[Federal Register Volume 79, Number 233 (Thursday, December 4, 2014)]
[Proposed Rules]
[Pages 71973-71975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28482]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Parts 1, 15, 17, 19, 32, 37, 38, 140, and 150
RIN 3038-AD99; 3038-AD82
Position Limits for Derivatives and Aggregation of Positions
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of proposed rulemaking; reopening of comment periods.
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SUMMARY: On December 12, 2013, the Commodity Futures Trading Commission
(``Commission'') published in the Federal Register a notice of proposed
rulemaking (the ``Position Limits Proposal'') to establish speculative
position limits for 28 exempt and agricultural commodity futures and
options contracts and the physical commodity swaps that are
economically equivalent to such contracts. On November 15, 2013, the
Commission published in the Federal Register a notice of proposed
rulemaking (the ``Aggregation Proposal'') to amend existing regulations
setting out the Commission's policy for aggregation under its position
limits regime. The Commission's Agricultural Advisory Committee has
scheduled a public meeting to be held on December 9, 2014, which will
consider, among other matters, deliverable supply and exemptions for
bona fide hedging positions. To provide commenters with a sufficient
period of time to respond to questions raised and points made at the
Agricultural Advisory Committee meeting, the Commission is reopening
the comment periods for an additional 45 days. Comments should be
limited to the
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following issues as they pertain to agricultural commodities: Hedges of
a physical commodity by a commercial enterprise; and the process for
estimating deliverable supplies used in the setting of spot month
limits.
DATES: The comment periods for the Aggregation Proposal published
November 15, 2013, at 78 FR 68946, and for the Position Limits Proposal
published December 12, 2013, at 78 FR 75680, will reopen on December 9,
2014, and close on January 22, 2015.
ADDRESSES: You may submit comments, identified by RIN 3038-AD99 for the
Position Limits Proposal or RIN 3038-AD82 for the Aggregation Proposal,
by any of the following methods:
Agency Web site: http://comments.cftc.gov;
Mail: Christopher Kirkpatrick, Secretary of the
Commission, Commodity Futures Trading Commission, Three Lafayette
Centre, 1155 21st Street NW., Washington, DC 20581;
Hand Delivery/Courier: Same as Mail, above; or
Federal eRulemaking Portal: http://www.regulations.gov.
Follow instructions for submitting comments.
Please submit your comments using only one method. All comments
must be submitted in English, or if not, accompanied by an English
translation. Comments will be posted as received to http://www.cftc.gov. You should submit only information that you wish to make
available publicly. If you wish the Commission to consider information
that may be exempt from disclosure under the Freedom of Information
Act, a petition for confidential treatment of the exempt information
may be submitted under Sec. 145.9 of the Commission's regulations (17
CFR 145.9).
The Commission reserves the right, but shall have no obligation, to
review, pre-screen, filter, redact, refuse or remove any or all of your
submission from http://www.cftc.gov that it may deem to be
inappropriate for publication, such as obscene language. All
submissions that have been redacted or removed that contain comments on
the merits of the rulemaking will be retained in the public comment
file and will be considered as required under the Administrative
Procedure Act and other applicable laws, and may be accessible under
the Freedom of Information Act.
FOR FURTHER INFORMATION CONTACT: Stephen Sherrod, Senior Economist,
Division of Market Oversight, (202) 418-5452, [email protected]; or
Riva Spear Adriance, Senior Special Counsel, Division of Market
Oversight, (202) 418-5494, [email protected]; Commodity Futures
Trading Commission, Three Lafayette Centre, 1155 21st Street NW.,
Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Background
The Commission has long established and enforced speculative
position limits for futures and options contracts on various
agricultural commodities as authorized by the Commodity Exchange Act
(``CEA'').\1\ The part 150 position limits regime \2\ generally
includes three components: (1) The level of the limits, which set a
threshold that restricts the number of speculative positions that a
person may hold in the spot-month, individual month, and all months
combined,\3\ (2) exemptions for positions that constitute bona fide
hedging transactions and certain other types of transactions,\4\ and
(3) rules to determine which accounts and positions a person must
aggregate for the purpose of determining compliance with the position
limit levels.\5\ The Position Limits Proposal generally sets out
proposed changes to the first and second components of the position
limits regime and would establish speculative position limits for 28
exempt and agricultural commodity futures and option contracts, and
physical commodity swaps that are ``economically equivalent'' to such
contracts (as such term is used in CEA section 4a(a)(5)).\6\ The
Aggregation Proposal generally sets out proposed changes to the third
component of the position limits regime.\7\
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\1\ 7 U.S.C. 1 et seq.
\2\ See 17 CFR part 150. Part 150 of the Commission's
regulations establishes federal position limits on futures and
option contracts in nine enumerated agricultural commodities.
\3\ See 17 CFR 150.2.
\4\ See 17 CFR 150.3.
\5\ See 17 CFR 150.4.
\6\ See Position Limits for Derivatives, 78 FR 75680 (Dec. 12,
2013).
\7\ See Aggregation of Positions, 78 FR 68946 (Nov. 15, 2013).
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The Commission published the Position Limits Proposal and the
Aggregation Proposal separately because it believes that the proposed
amendments regarding aggregation of positions could be appropriate
regardless of whether the Position Limits Proposal is finalized.\8\ If
the Aggregation Proposal is finalized first, the modifications would
apply to the current position limits regime for futures and option
contracts on nine enumerated agricultural commodities. If the Position
Limits Proposal is subsequently finalized, the modifications in the
Aggregation Proposal would apply to the position limits regime for 28
exempt and agricultural commodity futures and options contracts and the
physical commodity swaps that are economically equivalent to such
contracts.
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\8\ See Aggregation Proposal, 78 FR at 68947.
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In order to provide interested parties with an opportunity to
comment on the Aggregation Proposal during the comment period on the
Position Limits Proposal, the Commission extended the comment period
for the Aggregation Proposal to February 10, 2014, the same end date as
the comment period for the Position Limits Proposal.\9\
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\9\ See 79 FR 2394 (Jan. 14, 2014).
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Subsequent to publication of the Position Limits Proposal and the
Aggregation Proposal, the Commission directed staff to schedule a June
19, 2014, public roundtable to consider certain issues regarding
position limits for physical commodity derivatives. The roundtable
focused on hedges of a physical commodity by a commercial enterprise,
including gross hedging, cross-commodity hedging, anticipatory hedging,
and the process for obtaining a non-enumerated exemption. Discussion
included the setting of spot month limits in physical-delivery and
cash-settled contracts and a conditional spot-month limit exemption.
Further, the roundtable included discussion of: The aggregation
exemption for certain ownership interests of greater than 50 percent in
an owned entity; and aggregation based on substantially identical
trading strategies. As well, the Commission invited comment on whether
to provide parity for wheat contracts in non-spot month limits. In
conjunction with the roundtable, staff questions regarding these topics
were posted on the Commission's Web site.
To provide commenters with a sufficient period of time to respond
to questions raised and points made at the roundtable, the Commission
published a notice in the Federal Register on May 29, 2014, reopening
the comment periods for the Position Limit Proposal and the Aggregation
Proposal for three weeks, from June 12, 2014 to July 3, 2014. The
Commission published notice in the Federal Register on July 3, 2014,
further extending the comment periods to August 4, 2014.
Comment letters received on the Position Limits Proposal are
available at http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1436. Comment letters received on the Aggregation
Proposal are available at http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1427.
[[Page 71975]]
II. Reopening of Comment Period
The Commission's Agricultural Advisory Committee has scheduled a
meeting to be held on December 9, 2014, and adopted an agenda that
includes consideration, among other matters, of two issues associated
with the Position Limits rulemaking: Deliverable supply and exemptions
for bona fide hedging positions. To provide interested persons with a
sufficient period of time to respond to questions raised and points
made at the Agricultural Advisory Committee meeting, the Commission is
reopening both the Position Limit Proposal and the Aggregation Proposal
for an additional 45-day comment period. Comments should be limited to
the following issues as they pertain to agricultural commodities:
Hedges of a physical commodity by a commercial enterprise; and the
process for estimating deliverable supplies used in the setting of spot
month limits, as each pertains to agricultural commodities.
Both comment periods will reopen on December 9, 2014, and close on
January 22, 2015.
Issued in Washington, DC, on December 1, 2014, by the
Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.
Note: The following appendices will not appear in the Code of
Federal Regulations.
Appendices to Position Limits for Derivatives and Aggregation of
Positions Reopening of Comment Periods--Commission Voting Summary and
Commissioner's Statement
Appendix 1--Commission Voting Summary
On this matter, Chairman Massad and Commissioners Wetjen, Bowen,
and Giancarlo voted in the affirmative. No Commissioner voted in the
negative.
Appendix 2--Statement of Commissioner Sharon Y. Bowen
I support this reopening of the comment period for our position
limits rule. As I've previously said, this is a key rule and we are
well-served by giving stakeholders another chance to comment.
However, we cannot allow this rule to linger indefinitely on our
docket. It has been over a year since we re-proposed this rule and
nearly four years since it was first proposed. We need to finish
this rule next year, and I believe we can release a final rule by
spring 2015.
As we continue to finalize and fine-tune our Dodd-Frank
rulemakings, we have to avoid the temptation to simply ratchet back
or weaken prior versions of those rules. In fact, I think the best
way of viewing changes to our rules is not that we are tweaking
them, but rather that we are enhancing them. Sometimes that may mean
making the rules more cost-effective and leaner, but at other times
that will mean making them stronger than before. Enhancing a rule
can mean reducing burdens to business while strengthening
protections for the public. I believe our position limits proposal
is exactly the sort of rule that needs to be enhanced, and I look
forward to working with my fellow Commissioners to finish and
release this rule in a timely fashion.
[FR Doc. 2014-28482 Filed 12-3-14; 8:45 am]
BILLING CODE 6351-01-P