Release: #4167-98

For Release: July 15, 1998

CFTC Proposes Reform of Speculative Position Limit Rules

Washington, D.C. -- The Commodity Futures Trading Commission (Commission) has proposed a number of reforms to its speculative position limit rules. Commission speculative position limits restrict the size of positions that speculators may hold in the futures markets for various domestic agricultural products and have been a key regulatory feature of the U.S. futures markets for over sixty years. The Commission is proposing a number of revisions to these rules.

The Commission is proposing to increase Commission speculative position limits. The last increase to Commission speculative position limits occurred in 1993. The Commission is proposing this increase based upon the favorable experience with the 1993 increase and the intervening growth in the size of the futures markets. The increase in speculative position limits is proposed only for deferred trading months. The number of positions permitted to be held by speculators in the delivery month will remain unchanged.

The Commission is also proposing to broaden an exemption from its speculative position limits for commodity traders who use independent account controllers. The Commission is proposing to broaden the availability of this exemption to banks, insurance companies and affiliates of other eligible traders. This exemption would not apply in a futures contract's delivery month.

In addition, the Commission is proposing to codify rules permitting exchanges to establish "trader accountability rules" in lieu of speculative position limits. Futures exchanges are otherwise required to establish and enforce speculative position limits for all commodities except for those directly covered by Commission speculative position limits. Codifying these exemptions should provide the public with greater certainty of the requirements for this exemption and access to the relevant regulatory provisions.

Finally, the Commission is proposing to redefine the type of limited partnership interests which require a trader to combine the partnership's positions with the trader's positions for compliance with speculative position limits. The Commission is proposing that a trader with a twenty-five percent interest in a partnership or pooled account combine the pooled positions with the trader's other positions for the purpose of compliance with speculative position limits.

The Commission's proposal will be published in the Federal Register shortly and comments must be received within 60 days of its publication. Copies of the proposal may be obtained by contacting the Commission's Office of the Secretariate, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C., 20581, (202) 418-5100, or by accessing the Commission's website,