CFTC Proposes New, Amended Position Limits for Derivatives

The Commodity Futures Trading Commission yesterday proposed new and amended regulations regarding speculative position limits. The proposal would conform these limits with the Dodd-Frank Act amendments to the Commodity Exchange Act.

Included in the proposal are new and amended spot month limits for 25 physical commodities derivatives—all of which are futures contracts—and amended single-month and all-months-combined limits for most of the agricultural contracts currently subject to federal limits. The proposal also provides new and amended definitions of terms referenced in part 150 of the CFTC’s regulations, including definitions for “bona fide hedging transactions or positions,” and “economically equivalent swaps.”

In addition, the proposal offers amended rules governing exchange set-limit levels and when exemptions to these levels will be granted; a streamlined process for bona fide hedging recognitions; new enumerated hedges; and amendments to part 19 of the CFTC’s regulations that would enable the commission to leverage the cash-market reporting submitted directly to the exchanges.