* Futures and Options Assn opposes calls for position limits
* Says no evidence price spikes caused by speculation
* London may benefit if U.S. makes market rules much tighter
By Christopher Johnson
LONDON, Aug 4 (Reuters) - Tight position limits on financial futures and options are not needed and London could benefit if U.S. regulators impose unduly harsh new rules on their markets, Europe's main derivatives industry trade body said on Tuesday.
Anthony Belchambers, chief executive of the Futures and Options Association, said he believed wild swings in commodities prices over the last two years were attributable to changes in supply and demand and not to too much speculation.
"The case for increased or wider position limits has not yet been made," Belchambers told Reuters in an interview.
"If we are going to say that speculation is excessive and therefore we need limits, we need to have clear evidence for that. To date, none has been produced."
The U.S. Commodity Futures Trading Commission (CFTC) is holding hearings in Washington which look likely to lead to tougher controls on financial markets and the implementation of increased limits on trading positions. [ID:nCFTCREG]
Britain's Financial Services Authority (FSA) is coming under pressure to follow a similar path and impose tighter rules on financial markets such as oil and metals futures.
Belchambers said he was concerned that the U.S. authorities might want to impose their own rules on overseas markets, preventing those markets from functioning properly.
He cited comments by U.S. officials suggesting the CFTC might try to prevent market participants from moving to over-the-counter markets or to foreign exchanges from U.S. markets in order to avoid U.S. oversight.
The U.S. authorities might also want to impose rules on markets that were not directly linked to U.S. exchanges, he said.
"INTOLERABLE"
"This gets to the point where it could become intolerable," he said. "No report of all the reports that have been produced ... have found that financial inflows have significantly influenced price ... On the basis of all that evidence, why would we want to impose more position limits?"
Belchambers said London had to date taken a gentler approach to regulation, one that had been highly successful and relied on position accountability and transparency rather than a "hard limits plus exemptions rule, a rules driven route".
The British authorities had always been willing to allow exchanges to intervene and require positions to be unwound.
He suggested the U.S. authorities were concerned about possible competition from London and about what has been called "the London Loophole", differences in rules that can encourage investors to trade in London rather than in U.S. markets.
"It would be absurd to suggest that London is somehow under-regulated because it is not regulated like U.S. markets. It is just regulated differently," he said.
"Is the FSA likely to change its rules and regulations? I would hope that is not going to happen," he said. "We think that position accountability and transparency and the right for exchanges to require the unwinding of positions is adequate."
"You may want to tighten reporting of positions, you may want to look at enhanced transparency," he said. "The extent to which we agree to the export of U.S. rules designed for U.S. markets and their imposition on other markets is another matter."
Belchambers said London may attract more business if the U.S. authorities imposed unduly harsh new rules on their markets and the UK authorities took a more thoughtful and sophisticated approach to making sure that markets were not distorted.
"I do think London could benefit from these moves if London is careful and prudent," he said. "If the FSA and the Treasury play their hands right, it could be of real benefit here." (Editing by Sue Thomas)