SIFMA and ISDA Submit Comments to the CFTC Regarding Position Limits for Derivatives and the Aggregation of Positions

SIFMA and ISDA submitted comments to the CFTC in response to the reopening of comment periods on Position Limits for Derivatives and the Aggregation of Positions. SIFMA and ISDA focused on issues relating to: (i) physical commodity hedges; (ii) the process for providing non-enumerated exemptions from the position limits rules; (iii) spot-month limits and a conditional exemption; and (iv) the aggregation rules.In the letter, SIFMA and ISDA expressed support for the CFTC's decision to reopen the comment period on the Position Limits Proposal and Aggregation Proposal, and endorsed the CFTC's efforts to mitigate the burden of the recordkeeping rules in CFTC Rule 1.35(a) and expand the scope of counterparties that will be available for utility special entities when entering into utility swaps.SIFMA and ISDA affirmed several views expressed in prior letters, namely that:

• The CFTC "should not go forward with the Proposal until such time as it is able to demonstrate that the statutory prerequisites to imposing position limits have been satisfied and until such time as the Commission has meaningfully evaluated the costs and benefits of the rules it intends to impose"; and, assuming that the CFTC goes forward with the proposal,
• The CFTC should, among other things, "abandon those aspects of the Proposal that would impose position limits outside of the spot month."

Additionally, SIFMA and ISDA urged the CFTC to follow a sequenced approach moving forward in order to avoid unintended consequences.

See: SIFMA/ISDA Comment Letter.Related news: CFTC-Proposed Rule Amendment Regarding De Minimis Threshold for Entities Entering into Swaps with Utility Special Entities Published (Fed. Reg.) (June 2, 2014); CFTC Reopens Comment Periods for Position Limits for Derivatives and for Aggregation of Positions (Fed. Reg.) (May 29, 2014);CFTC Staff Issues Time-Limited No-Action Letter on the Applicability of Oral Recording Requirements for Certain Members of DCMs or SEFs (CFTC Letter 14-60) (with Lofchie Comment) (April 25, 2014); SIFMA, SIFMA AMG, and ISDA Submit Comments to CFTC on Proposed Position Limits Rules (with Lofchie Comment) (February 20, 2014); 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).