Speculators in futures and options are a much bigger beast than they used to be, but are US regulators right to attack them? Derivative markets depend on this capital, argues Philip McBride Johnson, and if regulators try to classify some participants as less deserving than others, they may just end up tying themselves in knots. Various governments around the world allow futures and commodity options markets to exist, not as betting parlours, but because they constitute a privately funded insurance pool for people in occupations where some form of price risk arises naturally. If this risk strikes, the markets compensate them for their losses. A very substantial part of that insurance pool is contributed by speculators willing to wager that the risk, after all, will not occur. As a result, the economic protections offered by derivatives markets could be defeated if speculation is curtailed too much. Yes, it is the...