CFTC Approves Appeal of Position Limit Decision

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The CFTC approved an appeal of the September 28, 2012 federal district court decision that vacated the agency’s position limits rule based on a finding that the agency had neglected to first find that the limits were necessary to “diminish, eliminate, or prevent” the burden of undue speculation on interstate commerce. The agency filed a notice in the district court that it had appealed the decision to the U.S. Court of Appeals for the D.C. Circuit.

Commissioner O’Malia, one of the two dissenting Commissioner’s in the 3-2 vote to approved the appeal, issued a dissenting statement questioning the Commission’s decision to “double down on its no-justification-needed stance”:

“Even if the Commission successfully appeals the ruling, there is a very good chance that the Commission would be right back in the district court to defend against plaintiffs’ other challenges, including their argument that the Commission failed to adequately weigh the costs and benefits of the rule. To save the Commission’s time and resources, it would be much more logical for the Commission to go back to the drawing board now to study the markets and to determine whether new position limits are in fact necessary, and only if so then to decide on the most cost-effective way of establishing such limits.”

Chairman Gensler, on the other hand, issued a statement supporting the ruling, calling it “critically important that these position limits be established as Congress required.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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