FIA Submits Comments to CFTC on Proposed Position Limits for Derivatives Rule

The Futures Industry Association ("FIA") submitted a comment letter to the CFTC regarding the proposed rulemaking on Position Limits for Derivatives. According to the letter, FIA's comments focus on the impact of speculative position limits on "the public policy imperatives of protecting the price discovery and risk-management function of liquid and fair derivatives markets."

According to the letter, FIA is concerned that various aspects of the Proposed Rule will negatively impact the price discovery function and liquidity of physical commodity and economically equivalent derivatives contracts subject to speculative position limits. Additionally, FIA is concerned that the Proposed Rule will "significantly restrict" the ability of market participants to rely on the derivatives markets to hedge risk. FIA stated that several aspects of the Proposed Rule impose substantial compliance and reporting burdens on market participants where less costly and restrictive alternatives would still enable the CFTC to achieve its regulatory objectives.

FIA urged the CFTC to delay imposing the speculative position limits until after the CFTC has collected and analyzed the data necessary to make an empirical finding that speculative position limits are "necessary" to "diminish, eliminate or prevent" the burden on interstate commerce caused by excessive speculation, and that the limit levels proposed are "appropriate." Should the CFTC decide to move forward with the Position Limits proposed rule "without making a necessity finding based upon empirical data as required by the CEA," FIA requested that the CFTC amend the Proposed Rule to be consistent with recommendations listed in the letter.

See: FIA Comment Letter.Related news: CFTC Issues Proposed Position Limits Rule (Fed. Reg.) (December 12, 2013); CFTC Issues Proposed Position Limits Rule for Derivatives (Pre-Fed. Reg.) (with Zwirb Comment)(December 3, 2013); CFTC Publishes Proposed Rules for Aggregation of Positions (Fed. Reg. Version) (November 15, 2013) Key Differences between the Recent CFTC Position Limits Proposal and the Previously Vacated Final Position Limits Rule (with Delta Strategy Group Summary) (November 18, 2013); Cadwalader Memo on Proposed Position Limits and Aggregation Rules (with Lofchie Comment) (November 6, 2013); CFTC Approves Position Limits Proposal (with Lofchie and Zwirb Comments and Delta Strategy Group Summary) (November 5, 2013).