Release Number 5681-09

Release: 5681-09
For Release: July 21, 2009

CFTC to Hold Three Open Hearings to Discuss Energy Position Limits and Hedge Exemptions

First Hearing Scheduled for July 28, 2009

Washington DC – The Commodity Futures Trading Commission (CFTC) today announced that it will hold three hearings to address the current application of position limits and exemptions from position limits in energy markets. The hearings are scheduled to be held between 9:00 a.m. EDT and 1:00 p.m. EDT on Tuesday, July 28, Wednesday, July 29, and Wednesday, August 5, 2009. The first hearing will consist of Congressional testimony by Senator Bernie Sanders and Congressman Bart Stupak; a presentation by the Commission’s Office of General Counsel regarding law of federal position limits and hedge exemptions; and two witness panels:


Panel One:

Jeff Sprecher, Intercontinental Exchange and
Craig Donohue, Chicago Mercantile Exchange


Panel Two:

Todd Petzel, Offit Capital Advisors;
Ben Hirst, Delta Airlines on behalf of the Air Transport Association;
Laura Campbell, Memphis Light, Gas and Water on behalf of the American Public Gas Association; and
Sean Cota, Cota and Cota, Inc. on behalf of the Petroleum Marketers Association of America

“The CFTC is directed by statute and provided with broad authorities to ensure the fair, open and efficient functioning of futures markets,” CFTC Chairman Gary Gensler said.  “While the CFTC currently sets and ensures adherence to federal position limits for certain agriculture products, the agency does not do the same for energy markets.  Our hearings, beginning next week, will be critical as we look into different approaches to regulate energy markets. I look forward to hearing from our panelists as we consider applying position limits to energy markets.

“Though we are initially focused on energy, the Commission intends to further review other commodities of finite supply in future hearings.”

The Commodity Exchange Act states that the Commission shall impose limits on trading and positions as necessary to eliminate, diminish or prevent the undue burdens on interstate commerce that may result from excessive speculation.  The CFTC’s hearings are intended to examine the role of position limits in energy markets in fulfilling the CFTC’s mission.

As such, the Commission has scheduled three hearings to receive the views from a wide-range of industry participants and academics on the following:


Applying position limits consistently across all markets and participants, including index traders, managers of Exchange Traded Funds, and issues of Exchange Traded Notes;


The effect of position limits on market function, integrity and efficiency;


The effect of position limits on facilitating the risk management of clearinghouses;


Whether the CFTC needs additional authority to implement such limits;


What methodology the Commission should use to determine position limit levels for each market.


What quantitative measures should be used in setting limits on the size of an individual trader’s position?


Should limits be established by percentage or proportion of the open interest of the market or by fixed number of allowed contracts?


Should limits apply in all months combined, in individual months, and in the delivery month?


How should spread trades be incorporated in this calculation?


Should the Commission limit the aggregate positions held by one person across different markets?


Should exemptions from position limits be permitted for anyone other than bona fide hedgers for the conduct and management of a commercial enterprise?


The statute states exemptions should only be granted to bona fide hedgers. What should the qualifying factors be for an entity to meet the definition of a bona fide hedger?


Finally, if you believe the Commission should not set position limits on energy contracts, please address the inconsistent approach for other commodities with a finite, physically deliverable supply, such as certain agriculture commodities.

The hearings will be open to the public and will be webcast via the internet. In addition, audio of the hearings will be available via a listen-only conference call.


Hearing on Energy Position Limits and Hedge Exemptions


CFTC Headquarters, Lobby-level Hearing Room 1155 21st Street, NW, Washington, DC


Tuesday, July 28, 2009


9:00 a.m. EDT – 1:00 p.m. EDT

Viewing/Listening Information:


The CFTC has made available the following options to access the meeting:


1. Watch a live broadcast of the hearing via webcast on


2. Call in to a toll-free telephone line to connect to a live audio feed.


Call-in participants should be prepared to provide their first name, last name, and affiliation. Conference call information is listed below:


Domestic/Canada Toll-Free: (888) 691-4252

International Toll: (404) 537-3379

The conference ID: 21421592

Call leader name: CFTC

Media Contact
R. David Gary

Last Updated: July 27, 2009