Judicial Developments: CFTC Position Limits Rule Struck Down by the Courts


On September 29, 2012, the US District Court for the District of Columbia struck down the position limits rule promulgated by the Commodity Futures Trading Commission ("CFTC") that would have gone into effect October 12, 2012, limiting the positions that investors could own in commodity futures, options and swaps.

The International Swaps and Derivatives Association ("ISDA") and the Securities Industry and Financial Markets Association ("SIFMA") filed a lawsuit in federal court challenging the CFTC's position limit rule on December 2, 2011.

The main issue before the District Court was whether the CFTC correctly interpreted Section 6a of the Commodity Exchange Act ("CEA") as "clearly and unambiguously" requiring the CFTC to impose position limits. While the CFTC interpreted the section as mandating the CFTC to impose position limits, the court disagreed and found that Section 6a "clearly and unambiguously requires the Commission to make a finding of necessity prior to imposing position limits." Because the CFTC had not first proven that imposing position limits in commodity markets was necessary to prevent speculation in markets such as energy, grain and metal, the rule was vacated.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


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.

© White & Case LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.