In This Issue:

- Basis for Imposing CFTC Limits. . .2

- Contracts Subject to CFTC Limits . . .4

- Types of CFTC Limits . . .5

- Netting . . .9

- Exemptions from CFTC Limits . . .9

- Aggregation . . .13

- Position Visibility Reporting Regime . . .16

- DCM and SEF Position Limits and Accountability Levels . . .16

Excerpt from CFTC Adopts Final Position Limit Rules for Futures, Options and Swaps on 28 Physical Commodities

Rising oil and gasoline prices in the spring of 2008 brought calls from many in Congress for the Commodity Futures Trading Commission (CFTC) to impose speculative position limits in futures markets to bring down prices. Despite the dearth of data showing that speculators caused higher prices or that limits would affect prices, the CFTC thereafter held public hearings on, and proposed the imposition of, federal limits on speculation in (certain energy) futures, but not swaps, even if those swap transactions were linked to futures prices. Congress then passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) which, among many other things, expanded the CFTC’s position limit authority to include many, but not all, swaps and directed the CFTC to concentrate on speculative position limits on futures and economically equivalent swaps in physical commodities, as found to be necessary and as appropriate. Once granted this new authority, the CFTC abandoned its prior proposal and set out to reconsider the question whether and how to impose speculative limits on futures and swaps on physical commodities.