CFTC Proposes Position Limit Aggregation Rules: CFTC Proposes Aggregation Standards Applicable to Position Limits for Derivatives

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 unanimously to propose for public comment rules that would expand in certain respects the availability of aggregation exemptions (the “Proposed Aggregation Rules”) under the CFTC’s position limit regime, as compared to the aggregation exemptions that were part of the Commission’s previously adopted position limit rules that would have applied across derivatives categories (the “Original Position Limit Rules”). The Proposed Aggregation Rules are substantially similar to the aggregation rules the Commission proposed in May of 2012 (the “Original Aggregation Proposal”) and would provide for five new exemptions from aggregation in addition to the exemptions existing under the Commission’s position limit rules currently in effect. The Commission also has promulgated proposed rules which would establish position limits that are applicable to options, futures and swaps contracts related to 28 agricultural, metal and energy commodities (the “Proposed Position Limit Rules”). The Proposed Position Limit Rules would replace the Commission’s Original Position Limit Rules, which were vacated by an order of the United States District Court for the District of Columbia.

The Proposed Aggregation Rules will be subject to a 60-day comment period ending January 14, 2014.

This memorandum to clients supplements our preliminary summary memorandum to clients on the Proposed Aggregation Rules and the Proposed Position Limit Rules. In addition, we will also publish a memorandum to clients supplementing our preliminary summary memorandum to clients with respect to the Proposed Position Limit Rules.