A police officer is walking down the street and sees a drunk crawling on all fours under a streetlight, obviously looking for something.

"Have you lost something?" says the police officer.

"Yes, occifer, I mean officer," says the drunk. "I lost my keys."

"Right about here?" asks the cop.

The drunk points toward a dark alley. "No, actually, in there?"

The puzzled police officer asks, "Then why are you looking here?"

"Because this is where the light is," he answers.

And that is the logic behind the stricter regulations to curb speculation in the commodity markets proposed by the Commodity Futures Trading Commission (CFTC) — arguably the least effective and occasionally most ridiculous financial regulatory body in Washington.

Is the CFTC going after speculators working the trading desks on Wall Street? No, too hard to pin anything down.

Are regulators going after hedge funds that build and dump massive positions daily, hourly and by the minute? Nope, they don't know how to do it.

Instead, since their idea of sophisticated financial investigation is to go to Yahoo Finance, they are going after futures-based commodity exchange-traded funds (ETFs) — the only intelligent way for individual investors to play commodity markets. The CFTC aims to reign in these ETFs by limiting how much of the futures market an ETF can lay claim to.

And why not? Individual investors do not lobby and cannot offer jobs to regulators once they leave the government. Big trading houses and hedge funds can and do.

I am not a conspiracy theorist — I believe the financial markets blew up because of a lack of proper regulation — but limiting the size of these ETFs is insane.

Not that ETFs, especially the double and triple leveraged ones, are good for markets, but they already exist, and to limit what they can do is to take away the private property of investors who already own these ETFs without due process.

NEXT: UNG Preemptively Halts Share Creation