On September 28, 2012, the U.S. District Court for the District of Columbia struck down the Commodity Futures Trading Commission’s (CFTC) final rule on position limits, which was enacted as part of the agency’s implementation of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The rule applied position limits to swaps and other derivatives, limited available hedging exemptions, and imposed stricter aggregation requirements.

This recent Court decision, coupled with pending legal challenges as well as the increasing threat of additional legal challenges to Dodd-Frank rulemakings, has raised questions within the financial services industry and among regulators regarding the scope of the CFTC’s, among other agencies, authority and the timing for Dodd-Frank rulemaking implementation. We believe the Court decision may further delay the Dodd-Frank rulemaking process and encourage additional legal challenges to the Dodd-Frank Act as well as potentially compel lawmakers to revisit the Dodd-Frank Act in whole or in part.

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