MFA Submits Comments to CFTC on Position Limits Proposal

The Managed Funds Association ("MFA") submitted comments to the CFTC on its position limits for derivatives proposal. According to MFA, the CFTC "has not fulfilled its statutory obligation" to make a "necessity finding" that position limits are necessary or appropriate.

The letter stated that rulemaking related to position limits should be "empirically driven and not a response to popular sentiment or partial analyses." While MFA voiced its overall disagreement with the need for position limits, it provided comments and suggestions to the CFTC on the proposed rule, including the following:

• the CFTC should provide clear guidance on referenced contracts and the economic equivalence determination;
• the CFTC should address the computational challenges for options;
• position limits should be based on current estimated deliverable supply data and transparency;
• the CFTC should not impose position limits for cash-settled contracts and, in the alternative, position limits for cash-settled contracts should not be based on estimated deliverable supply;
• in lieu of the proposed conditional spot-month position limit, MFA believes the best alternative would be for the CFTC to set the limit for cash-settled contracts at five times the level of the limit for the physical-delivery core referenced futures contract regardless of positions in the underlying physical-delivery contract; and
• the one-size-fits-all approach to setting non-spot month and all-months-combined limits fails to incorporate market realities unique to specific commodities.

See:MFA Comment Letter to CFTC.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).