Federal Register, Volume 79 Issue 233 (Thursday, December 4, 2014)

[Federal Register Volume 79, Number 233 (Thursday, December 4, 2014)]

[Proposed Rules]

[Pages 71973-71975]

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

[FR Doc No: 2014-28482]

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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; reopening 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. The Commission’s Agricultural Advisory Committee has

scheduled a public meeting to be held on December 9, 2014, which will

consider, among other matters, deliverable supply and exemptions for

bona fide hedging positions. To provide commenters with a sufficient

period of time to respond to questions raised and points made at the

Agricultural Advisory Committee meeting, the Commission is reopening

the comment periods for an additional 45 days. Comments should be

limited to the

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following issues as they pertain to agricultural commodities: Hedges of

a physical commodity by a commercial enterprise; and the process for

estimating deliverable supplies used in the setting of spot month

limits.

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 reopen on December 9,

2014, and close on January 22, 2015.

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: Christopher Kirkpatrick, 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 components 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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The Commission published the Position Limits Proposal and the

Aggregation Proposal separately because it believes that the proposed

amendments regarding aggregation of positions could be appropriate

regardless of whether the Position Limits Proposal is finalized.8 If

the Aggregation Proposal is finalized first, the modifications would

apply to the current position limits regime for futures and option

contracts on nine enumerated agricultural commodities. If the Position

Limits Proposal is subsequently finalized, the modifications in the

Aggregation Proposal would apply to the position limits regime for 28

exempt and agricultural commodity futures and options contracts and the

physical commodity swaps that are economically equivalent to such

contracts.

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8 See Aggregation Proposal, 78 FR at 68947.

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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 end date as

the comment period for the Position Limits Proposal.9

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

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Subsequent to publication of the Position Limits Proposal and the

Aggregation Proposal, the 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

published a notice in the Federal Register on May 29, 2014, reopening

the comment periods for the Position Limit Proposal and the Aggregation

Proposal for three weeks, from June 12, 2014 to July 3, 2014. The

Commission published notice in the Federal Register on July 3, 2014,

further extending the comment periods to August 4, 2014.

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.

[[Page 71975]]

II. Reopening of Comment Period

The Commission’s Agricultural Advisory Committee has scheduled a

meeting to be held on December 9, 2014, and adopted an agenda that

includes consideration, among other matters, of two issues associated

with the Position Limits rulemaking: Deliverable supply and exemptions

for bona fide hedging positions. To provide interested persons with a

sufficient period of time to respond to questions raised and points

made at the Agricultural Advisory Committee meeting, the Commission is

reopening both the Position Limit Proposal and the Aggregation Proposal

for an additional 45-day comment period. Comments should be limited to

the following issues as they pertain to agricultural commodities:

Hedges of a physical commodity by a commercial enterprise; and the

process for estimating deliverable supplies used in the setting of spot

month limits, as each pertains to agricultural commodities.

Both comment periods will reopen on December 9, 2014, and close on

January 22, 2015.

Issued in Washington, DC, on December 1, 2014, by the

Commission.

Christopher J. Kirkpatrick,

Secretary of the Commission.

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

Federal Regulations.

Appendices to Position Limits for Derivatives and Aggregation of

Positions Reopening of Comment Periods–Commission Voting Summary and

Commissioner’s Statement

Appendix 1–Commission Voting Summary

On this matter, Chairman Massad and Commissioners Wetjen, Bowen,

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

negative.

Appendix 2–Statement of Commissioner Sharon Y. Bowen

I support this reopening of the comment period for our position

limits rule. As I’ve previously said, this is a key rule and we are

well-served by giving stakeholders another chance to comment.

However, we cannot allow this rule to linger indefinitely on our

docket. It has been over a year since we re-proposed this rule and

nearly four years since it was first proposed. We need to finish

this rule next year, and I believe we can release a final rule by

spring 2015.

As we continue to finalize and fine-tune our Dodd-Frank

rulemakings, we have to avoid the temptation to simply ratchet back

or weaken prior versions of those rules. In fact, I think the best

way of viewing changes to our rules is not that we are tweaking

them, but rather that we are enhancing them. Sometimes that may mean

making the rules more cost-effective and leaner, but at other times

that will mean making them stronger than before. Enhancing a rule

can mean reducing burdens to business while strengthening

protections for the public. I believe our position limits proposal

is exactly the sort of rule that needs to be enhanced, and I look

forward to working with my fellow Commissioners to finish and

release this rule in a timely fashion.

[FR Doc. 2014-28482 Filed 12-3-14; 8:45 am]

BILLING CODE 6351-01-P

Last Updated: December 4, 2014