The uses of futures contracts emphasize the importance of the existence of future markets. However, from the outset, manipulation is commonplace in a futures market (Markham, 1991). Manipulation is blamed because it disrupts two main functions of the futures market, namely risk transfer and price discovery. Manipulation distorts price determination by forcing inappropriate incentives other than legitimate demand and supply. As a result, manipulation reduces the efficiency of the futures market. The regulators are therefore supposed to prevent the manipulation from spreading, but it turned out that they were not able to stop the manipulation. The main reason for this failure is that neither regulations nor laws clearly define manipulation. The most frequently discussed market manipulation is “long” market power manipulation, also known as “wedge” or “squeeze” (Pirrong, 2010). This happens when a trader buys a large number of futures contracts. The trader is therefore able to artificially influence the price by controlling the supply of the product of the future contract. This could affect short sellers. In the futures market, shorts sell more contracts than the available quantity that can actually be delivered at expiration. This is because contracts are used as hedges and speculators to transfer risk. These contracts can be offset between short and long positions. Short sellers must either supply the commodity or pay the differences between the spot price and the futures price at maturity, unless the contracts are offset between the long and short contracts. However, if the large long positions act like a monopolist by controlling supply, the short positions would be cornered and pay a distorted amount to the monopolist, meaning the artificial price would be at the middle of paper......es level limited amount of raw materials that non-hedgers can hold during the month of supply, up to 25 percent. This could prevent manipulation of market power such as cornering. When a trader buys a large amount of derivatives and thus takes a large position, he is able to exert his power to move prices, because his power would increase with his position. Thus, this rule restricts the position held by the trader as well as his ability to manipulate. Additionally, this prevention helps make the futures market more efficient. (Gwilym and Ebrahim, 2013). On the other hand, Pirrong (2007) agreed to some extent, but Pirrong argued that the speculative position limit had a negative effect on market efficiency because it "actually reduced welfare" . As speculators are limited in quantity, hedgers are not able to transfer price risk to speculators and speculators are not able to absorb price risk..