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e8-12723

  • FR Doc E8-12723[Federal Register: June 6, 2008 (Volume 73, Number 110)]

    [Proposed Rules]

    [Page 32261-32262]

    From the Federal Register Online via GPO Access [wais.access.gpo.gov]

    [DOCID:fr06jn08-22]

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    COMMODITY FUTURES TRADING COMMISSION

    17 CFR Part 150

    RIN 3038-AC40

    Risk Management Exemption From Federal Speculative Position

    Limits

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Proposed rules; withdrawal.

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    SUMMARY: On November 27, 2007, the Commodity Futures Trading Commission

    (Commission or CFTC) published proposed rules to create a ``risk

    management exemption'' from Federal speculative position limits--the

    limits on the size of speculative positions that traders may hold or

    control in futures and futures equivalent option contracts on certain

    designated agricultural commodities. The Commission has determined to

    withdraw these proposed rules.

    FOR FURTHER INFORMATION CONTACT: Donald Heitman, Senior Special

    Counsel, Division of Market Oversight, Commodity Futures Trading

    Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington,

    DC 20581, telephone (202) 418-5041, facsimile number (202) 418-5507,

    electronic mail dheitman@cftc.gov; or John Fenton, Director of

    Surveillance, Division of Market Oversight, telephone (202) 418-5298,

    facsimile number (202) 418-5507, electronic mail jfenton@cftc.gov.

    SUPPLEMENTARY INFORMATION: Commission regulation 150.2 imposes limits

    on the size of speculative positions that traders may hold or control

    in futures and futures equivalent option contracts on certain

    designated agricultural commodities named therein. Commission

    regulation 150.3 lists certain types of positions that may be exempted

    from these Federal speculative position limits.

    On November 27, 2007, the Commission published proposed amendments

    that would provide an additional exemption from Federal speculative

    position limits for ``risk management positions'' (proposed

    rulemaking).\1\ The proposal defined a risk management position as a

    futures or futures equivalent position, held as part of a broadly

    diversified portfolio of long-only or short-only futures or futures

    equivalent positions, that is based upon either: (1) A fiduciary

    obligation to match or track the results of a broadly diversified index

    that includes the same commodity markets in fundamentally the same

    proportions as the futures or futures equivalent position; or (2) a

    portfolio diversification plan that has, among other substantial asset

    classes, an exposure to a broadly diversified index that includes the

    same commodity markets in fundamentally the same proportions as the

    futures or futures equivalent position. The exemption, as proposed,

    would have been subject to certain conditions, including that the

    positions be passively managed, unleveraged, and not carried into the

    spot month.

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    \1\ Risk Management Exemption from Federal Speculative Position

    Limits, 72 FR 66097 (November 27, 2007).

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    The Commission requested public comment by January 28, 2008. The

    Commission received a total of 10 comment letters in response to its

    [[Page 32262]]

    Federal Register publication.\2\ Three letters generally favored the

    proposed regulations and seven letters were generally opposed to their

    adoption. An Agricultural Forum held by the Commission on April 22,

    2008 served as an additional venue for the presentation of views with

    respect to the proposed rulemaking and a related Commission proposal to

    revise the Federal speculative position limits delineated in Commission

    regulation 150.2.\3\

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    \2\ Federal Register Comment File 07-015, available at http://

    www.cftc.gov/lawandregulation/federalregister/

    federalregistercomments/2007/07-015.html.

    \3\ Revision of Federal Speculative Position Limits, 72 FR 65483

    (November 21, 2007) (to be withdrawn).

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    Collectively, the comments received in response to the proposed

    rulemaking and at the Commission's April 22 Agricultural Forum

    reflected differing perspectives on a wide range of issues of

    substantive import to the proposed rulemaking. The issues covered by

    the commenters, both in favor and opposed to the Commission's proposal

    to adopt a risk management exemption from the Federal speculative

    position limits, included product margin requirements, the convergence

    of cash and futures transaction prices, the impact of commodity-linked

    instruments traded on national securities exchanges on CFTC regulated

    transactions, the degree of transparency for market participation, and

    the quantification of the impact of speculative trading on market

    volatility. In light of the wide range of divergent positions that have

    been put forth by interested parties, the current market conditions for

    the contracts that would be affected by the proposed rulemaking, and in

    order to determine whether further consensus among the affected parties

    should be sought, the Commission has determined to withdraw the

    proposed rulemaking pending further consideration of the relevant

    issues.

    Issued by the Commission June 2, 2008, in Washington, DC.

    David Stawick,

    Secretary of the Commission.

    [FR Doc. E8-12723 Filed 6-5-08; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: June 6, 2008



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