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 [email protected]; or John Fenton, Director of

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

facsimile number (202) 418-5507, electronic mail [email protected]

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