CMC Awaits CFTC Decision on Position Limits

After months of deliberation, the CFTC will vote on a final rulemaking tomorrow morning at 9:30 am ET.  CMC will be watching for resolution on these issues:

  • Bona Fide Hedge Definition
    • Will the Commission recognize anticipatory merchandizing transactions based on throughput and not fixed-capacity?
    • Will the Commission retain the current 30-day reporting regime or will it move to a daily reporting requirement?
  • Position Limits
    • How will the Commission handle the CME proposal for ag markets?
    • What will the effective date be?
    • Will long-term contracts be included in deliverable supply?
  • Class Limits
    • Will the CFTC allow netting of futures and swap positions?
  • Conditional Limits
    • Will the Commission address conditional limits in the final rulemaking or will it treat this issue differently?
    • Will ag markets and energy markets receive disparate treatment?
  • Aggregation
    • Beyond the independent controller exemption, are any additional exemptions made for subsidiaries of non-financial firms?

CMC Discussed Several Legislative and Regulatory Topics on our Members-only Policy Call

Earlier this week, on CMC’s members-only policy call, CMC staff and members discussed various legislative and regulatory topics, including joint initiatives taken by the SEC and CFTC on international swaps regulations, and conversations that the CMC is having with the CFTC on bona-fide hedging. Bona-fide hedging was the topic that members were most interested in discussing in greater detail.

CMC Meets with Sen. Scott Brown’s Staff

CMC met with Senator Scott Brown’s Legislative Director today. Although Sen. Brown (Republican – Massachusetts) does not sit on the Banking or Agriculture Committees, he is very interested in derivatives issues because many of his constituent firms in Massachusetts (especially financial companies) are heavy users of derivatives. Being a moderate Republican, he is also a very important swing vote in the Senate on several pieces of legislation. CMC discussed the following issues at a broad 30,000-foot level with the staffer: position limits and bona-fide hedging, and international co-ordination of derivatives regulations across various jurisdictions. Sen. Brown’s office is also very interested in forex swaps, and expressed an interest to continue an ongoing discussion with CMC on that topic.