Regulatory Action and Position Limits

The Asset Management Group of SIFMA (SIFMA AMG) provides comments to the Commodity Futures Trading Commission (CFTC) on the CFTC’s proposal Position Limits on Derivatives, RIN 3038-AD11.

SIFMA AMG recognizes that regulatory action may be appropriate under certain circumstances in order to achieve the goals set forth in the Commodity Exchange Act (CEA) for setting position limits, namely to prevent market manipulation, protect against excessive speculation, ensure sufficient market liquidity for bona fide hedgers, and deter disruption to price discovery, including preventing price discovery from moving to foreign boards of trade (FBOTs), but continues to question whether position limits would achieve these goals, particularly as proposed under the 2013 NPRM.

SIFMA AMG believes that under the CEA, the CFTC must find that speculative position limits are “necessary” and “appropriate” and balance several countervailing statutory factors on a contract-by-contract basis before promulgating position limits rules. The CFTC has not met these statutory requirements in promulgating the 2013 NPRM. The group requests that the CFTC withdraw this proposal to make the needed findings.