CFTC Proposes New Position Limits: CFTC Proposes New Rules to Impose Position Limits on Derivatives on 28 Physical Commodities

Sullivan & Cromwell LLP - November 18, 2013

On November 5, 2013, the Commodity Futures Trading Commission (the “CFTC” or “Commission”) held a public meeting during which it voted 3-1 to propose for public comment rules on position limits applicable to options, futures, and swaps contracts (“derivatives”) related to 28 agricultural, metal, and energy commodities (the “Position Limit Proposal” or “Proposal”). The Proposal will be open for a 60-day public comment period following publication in the Federal Register. At the same meeting, the Commission confirmed that it would 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 (the “Original Position Limit Rules”). The Commission also voted unanimously to propose for public comment rules that would provide five new exemptions from the CFTC’s requirement to aggregate commonly owned or controlled positions for the purpose of calculating position levels (the “Aggregation Proposal”).

This memorandum to clients supplements our preliminary summary memorandum to clients on the Position Limit Proposal and the Aggregation Proposal. In addition, we are also publishing a memorandum to clients supplementing our preliminary summary memorandum to clients with respect to the Aggregation Proposal.