• CFTC Issues Proposed Rules Setting Position Limits for Commodity Derivatives
  • January 21, 2011 | Author: William L. Massey
  • Law Firm: Covington & Burling LLP - Washington Office
  • The Commodity Futures Trading Commission (“CFTC”) voted Thursday to propose a framework for implementing position limits for energy, metals, and agricultural derivatives under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The Notice of Proposed Rulemaking (“NOPR”) outlines the position limits regime to be set in two phases for 28 core physical-delivery contracts and their economically equivalent swaps. The NOPR also defines the bona fide hedge exemption, provides for the treatment of positions established prior to the new limits’ effective date, and discusses how positions are to be aggregated among common owners. Finally, the NOPR implements visibility regulations that trigger reporting obligations over certain thresholds. The NOPR contains the same position limits rule and bona fide hedge exemption that the CFTC considered, but did not vote on, last month before adjourning its December 16th rulemaking meeting.