The Aggregation of Position Limits
Summary
The Asset Management Group of SIFMA (SIFMA AMG) provides comments to the CFTC on the proposed rulemaking, Aggregation of Positions, RIN 3038-AD82.
SIFMA AMG believes that the CFTC has made some positive steps in this 2013 Aggregation NPRM, but has some significant concerns with respect to certain aspects of the proposal, and shares their recommendations in the following areas in particular:
- Owned Entity Aggregation;
- Investment in Accounts or Pools with “Substantially Identical Trading Strategies;”
- Passive Investors in Commission Regulation 4.13 Exempt Pool Aggregation Requirement; and
- Independent Account Controller Exemption.
Excerpt
Melissa Jurgens
Secretary
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, N.W.
Washington DC 20581
Re: Notice of Proposed Rulemaking – Aggregation of Positions (RIN 3038-AD82)
The Asset Management Group (“AMG”) 1 of the Securities Industry and Financial Markets Association (“SIFMA”) appreciates the opportunity to provide the Commodity Futures
Trading Commission (the “Commission”) with comments regarding the “Aggregation of Positions” proposed rulemaking (“2013 Aggregation NPRM”). 2 We believe that the Commission has made some positive steps in this 2013 Aggregation NPRM, but we have some significant concerns with respect to certain aspects of the proposal, in the following areas in particular:
- Owned Entity Aggregation. The Commission should not adopt the owned entity aggregation as proposed. Requiring passive investors, which include, without limitation, registered and private commodity pools and other investment vehicles, pension funds and other institutional clients of asset managers, that have no control over, or even knowledge of, the specific commodity derivatives trading activities of owned entities they have invested in to aggregate the positions of such entities would impose significant costs that would unnecessarily diminish their ability to provide valuable capital investment and generate returns for their beneficiaries and participants, exceeds the scope of the Commission’s position aggregation authority under the Commodity Exchange Act (“CEA”), and is an unwarranted departure from the Commission’s historical aggregation approach. The proposed exemptions from this owned entity aggregation requirement under proposed rules 150.4(b)(2) (10 to 50% ownership) and (b)(3) (above 50% ownership) do not sufficiently address the flaws of the proposed approach to aggregating owned entity positions in the passive investment ownership context.