Federal Register: CFTC Proposes New Position Limits for Physical Commodity Derivatives
A CFTC proposal to apply federal speculative position limits to 25 "core referenced futures contracts" was published in the Federal Register. Comments on the proposal must be received by April 29, 2020.
As previously covered, the 25 core contracts include 16 related to agriculture, five related to metals, and four related to energy. With the exception of nine of the agriculture products, the federal limits would apply only during the stop month; however, the relevant exchanges (i.e., CBOT, MGEX, ICE, COMEX and/or NYMEX, depending on the product) would be required to set non-spot month limits in the other contracts.
The position limits would not apply to location basis contracts, commodity index contracts, swap guarantees or certain trade options.
Hedging exemptions would be available for positions that satisfy all three of the following tests: (i) the temporary substitute text, (ii) the economically appropriate test and (iii) the change in value requirement.
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In a 3-2 vote, the CFTC proposed applying federal speculative position limits to 25 "core referenced futures contracts," including futures and options linked to those contracts and economically equivalent swaps.
