[Federal Register Volume 79, Number 128 (Thursday, July 3, 2014)]

[Proposed Rules]

[Pages 37973-37974]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2014-15618]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 1, 15, 17, 19, 32, 37, 38, 140, and 150

RIN 3038-AD99; 3038-AD82

Position Limits for Derivatives and Aggregation of Positions

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed rulemaking; extension of comment periods.

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SUMMARY: On December 12, 2013, the Commodity Futures Trading Commission

(“Commission”) published in the Federal Register a notice of proposed

rulemaking (the “Position Limits Proposal”) to establish speculative

position limits for 28 exempt and agricultural commodity futures and

options contracts and the physical commodity swaps that are

economically equivalent to such contracts. On November 15, 2013, the

Commission published in the Federal Register a notice of proposed

rulemaking (the “Aggregation Proposal”) to amend existing regulations

setting out the Commission’s policy for aggregation under its position

limits regime. In addition, the Commission directed staff to hold a

public roundtable on June 19, 2014, to consider certain issues

regarding position limits for physical commodity derivatives. In order

to provide interested parties with an opportunity to comment on the

issues to be discussed at the roundtable, the Commission published

notice in the Federal Register on May 29, 2014, that the comment

periods for the Position Limits Proposal and the Aggregation Proposal

were reopened, starting June 12, 2014 (one week before the roundtable)

and ending July 3, 2014 (two weeks following the roundtable). To

provide commenters with a sufficient period of time to respond to

questions raised and points made at the roundtable, the Commission is

now further extending the comment period. Comments should be limited to

the issues of hedges of a physical commodity by a commercial

enterprise, including gross hedging, cross-commodity hedging,

anticipatory hedging, and the process for obtaining a non-enumerated

exemption; the setting of spot month limits in physical-delivery and

cash-settled contracts and a conditional spot-month limit exemption;

the setting of non-spot limits for wheat contracts; the aggregation

exemption for certain ownership interests of greater than 50 percent in

an owned entity; and aggregation based on substantially identical

trading strategies.

DATES: The comment periods for the Aggregation Proposal published

November 15, 2013, at 78 FR 68946, and for the Position Limits Proposal

published December 12, 2013, at 78 FR 75680, will close on August 4,

2014.

ADDRESSES: You may submit comments, identified by RIN 3038-AD99 for the

Position Limits Proposal or RIN 3038-AD82 for the Aggregation Proposal,

by any of the following methods:

Agency Web site: http://comments.cftc.gov;

Mail: Secretary of the Commission, Commodity Futures

Trading Commission, Three Lafayette Centre, 1155 21st Street NW.,

Washington, DC 20581;

Hand delivery/courier: Same as mail, above; or

Federal eRulemaking Portal: http://www.regulations.gov.

Follow instructions for submitting comments.

Please submit your comments using only one method. All comments

must be submitted in English, or if not, accompanied by an English

translation. Comments will be posted as received to http://www.cftc.gov. You should submit only information that you wish to make

available publicly. If you wish the Commission to consider information

that may be exempt from disclosure under the Freedom of Information

Act, a petition for confidential treatment of the exempt information

may be submitted under Sec. 145.9 of the Commission’s regulations (17

CFR 145.9).

The Commission reserves the right, but shall have no obligation, to

review, pre-screen, filter, redact, refuse or remove any or all of your

submission from http://www.cftc.gov that it may deem to be

inappropriate for publication, such as obscene language. All

submissions that have been redacted or removed that contain comments on

the merits of the rulemaking will be retained in the public comment

file and will be considered as required under the Administrative

Procedure Act and other applicable laws, and may be accessible under

the Freedom of Information Act.

FOR FURTHER INFORMATION CONTACT: Stephen Sherrod, Senior Economist,

Division of Market Oversight, (202) 418-5452, [email protected]; or

Riva Spear Adriance, Senior Special Counsel, Division of Market

Oversight, (202) 418-5494, [email protected]; Commodity Futures

Trading Commission, Three Lafayette Centre, 1155 21st Street NW.,

Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

I. Background

The Commission has long established and enforced speculative

position limits for futures and options contracts on various

agricultural commodities as authorized by the Commodity Exchange Act

(“CEA”).1 The part 150 position limits regime 2 generally

includes three components: (1) The level of the limits, which set a

threshold that restricts the number of speculative positions that a

person may hold in the spot-month, individual month, and all months

combined,3 (2) exemptions for positions that constitute bona fide

hedging transactions and certain other types of transactions,4 and

(3) rules to determine which accounts and positions a person must

aggregate for the purpose of determining compliance with the position

limit levels.5 The Position Limits Proposal generally sets out

proposed changes to the first and second component of the position

limits regime and would establish speculative position limits for 28

exempt and agricultural commodity futures and option contracts, and

physical commodity swaps that are “economically equivalent” to such

contracts (as such term is used in CEA section 4a(a)(5)).6 The

Aggregation Proposal generally sets out proposed changes to the third

component of the position limits regime.7

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1 7 U.S.C. 1 et seq.

2 See 17 CFR part 150. Part 150 of the Commission’s

regulations establishes federal position limits on futures and

option contracts in nine enumerated agricultural commodities.

3 See 17 CFR 150.2.

4 See 17 CFR 150.3.

5 See 17 CFR 150.4.

6 See Position Limits for Derivatives, 78 FR 75680 (Dec. 12,

2013).

7 See Aggregation of Positions, 78 FR 68946 (Nov. 15, 2013).

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In order to provide interested parties with an opportunity to

comment on the Aggregation Proposal during the comment period on the

Position Limits Proposal, the Commission extended the comment period

for the Aggregation Proposal to February 10, 2014, the same

[[Page 37974]]

end date as the comment period for the Position Limits Proposal.8

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8 See 79 FR 2394 (Jan. 14, 2014).

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Comment letters received on the Position Limits Proposal are

available at http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1436. Comment letters received on the Aggregation

Proposal are available at http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1427.

II. Extension of Comment Period

Subsequent to publication of the Position Limits Proposal and the

Aggregation Proposal, Commission directed staff to schedule a June 19,

2014, public roundtable to consider certain issues regarding position

limits for physical commodity derivatives. The roundtable focused on

hedges of a physical commodity by a commercial enterprise, including

gross hedging, cross-commodity hedging, anticipatory hedging, and the

process for obtaining a non-enumerated exemption. Discussion included

the setting of spot month limits in physical-delivery and cash-settled

contracts and a conditional spot-month limit exemption. Further, the

roundtable included discussion of: the aggregation exemption for

certain ownership interests of greater than 50 percent in an owned

entity; and aggregation based on substantially identical trading

strategies. As well, the Commission invited comment on whether to

provide parity for wheat contracts in non-spot month limits. In

conjunction with the roundtable, staff questions regarding these topics

were posted on the Commission’s Web site.

To provide commenters with a sufficient period of time to respond

to questions raised and points made at the roundtable, the Commission

is further extending the comment periods for the Position Limit

Proposal and the Aggregation Proposal. Thus, both comment periods will

end on August 4, 2014.

Issued in Washington, DC, on June 27, 2014, by the Commission.

Christopher J. Kirkpatrick,

Acting Secretary of the Commission.

Note: The following appendix will not appear in the Code of

Federal Regulations.

Appendix to Position Limits for Derivatives and Aggregation of

Positions Extension of Comment Periods–Commission Voting Summary

On this matter, Chairman Massad and Commissioners O’Malia, Wetjen,

and Giancarlo voted in the affirmative. No Commissioner voted in the

negative. Commissioner Bowen did not participate in this matter.

[FR Doc. 2014-15618 Filed 7-2-14; 8:45 am]

BILLING CODE 6351-01-P

Last Updated: March 7, 2016