Conaway, Stabenow differ on CFTC decision
House Agriculture Committee Chairman Michael Conaway, R-Texas, on Monday praised the Commodity Futures Trading Commission for its decision to repropose its rule on position limits under the Dodd-Rank law, while Senate Agriculture Committee ranking member Debbie Stabenow, D-Mich., said she was disappointed.
The Commodity Futures Trading Commission (CFTC) on Monday voted unanimously to repropose regulations implementing limits on speculative futures and swaps positions. The reproposal will be open for public comment for 60 days after publication in the Federal Register, which will move a decision on the final rule into the Trump administration.
The rule is considered most important for energy futures. During the 2008 financial crisis there was concern about what role speculators had played in a spike in energy prices.
“I did not want to finalize a rule that next year the commission would choose not to defend or implement,” CFTC Chairman Timothy Massad said on a call with reporters, according to report in The Wall Street Journal.
In a news release, the CFTC said, “In response to comments on a prior proposal published in December 2013, and on a supplemental proposal published in June 2016, the CFTC is reproposing limits on speculative positions in 25 core physical commodity futures contracts and their ‘economically equivalent’ futures, options, and swaps (referenced contracts), and is deferring action on three cash-settled commodities.”
The CFTC is also reproposing the definition of bona fide hedging position, as well as exemptions for bona fide hedging positions in physical commodities. Exemptions are being reproposed for, among other things, positions that are established in good faith prior to the effective date of the initial limits that would be established by final regulations, the commission said.
In addition, the reproposed regulations include requirements and acceptable practices for Designated Contract Markets (DCMs) and Swap Execution Facilities (SEFs) for setting position limits for the 25 referenced contracts, as well as acceptable practices for exchange position limits or accountability rules in all other listed contracts, including excluded commodities.
The reproposed regulations also permit exchange recognition of non-enumerated bona fide hedging positions, certain enumerated anticipatory hedge positions, and granting of spread exemptions. The reproposal includes updated reporting requirements under part 19 of the CFTC’s regulations.
Finally, the reproposed regulations would delay any requirement for DCMs and SEFs that lack access to sufficient swap position information to establish position limits on swaps that are subject to a federal position limit.
Conaway said in a news release, “I want to thank Chairman [Timothy] Massad and his fellow commissioners for reproposing the position limits rulemaking. The Committee on Agriculture has heard repeatedly from end-users across the economy about the importance of getting this rule right. Today’s action will offer them the opportunity to refine this rule and ensure that it does not negatively impact their ability to manage their risks.”
Stabenow said, “I am disappointed that the CFTC is not finalizing the position limits rule in its entirety this year – nearly six years after the CFTC first proposed a rule. Position limits are a critical tool for the CFTC to ensure that Americans are not paying too much for energy at home or at the pump. Finalizing a full and meaningful rule should be the first priority of the commission next year.”
–The Hagstrom Report
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