CFTC Proposes New Position Limits and Aggregation Rules: CFTC Proposes New Rules to Impose Position Limits on Derivatives on 28 Physical Commodities, Voluntarily Dismisses Appeal of District Court Decision Vacating Original Position Limit Rules, and Proposes Aggregation Standards Applicable to Position Limits for Derivatives

Sullivan & Cromwell LLP - November 5, 2013

On November 5, 2013, the Commodity Futures Trading Commission (the “CFTC” or “Commission”) held a public meeting during which it:

  • Voted 3-1, with commissioner O’Malia dissenting, to propose for public comment a new set of rules on position limits (the “Proposed Rules”) applicable to options, futures, and swaps contracts (“derivatives”) related to 28 agricultural, metal, and energy commodities;
  • Confirmed that it will voluntarily dismiss its appeal of the September 2012 decision from the United States District Court for the District of Columbia (the “Court”) vacating the Commission’s previous attempt at imposing position limits across derivatives (the “Original Position Limit Rules”); and
  • Voted unanimously to propose separately for public comment rules that would expand the availability of aggregation exemptions, as compared to the Original Position Limit Rules, from the CFTC’s aggregation standards applicable to position limits for futures and swaps (the “Proposed Aggregation Rules”).

This summary and overview is based on the fact sheet and frequently asked questions distributed by the CFTC during its public meeting, as well as on the comments made by the CFTC Commissioners and staff during the public meeting. We expect to issue a further, more detailed memorandum on the Proposed Rules and the Proposed Aggregation Rules following the CFTC’s issuance of the Federal Register releases.