If you have not already done so, please consider writing the U.S. Commodity Futures Trading Commission (CFTC) in support of meaningful limits on commodity speculation. Public comments are due in just a few days!
Background information and instructions for submitting comments can be found below…
Background
After the speculative bubble burst in 2008, Congress passed a sweeping and bipartisan law designed to increase transparency, stability and oversight in the commodity futures, options and swaps markets. NEFI was a lead proponent of these reforms. In particular, NEFI praised Section 737 of the law which requires the CFTC to establish limits on the size of positions that speculators can take in commodities from oil to wheat, known as “speculative position limits.” Congress had sought to reverse a 2000 law that exempts most commodity trades from such limits.
The CFTC finalized a position limits rule on October 18, 2011. That rule was successfully challenged in court by Wall Street groups and vacated just days before limits were to be imposed. In his decision, the District Court Judge expressed concern over ambiguous wording in the law that requires position limits be set “as appropriate.” Wall Street groups argued the language gave complete discretion to the CFTC in determining the necessity of position limits; while the CFTC, backed by NEFI and its allies, argued that limits were required by Congress and that “as appropriate” merely refers to the specifics of the limits themselves. Ultimately the Judge determined the CFTC should have addressed these “ambiguities” and included a “finding of necessity” in its final rule.
Proposed Rule
On November 5, 2013 the CFTC approved a Notice of Proposed Rulemaking for position limits. The revised rule strengthens the CFTC’s finding that limits are mandated by Congress and necessary to ensure market stability and prevent excessive speculation. The proposed rule would limit spot month speculative positions to 25 percent of deliverable supply and limit non-spot month positions to 10 percent of open interest for the first 25,000 contracts and 2.5 percent thereafter. While NEFI supports this long-overdue rule, we feel these speculation limits are too high to capture all potentially harmful trading activity. NEFI is also reviewing some changes from the original rule (including to the exemptions for bona fide hedgers) and will submit detailed comments before the deadline.
Take Action!
The public has until midnight on Monday, February 10th to submit comments. Please voice your support for speculative position limits and urge regulators to strengthen the proposed rule to maximize market stability and prevent manipulation in the commodity markets. Click here to download the suggested comment letter. Feel free to modify the letter with details on how this issue has affected you or your business.
To submit electronically: click here, fill out required fields, and cut & paste your letter in the “comment” box.
To submit by postal mail or fax:, print out your letter and mail to: Commodity Futures Trading Commission, Three Lafayette Centre, 1155 12st St. NW, Washington, DC or fax to 202-418-5521.
If you have questions or difficulty submitting your letter, please contact Jim Collura at [email protected] or 617-923-5023. Thank you as always for your support!
