CFTC Reopens Comment Period on Position Limits for Speculative Commodity Derivatives | Practical Law

CFTC Reopens Comment Period on Position Limits for Speculative Commodity Derivatives | Practical Law

The CFTC is reopening the comment period on its reproposed rules for position limits on speculative holdings of physical commodity derivatives and their economic equivalents in anticipation of its upcoming roundtable.

CFTC Reopens Comment Period on Position Limits for Speculative Commodity Derivatives

Practical Law Legal Update 7-569-7986 (Approx. 3 pages)

CFTC Reopens Comment Period on Position Limits for Speculative Commodity Derivatives

by Practical Law Finance
Published on 29 May 2014 • USA (National/Federal)
The CFTC is reopening the comment period on its reproposed rules for position limits on speculative holdings of physical commodity derivatives and their economic equivalents in anticipation of its upcoming roundtable.
The CFTC is reopening the comment period on its reproposed rules for position limits on speculative holdings of physical commodity derivatives and their economic equivalents (see Practice Note, The Dodd-Frank Act: Commodity Position Limits) in anticipation of its upcoming roundtable on the issue. The rules were re-proposed last year after a federal court struck down the CFTC's original final position limits rules (see Legal Updates, CFTC Commodity Position Limits Rules Vacated by DC District Court and CFTC Re-proposes Position Limits for Speculative Commodity Derivatives).
On December 12, 2013, the CFTC published in the Federal Register a notice of proposed rulemaking (Position Limits NPR) to establish speculative position limits for 28 exempt and agricultural commodity futures and options contracts and the physical commodity swaps that are economically equivalent to such contracts. On November 15, 2013, the CFTC published in the Federal Register a notice of proposed rulemaking (Aggregation NPR) to amend existing CFTC regulations setting out the CFTC's policy for aggregation under its position limits regime.
The CFTC is scheduled to hold a public roundtable on June 19, 2014, to consider certain issues regarding the position limits for physical commodity derivatives. In order to provide interested parties with an opportunity to comment on the issues to be discussed at the roundtable, the CFTC is reopening the comment periods for the Position Limits NPR and the Aggregation NPR for a three-week period starting June 12, 2014 (one week before the roundtable) and ending July 3, 2014 (two weeks following the roundtable).
Update: The public comment period for the re-proposed position limits rules has been further extended to August 4, 2014 (see Legal Update, Dodd-Frank Swaps Roundup: Position Limits Comment Extension, Data Reporting Relief and More).
Comments should be limited to the following issues:
  • Hedges of a physical commodity by a commercial enterprise, including gross hedging, cross-commodity hedging, anticipatory hedging, and the process for obtaining a non-enumerated exemption fro the position limits.
  • The setting of spot month limits in physical-delivery and cash-settled contracts and a conditional spot-month limit exemption.
  • The setting of non-spot limits for wheat contracts.
  • The aggregation exemption for certain ownership interests of greater than 50 percent in an owned entity.
  • Aggregation based on substantially identical trading strategies.
Comments may be submitted (identified by RIN 3038-AD99 for the Position Limits NPR or RIN 3038-AD82 for the Aggregation NPR) by any of the following methods:
  • CFTC website: http://comments.cftc.gov.
  • Mail or hand delivery by courier to: Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581.
  • Federal eRulemaking Portal: http://www.regulations.gov.