District Court Rejects CFTC Rule on Position Limits, for Now


On September 28, 2012, in the case of International Swaps and Derivatives Association v. U.S. Commodity Futures Trading Commission, the District Court for the District of Columbia (the "Court") ruled that the Commodity Exchange Act ("CEA"), asamended by the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") was ambiguous as to whether the CFTC was required to set position limits without first determining that the limits were necessary and appropriate.

On October 18, 2011, the CFTC adopted the Position Limits Rule, which would cap the maximum number of contracts a trader can own during a given period and would require traders to aggregate positions held in multiple accounts. The rule would impact derivatives tied to 28 physical commodities. In promulgating the final rule, the CFTC viewed Section 6a of the Commodity Exchange Act of 1936 as an unambiguous congressional mandate that required the Commission to issue and implement the new rule.

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