or peace in the Persian Gulf could lead to huge movements in oil prices has prompted some calls for tighter controls on the exchange. But exchange officials said in a news conference today that the proposed rule changes, which they expect to be approved by the Commodity Futures Trading Commission next week, were “self-imposed.”

Under the new rules, if oil prices swing $7.50 in either direction during a trading session and stay at that level for five minutes, brokers will be told that trading will be halted in two minutes. After a one-hour stoppage, trading will resume, with the swing in prices limited to $15 for the spot month and the month after.