Federal Register, Volume 80 Issue 37 (Wednesday, February 25, 2015)

[Federal Register Volume 80, Number 37 (Wednesday, February 25, 2015)]

[Proposed Rules]

[Pages 10022-10026]

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

[FR Doc No: 2015-03834]

=======================================================================

———————————————————————–

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; provision of Table 11a; and

reopening of comment periods.

———————————————————————–

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 Energy and Environmental Markets

Advisory Committee has scheduled a public meeting to be held on

February 26, 2015, which will consider, among other matters, exemptions

for bona fide hedging positions. In conjunction with the meeting of the

Commission’s Energy and Environmental Markets Advisory Committee, the

Commission will post an agenda and associated materials, if any, on the

Commission’s Web site; additionally, access to a video webcast of the

meeting will be added to the Web site. In addition, and in connection

with the meeting, the Commission is providing counts of the unique

persons over percentages of the 28 proposed position limit levels

(currently provided in Table 11 of the Position Limits Proposal based

on counts from the period of January 1, 2011, to December 31, 2012

period) in a new table, Table

[[Page 10023]]

11a, based on counts from the period of January 1, 2013, to December

31, 2014. To provide commenters with a sufficient period of time to

respond to questions raised and points made at the Energy and

Environmental Markets Committee meeting, as well as to provide an

opportunity to comment on Table 11a, the Commission will reopen the

comment periods for an additional 30 days. The Commission is providing

notice that comments may be made on the issues addressed at the meeting

or in the associated materials posted to the Commission’s Web site, as

they pertain to energy commodities. Furthermore, comments may be made

on Table 11a, showing counts of the unique persons over percentages of

the 28 proposed position limit levels based on counts from the period

of January 1, 2013, to December 31, 2014.

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 February

26, 2015, and will close on March 28, 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

—————————————————————————

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).

—————————————————————————

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.

—————————————————————————

8 See id. at 68947.

—————————————————————————

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

—————————————————————————

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

—————————————————————————

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 document in the Federal Register on May 29, 2014 (79 FR

30762), reopening

[[Page 10024]]

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 a document in the Federal Register on July 3, 2014

(79 FR 37973), further extending the comment periods to August 4, 2014.

The Commission’s Agricultural Advisory Committee met on December 9,

2014. The agenda adopted for the meeting included consideration, among

other matters, of two issues associated with the Position Limits

rulemaking: Deliverable supply and exemptions for bona fide hedging

positions. In conjunction with the meeting of the Commission’s

Agricultural Advisory Committee, the Commission posted questions and

presentation materials on the Commission’s Web site; additionally,

access to a video webcast of the meeting was added to the Web site.10

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 reopened both the Position

Limit Proposal and the Aggregation Proposal for an additional 45-day

comment period.11

—————————————————————————

10 Questions, presentation materials, and a video webcast have

been made available at http://www.cftc.gov/PressRoom/Events/opaevent_aac120914.

11 See 79 FR 71973 (Dec. 4, 2014). The Commission also

provided notice and clarification that, in addition to commenting on

the agenda issues noted in the December 4, 2014, Federal Register

release providing notice of the reopened comment period, comments

could be made on the issues addressed at the meeting or in

associated materials posted to the Commission’s Web site, as they

pertained to agricultural commodities, including 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 pertained to agricultural commodities. See also 80

FR 200 (Jan. 5, 2015).

—————————————————————————

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. Reopening of Comment Period

The Commission’s Energy and Environmental Markets Advisory

Committee has scheduled a meeting on February 26, 2015. The agenda

adopted for the meeting includes consideration of exemptions for bona

fide hedging positions. In conjunction with the meeting of the

Commission’s Energy and Environmental Markets Advisory Committee, the

Commission will post associated materials on the Commission’s Web site;

additionally, access to a video webcast of the meeting will be added to

the Web site. To provide interested persons with a sufficient period of

time to respond to questions raised and points made at the Energy and

Environmental Markets Advisory Committee meeting, the Commission is

reopening both the Position Limit Proposal and the Aggregation Proposal

for an additional 30-day comment period. The Commission is providing

notice that, in addition to commenting on the agenda issues, comments

may be made on the issues addressed at the meeting or in associated

materials posted to the Commission’s Web site, as they pertain to

energy commodities, including hedges of a physical commodity by a

commercial enterprise, as pertains to energy commodities.

In addition, and in connection with the Energy and Environmental

Markets Advisory Committee meeting, the Commission is providing counts

of the unique persons exceeding the 28 proposed position limit levels

(currently provided in Table 11 of the Positions Limits Proposal based

on counts from the period of January 1, 2011, to December 31, 2012

period 12) by certain specified percentages in a new table, Table

11a, based on counts from the period of January 1, 2013, to December

31, 2014. As was the case with Table 11, to provide the public with

additional information regarding the number of large position holders

in the past two calendar years, Table 11a provides counts of unique

persons over 60, 80, 100, and 500 percent of the levels of the position

limits proposed for 28 core referenced futures products.13 Note that

the 500 percent line is omitted from Table 11a for contracts where no

person held a position over that level. The Commission notes that in

addition to commenting on the agenda issues and on the issues addressed

at the meeting or in associated materials posted to the Commission’s

Web site, as they pertain to energy commodities, comments may be made

on Table 11a.

—————————————————————————

12 See 78 FR 75680 at 75731 (Dec. 12, 2013).

13 As is the case for Table 11, the Commission notes that

Table 11a is presented using the proposed initial limit levels,

without regard to alternatives presented in the proposed rule. See

78 FR at 75839 for the proposed initial limit levels for the spot

month. The Commission also proposed alternatives methods for setting

initial levels for the spot month. See FR at 75727-8. The proposed

initial limit levels for the non-spot months are found at 78 FR

76787 (Dec. 19, 2013). The Commission also proposed an alternative

method to establish higher initial limit levels in the non-spot

months. See FR 78 at 75734.

Table 11a–Unique Persons Over Percentages of Proposed Position Limit Levels, January 1, 2013, to December 31,

2014

—————————————————————————————————————-

Unique persons over level

—————————————————————

Commodity type/core referenced Percent of Spot month

futures contract level (physical- Spot month Single month All months

delivery) (cash-settled)

—————————————————————————————————————-

Legacy Agricultural

—————————————————————————————————————-

CBOT Corn (C)………………. 60 206 — 12 25

80 147 — 4 7

100 49 — (*) 5

500 4 — — —

CBOT Oats (O)………………. 60 (*) — 11 12

80 (*) — 6 8

100 — — (*) 5

CBOT Soybeans (S)…………… 60 127 — 14 18

80 90 — 9 11

100 31 — 6 9

500 9 — — —

CBOT Soybean Meal (SM)………. 60 53 — 42 54

80 31 — 12 19

[[Page 10025]]

 

100 16 — 6 11

500 (*) — — —

CBOT Soybean Oil (SO)……….. 60 82 — 31 38

80 51 — 10 18

100 18 — 5 11

500 (*) — — —

CBOT Wheat (W)……………… 60 39 — 35 33

80 30 — 12 17

100 10 — 8 11

500 (*) — — —

ICE Cotton No. 2 (CT)……….. 60 16 — 15 22

80 10 — 10 14

100 7 — 8 10

500 4 — — —

KCBT Hard Winter Wheat (KW)….. 60 17 — 32 39

80 7 — 16 27

100 (*) — 12 12

MGEX Hard Red Spring Wheat (MWE) 60 7 — 33 36

80 4 — 20 29

100 (*) — 15 21

—————————————————————————————————————-

Other Agricultural

—————————————————————————————————————-

CBOT Rough Rice (RR)………… 60 9 — 6 5

80 7 — 4 4

100 (*) — (*) (*)

CME Milk Class III (DA)……… 60 NA 5 (*) 26

80 NA 4 — 15

100 NA (*) — 10

CME Feeder Cattle (FC)………. 60 NA 113 8 14

80 NA 70 (*) 8

100 NA 28 — 5

CME Lean Hog (LH)…………… 60 NA 98 19 34

80 NA 74 8 24

100 NA 45 (*) 14

CME Live Cattle (LC)………… 60 51 — 14 29

80 7 — 7 16

100 5 — (*) 8

ICUS Cocoa (CC)…………….. 60 4 — 47 42

80 4 — 38 30

100 (*) — 21 21

ICE Coffee C (KC)…………… 60 14 — 30 32

80 10 — 13 16

100 6 — 8 11

500 (*) — — —

ICE FCOJ-A (OJ)…………….. 60 5 — 7 7

80 5 — 4 4

100 5 — 4 4

ICE Sugar No. 11 (SB)……….. 60 55 — 41 39

80 42 — 31 29

100 16 — 21 22

500 (*) — — —

ICE Sugar No. 16 (SF)……….. 60 5 — 6 13

80 5 — 6 11

100 4 — 5 11

—————————————————————————————————————-

Energy

—————————————————————————————————————-

NYMEX Henry Hub Natural Gas (NG) 60 187 236 (*) 7

80 142 205 (*) (*)

100 83 187 — (*)

500 (*) 46 — —

NYMEX Light Sweet Crude Oil (CL) 60 135 100 (*) 12

80 95 87 (*) 7

100 44 65 — (*)

500 — — — —

NYMEX NY Harbor ULSD (HO)……. 60 76 68 13 16

[[Page 10026]]

 

80 49 63 7 9

100 31 44 (*) 6

500 — 5 — —

NYMEX RBOB Gasoline (RB)…….. 60 97 57 26 30

80 67 52 15 17

100 36 37 11 12

500 — (*) — —

—————————————————————————————————————-

Metals

—————————————————————————————————————-

COMEX Copper (HG)…………… 60 12 — 61 62

80 9 — 37 40

100 4 — 29 30

COMEX Gold (GC)…………….. 60 13 — 22 24

80 9 — 14 14

100 5 — 10 11

COMEX Silver (SI)…………… 60 9 — 34 32

80 4 — 20 21

100 (*) — 16 16

NYMEX Palladium (PA)………… 60 9 — 12 13

80 5 — 9 5

100 (*) — 4 4

NYMEX Platinum (PL)…………. 60 11 — 29 29

80 7 — 18 18

100 (*) — 9 9

—————————————————————————————————————-

Legend:

* means fewer than 4 unique owners exceeded the level.

— means no unique owner exceeded the level.

NA means not applicable.14

Both comment periods will reopen on February 26, 2015, and will

close on March 28, 2015.

—————————————————————————

14 Table notes: (1) Aggregation exemptions were not used in

computing the counts of unique persons; (2) the position data was

for futures, futures options and swaps that are significant price

discovery contracts (SPDCs).

Issued in Washington, DC, on February 19, 2015, by the

Commission.

Christopher J. Kirkpatrick,

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 Reopening of Comment Periods–Commission Voting Summary

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

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

negative.

[FR Doc. 2015-03834 Filed 2-24-15; 8:45 am]

BILLING CODE 6351-01-P

 

Last Updated: February 25, 2015