Experienced counsel also can help market participants navigate the new requirements and procedures that would result from formal adoption of the Proposed Rule. [1] Position Limits for Derivatives (proposed Jan. 30, 2020) (publication in Federal Register pending) (to be codified at 40 C.F.R. pts. 1, 15, 17, 19, 40, 140, 150, 151), https://www.cftc.gov/LawRegulation/DoddFrankAct/Rulemakings/ PositionLimitsforDerivatives/index.htm [hereinafter “Proposed Rule”].[2] 7 U.S.C. § 6a(a)(1). [3] Int’l Swaps & Derivatives Ass’n v. CFTC, 887 F. Supp. 2d 259 (D.D.C. 2012).

The Dodd-Frank Act directed the CFTC to establish position limits for exempt commodities (such as energy commodities and metals) within 180 days and for agricultural commodities within 270 days after the Act’s enactment (which was July 21, 2010). See 7 U.S.C. § 6a(a)(2)(B)Download PDF

The Commission will accept comments on its new proposal only through April 29, 2020 – 90 days after the Commission’s release of its proposed new rules.My View: The CFTC commissioners’ debate over the requirement of a necessity determination derives from a somewhat ambiguously worded statutory provision (click here to access the Commodity Exchange Act §6a(a), 7 U.S.C. §6a(a)) and unclear language in a court decision that neutralized the Commission’s first effort to revise its position limits regime in 2011, following the amendment of the relevant statutory provision in the Dodd Frank Wall Street Reform and Consumer Protection Act in 2010 (click here to access the relevant court decision). Reasonable persons could fairly disagree on the law’s precise meaning.

million to settle charges by the Commodity Futures Trading Commission that, from January 2013 through November 2015, they violated various laws and Commission regulations related to their trading of cotton futures on ICE Futures U.S.In particular, the Commission alleged that the firm violated speculative position limits on “multiple days” in May and June 2013 and May and June 2014; entered into exchange for related position transactions with each other contrary to IFUS rules, and thus prohibited by law and CFTC rule; and failed to file two reports with it of their physical cotton positions that were accurate as of the last day of May 2013 and May 30, 2014, as required.The Commission alleged that the Glencore entities violated position limits on the applicable occasions when looking at their positions on an aggregate basis, excluding any bona fide hedging positions which would not be included in a calculation of speculative positions. (Clickhereto access Commodity Exchange Act § 4a(b), 7 U.SC. § 6a(b) andherefor CFTC Rules 150.2 through 150.

Compared to its 2013 proposed rules, the Commission’s newly re-proposed requirements: (1) reduce the number of core agricultural, energy and metals futures contracts and their economically equivalent futures, options and swaps (collectively, “referenced contracts”) subject to express oversight by the Commission for position limits purposes (as opposed to exchanges) from 28 to 25; (2) revise spot month, single and all-months positions limits on the 25 referenced contracts; (3) define bona fide hedging to more closely parallel the definition in applicable law (click here to access Sec. 4a of the Commodity Exchange Act, 7 USC § 6a); and authorize persons to apply for non-enumerated hedging exemptions from qualified exchanges even for referenced contracts. The final aggregation rules are scheduled to be effective 60 days after their publication in the Federal Register, during which time the CFTC will accept comments on the proposed position limit rules.

This rule was also of immense public interest – the CFTC received over 15,000 comment letters on its proposed rule. The fundamental dispute between the parties revolved around what Congress intended when itenacted the Dodd-Frank Act amendingSection 4a of the Commodity Exchange Act (codified at 7 U.S.C. § 6a). The plaintiffs, two industry trade groups, argued that Congress’ intent was clear and unambiguous – the CFTC was required to make findings of necessity in promulgating the position limits rule.