Court Vacates Position Limit Rules: U.S. District Court for the District of Columbia Vacates the CFTC’s New Position Limit Rules Under Part 151 of the CFTC’s Regulations

Sullivan & Cromwell LLP - October 1, 2012

On October 18, 2011, the Commodity Futures Trading Commission (“CFTC”) adopted interim and final rules on positions limits applicable to options, futures contracts and swaps (including swaptions) related to 28 agricultural, metal and energy commodity contracts under Part 151 of its regulations (the “Position Limit Rules”) as well as amended existing position limits applicable to options and futures contracts under Part 150 of its regulations. The Position Limit Rules would have expanded the existing position limits regime to, among other things, apply to swaps, limit available hedging exemptions and impose stricter aggregation requirements. On December 2, 2011, the International Swaps and Derivatives Association (“ISDA”) and the Securities Industry and Financial Markets Association (“SIFMA”) filed a challenge to the Position Limit Rules in the U.S. District Court for the District of Columbia (the “Court”). Initial position limits under the Position Limit Rules were due to take effect on October 12, 2012. On September 28, 2012, the Court vacated the Position Limit Rules, remanding them to the CFTC.