The Commodity Futures Trading Commission (CFTC) issued a supplement to its December 2013 position limits proposal, which is now available for public comment. The supplement will modify the procedures proposed for persons seeking exemptions from speculative position limits for non-enumerated bona fide hedging.
The proposal also would define procedures for recognition of certain anticipatory bona fide hedge positions; provide a new process for exchanges to recognize certain positions in commodity derivative contracts as non-enumerated bona fide hedges or enumerated anticipatory bona fide hedges, as well as exempt from federal position limits certain spread positions.
The proposal also includes corresponding changes to certain regulations proposed in 2013 regarding exemptions from position limits and exchange-set position limits to take into account this new process.
In connection with these changes, the CFTC proposes to further amend certain relevant definitions, including to clearly define the general definition of “bona fide hedging position” for physical commodities under the standards in Commodity Exchange Act (CEA) Section 4a(c).
Separately, the CFTC proposes to delay the requirement to establish and monitor position limits on swaps for designated contract markets (DCMs) and swaps execution facilities (SEFs) that lack access to sufficient swap position information.
All other aspects of the December 2013 Position Limits Proposal would remain the same.
“The supplemental proposal appears responsive to a broad range of public comments,” CFTC Commissioner J. Christopher Giancarlo said in a statement. “I believe it is a positive step forward in devising a final rule that will take into account certain practical realities associated with administering a workable position limits regime.
“The proposal appropriately recognizes that most exchanges do not have access to sufficient swap positon information to effectively monitor swap position limits,” Giancarlo continued. “If adopted, it would seem to relieve DCMs and SEFs from setting and monitoring exchange limits on swaps until such time as DCMs and SEFs have access to data that is necessary to be able to do so. Position limits for swaps would still be set and monitored by the CFTC. The proposal simply acknowledges that the commission cannot require exchanges to do the impossible.”
The supplemental notice of proposed rulemaking will be open for public comment for 30 days after publication in the Federal Register. Comments on the supplemental notice of proposed rulemaking, which is available on the CFTC’s website, may be submitted electronically through the CFTC’s comments online process.