US CFTC repurposes position limits rule for speculative futures, swaps positions

US CFTC repurposes position limits rule for speculative futures, swaps positions

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The US Commodity Futures Trading Commission (CFTC) has decided to repropose regulations concerning the maximum number of positions on speculative futures and swaps. The regulator has also approved final aggregation regulations – a key component of its existing position limits regime.

The new rules were voted unanimously on 5 December and are part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

The regulator will repurpose position limits for 25 core physical commodity futures contracts and their “economically equivalent” futures, options, and swaps (referenced contracts), as well as will defer action on three cash-settled commodities. The reproposed regulations include requirements and acceptable practices for designated contract markets (DCMs) and swap execution facilities (SEFs) for setting position limits for the referenced contracts, in addition to acceptable practices for exchange position limits or accountability rules in all other listed contracts, including excluded commodities.

The reproposed regulations would delay any requirement for DCMs and SEFs that lack access to sufficient swap position information to establish position limits on swaps that are subject to a federal position limit.

In addition, the US regulator is reporposing the definition of bona fide hedging position, as well as exemptions for bona fide hedging positions in physical commodities. The reproposed regulations also permit exchange recognition of non-enumerated bona fide hedging positions, certain enumerated anticipatory hedge positions, and granting of spread exemptions.

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