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2014-15618

  • [Federal Register Volume 79, Number 128 (Thursday, July 3, 2014)]

    [Proposed Rules]

    [Pages 37973-37974]

    From the Federal Register Online via the Government Printing Office [www.gpo.gov]

    [FR Doc No: 2014-15618]

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    COMMODITY FUTURES TRADING COMMISSION

    17 CFR Parts 1, 15, 17, 19, 32, 37, 38, 140, and 150

    RIN 3038-AD99; 3038-AD82

    Position Limits for Derivatives and Aggregation of Positions

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Notice of proposed rulemaking; extension of comment periods.

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    SUMMARY: On December 12, 2013, the Commodity Futures Trading Commission

    (``Commission'') published in the Federal Register a notice of proposed

    rulemaking (the ``Position Limits Proposal'') to establish speculative

    position limits for 28 exempt and agricultural commodity futures and

    options contracts and the physical commodity swaps that are

    economically equivalent to such contracts. On November 15, 2013, the

    Commission published in the Federal Register a notice of proposed

    rulemaking (the ``Aggregation Proposal'') to amend existing regulations

    setting out the Commission's policy for aggregation under its position

    limits regime. In addition, the Commission directed staff to hold a

    public roundtable on June 19, 2014, to consider certain issues

    regarding position limits for physical commodity derivatives. In order

    to provide interested parties with an opportunity to comment on the

    issues to be discussed at the roundtable, the Commission published

    notice in the Federal Register on May 29, 2014, that the comment

    periods for the Position Limits Proposal and the Aggregation Proposal

    were reopened, starting June 12, 2014 (one week before the roundtable)

    and ending July 3, 2014 (two weeks following the roundtable). To

    provide commenters with a sufficient period of time to respond to

    questions raised and points made at the roundtable, the Commission is

    now further extending the comment period. Comments should be limited to

    the issues of hedges of a physical commodity by a commercial

    enterprise, including gross hedging, cross-commodity hedging,

    anticipatory hedging, and the process for obtaining a non-enumerated

    exemption; the setting of spot month limits in physical-delivery and

    cash-settled contracts and a conditional spot-month limit exemption;

    the setting of non-spot limits for wheat contracts; the aggregation

    exemption for certain ownership interests of greater than 50 percent in

    an owned entity; and aggregation based on substantially identical

    trading strategies.

    DATES: The comment periods for the Aggregation Proposal published

    November 15, 2013, at 78 FR 68946, and for the Position Limits Proposal

    published December 12, 2013, at 78 FR 75680, will close on August 4,

    2014.

    ADDRESSES: You may submit comments, identified by RIN 3038-AD99 for the

    Position Limits Proposal or RIN 3038-AD82 for the Aggregation Proposal,

    by any of the following methods:

    Agency Web site: http://comments.cftc.gov;

    Mail: Secretary of the Commission, Commodity Futures

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

    Washington, DC 20581;

    Hand delivery/courier: Same as mail, above; or

    Federal eRulemaking Portal: http://www.regulations.gov.

    Follow instructions for submitting comments.

    Please submit your comments using only one method. All comments

    must be submitted in English, or if not, accompanied by an English

    translation. Comments will be posted as received to http://www.cftc.gov. You should submit only information that you wish to make

    available publicly. If you wish the Commission to consider information

    that may be exempt from disclosure under the Freedom of Information

    Act, a petition for confidential treatment of the exempt information

    may be submitted under Sec. 145.9 of the Commission's regulations (17

    CFR 145.9).

    The Commission reserves the right, but shall have no obligation, to

    review, pre-screen, filter, redact, refuse or remove any or all of your

    submission from http://www.cftc.gov that it may deem to be

    inappropriate for publication, such as obscene language. All

    submissions that have been redacted or removed that contain comments on

    the merits of the rulemaking will be retained in the public comment

    file and will be considered as required under the Administrative

    Procedure Act and other applicable laws, and may be accessible under

    the Freedom of Information Act.

    FOR FURTHER INFORMATION CONTACT: Stephen Sherrod, Senior Economist,

    Division of Market Oversight, (202) 418-5452, ssherrod@cftc.gov; or

    Riva Spear Adriance, Senior Special Counsel, Division of Market

    Oversight, (202) 418-5494, radriance@cftc.gov; Commodity Futures

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

    Washington, DC 20581.

    SUPPLEMENTARY INFORMATION:

    I. Background

    The Commission has long established and enforced speculative

    position limits for futures and options contracts on various

    agricultural commodities as authorized by the Commodity Exchange Act

    (``CEA'').\1\ The part 150 position limits regime \2\ generally

    includes three components: (1) The level of the limits, which set a

    threshold that restricts the number of speculative positions that a

    person may hold in the spot-month, individual month, and all months

    combined,\3\ (2) exemptions for positions that constitute bona fide

    hedging transactions and certain other types of transactions,\4\ and

    (3) rules to determine which accounts and positions a person must

    aggregate for the purpose of determining compliance with the position

    limit levels.\5\ The Position Limits Proposal generally sets out

    proposed changes to the first and second component of the position

    limits regime and would establish speculative position limits for 28

    exempt and agricultural commodity futures and option contracts, and

    physical commodity swaps that are ``economically equivalent'' to such

    contracts (as such term is used in CEA section 4a(a)(5)).\6\ The

    Aggregation Proposal generally sets out proposed changes to the third

    component of the position limits regime.\7\

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    \1\ 7 U.S.C. 1 et seq.

    \2\ See 17 CFR part 150. Part 150 of the Commission's

    regulations establishes federal position limits on futures and

    option contracts in nine enumerated agricultural commodities.

    \3\ See 17 CFR 150.2.

    \4\ See 17 CFR 150.3.

    \5\ See 17 CFR 150.4.

    \6\ See Position Limits for Derivatives, 78 FR 75680 (Dec. 12,

    2013).

    \7\ See Aggregation of Positions, 78 FR 68946 (Nov. 15, 2013).

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    In order to provide interested parties with an opportunity to

    comment on the Aggregation Proposal during the comment period on the

    Position Limits Proposal, the Commission extended the comment period

    for the Aggregation Proposal to February 10, 2014, the same

    [[Page 37974]]

    end date as the comment period for the Position Limits Proposal.\8\

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    \8\ See 79 FR 2394 (Jan. 14, 2014).

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    Comment letters received on the Position Limits Proposal are

    available at http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1436. Comment letters received on the Aggregation

    Proposal are available at http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1427.

    II. Extension of Comment Period

    Subsequent to publication of the Position Limits Proposal and the

    Aggregation Proposal, Commission directed staff to schedule a June 19,

    2014, public roundtable to consider certain issues regarding position

    limits for physical commodity derivatives. The roundtable focused on

    hedges of a physical commodity by a commercial enterprise, including

    gross hedging, cross-commodity hedging, anticipatory hedging, and the

    process for obtaining a non-enumerated exemption. Discussion included

    the setting of spot month limits in physical-delivery and cash-settled

    contracts and a conditional spot-month limit exemption. Further, the

    roundtable included discussion of: the aggregation exemption for

    certain ownership interests of greater than 50 percent in an owned

    entity; and aggregation based on substantially identical trading

    strategies. As well, the Commission invited comment on whether to

    provide parity for wheat contracts in non-spot month limits. In

    conjunction with the roundtable, staff questions regarding these topics

    were posted on the Commission's Web site.

    To provide commenters with a sufficient period of time to respond

    to questions raised and points made at the roundtable, the Commission

    is further extending the comment periods for the Position Limit

    Proposal and the Aggregation Proposal. Thus, both comment periods will

    end on August 4, 2014.

    Issued in Washington, DC, on June 27, 2014, by the Commission.

    Christopher J. Kirkpatrick,

    Acting Secretary of the Commission.

    Note: The following appendix will not appear in the Code of

    Federal Regulations.

    Appendix to Position Limits for Derivatives and Aggregation of

    Positions Extension of Comment Periods--Commission Voting Summary

    On this matter, Chairman Massad and Commissioners O'Malia, Wetjen,

    and Giancarlo voted in the affirmative. No Commissioner voted in the

    negative. Commissioner Bowen did not participate in this matter.

    [FR Doc. 2014-15618 Filed 7-2-14; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: July 3, 2014



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