[Federal Register Volume 69, Number 116 (Thursday, June 17, 2004)]
[Proposed Rules]
[Pages 33874-33878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13678]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 150


Petitions of the Chicago Board of Trade, the Kansas City Board of 
Trade, and the Minneapolis Grain Exchange Pursuant to Commission 
Regulation 13.2 for Repeal or Amendment of Speculative Position Limits 
in Commission Regulation 150.2

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of petitions for amendment, or repeal of a rule, and 
request for comment on the petitions.

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SUMMARY: The Chicago Board of Trade (CBT), the Kansas City Board of 
Trade (KCBT), and the Minneapolis Grain Exchange (MGE) have submitted 
separate petitions to the Commodity Futures Trading Commission 
(Commission) seeking repeal or amendment of the speculative position 
limits set out in Commission regulation 150.2 (Federal speculative 
position limits). In addition, the New York Board of Trade, while not 
submitting a formal petition of its own, has submitted a letter in 
support of the CBT petition. The Commission believes that publication 
of the petitions for comment is in the public interest, will assist the 
Commission in considering the views of interested persons, and is 
consistent with the Commodity Exchange Act (Act) and Commission 
regulations. Copies of the petitions will be available for inspection 
at the Office of the Secretariat, Commodity Futures Trading Commission, 
Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581, or 
on the Commission's website at http://www.cftc.gov. Copies of the 
proposed amendments can also be obtained through the Office of the 
Secretariat by mail at the above address or by phone at (202) 418-5100.

DATES: Comments must be received on or before August 16, 2004.

ADDRESSES: Comments should be submitted to Jean A. Webb, Secretary, 
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st 
Street, NW., Washington, DC 20581. Comments also may be sent by 
facsimile to (202) 418-5521, or by electronic mail to 
[email protected]. Reference should be made to ``Petitions for Repeal 
or Amendment of Federal Speculative Position Limits.'' Comments may 
also be submitted by connecting to the Federal eRulemaking Portal at 
http://www.regulations.gov and following comment submission 
instructions.

FOR FURTHER INFORMATION CONTACT: Clarence Sanders, Attorney, Division 
of Market Oversight, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581, 
telephone (202) 418-5068, facsimile number (202) 418-5507, electronic 
mail [email protected]; or Martin Murray, Industry Economist, Division 
of Market Oversight, telephone (202) 418-5276, facsimile number (202) 
418-5507, electronic mail [email protected].

SUPPLEMENTARY INFORMATION:

[[Page 33875]]

I. Introduction

    Speculative position limits have been a tool for the regulation of 
the futures markets for over a half-century. The current regulatory 
framework is two-pronged. Under the first prong, the Commission 
establishes and enforces speculative position limits for futures 
contracts on various agricultural commodities. These Federal limits are 
enumerated in Commission regulation 150.2, and apply to the following 
futures and option markets: CBT corn, oats, soybeans, wheat, soybean 
oil, and soybean meal; MGE hard red spring wheat and white wheat; New 
York Cotton Exchange (NYCE) cotton No. 2; and KCBT hard winter 
wheat.\1\ Under the second prong, individual designated contract 
markets (DCMs) establish and enforce their own speculative position 
limits or position accountability provisions, subject to Commission 
oversight and separate authority to enforce exchange-set speculative 
position limits that the Commission has approved.
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    \1\ For each of these markets, regulation 150.2 establishes a 
spot month limit, a non-spot individual month limit, and an all-
months-combined speculative position limit.
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    The CBT, by letters dated March 26, 2004, and April 27, 2004, the 
KCBT, by a letter dated April 27, 2004, and the MGE, by a letter dated 
May 20, 2004, submitted petitions to the Commission pursuant to 
Commission regulation 13.2.\2\ Specifically, the CBT petition requests 
that the Commission repeal regulation 150.2 and thereby eliminate the 
Federal speculative position limits for all commodity markets 
enumerated under that rule. The KCBT petition requests that the 
Commission repeal only that part of regulation 150.2 pertaining to 
Federal speculative position limits for the KCBT commodity markets 
(i.e., hard winter wheat). The MGE petition also seeks repeal of the 
regulation 150.2 as it relates to Federal speculative limits for the 
MGE market in hard red spring wheat but does not address that DCM's 
market in white wheat, which is currently dormant. In addition, the New 
York Board of Trade (NYBOT), the parent company of NYCE, while not 
submitting a formal petition of its own, submitted a May 27, 2004, 
letter stating that it ``fully supports the CBOT petition.''
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    \2\ Commission regulation 13.2 states in pertinent part that 
``any person may file a petition with the Secretariat of the 
Commission for the issuance, amendment, or repeal of a rule of 
general application.''
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    Under all three petitions, in place of the repealed speculative 
position limits, designated contract markets would bear the sole 
responsibility for setting their own position limits or position 
accountability standards, subject to Commission oversight and 
enforcement. In this regard, the CBT has previously established its own 
exchange-set speculative position limits that are independent of, but 
set at the same or lower levels as, the Federal limits. The MGE and 
NYCE incorporate the existing Federal limits by reference in their 
respective rulebooks; they have not established independent limits on 
speculative positions for these commodity futures markets. Likewise, 
the KCBT currently has no provisions pertaining to speculative position 
limits for hard winter wheat. Therefore, if Federal limits were 
abolished, these exchanges would need to adopt speculative position 
limits or position accountability provisions, as appropriate, to comply 
with Core Principle 5 and the acceptable practices thereunder.
    Although the CBT, KCBT, and MGE petitions differ in scope, they are 
similar in topical substance and for this reason are being combined for 
purposes of publishing notice and requesting comment.

II. Background

A. Statutory Framework

    During the past half-century, Congress consistently has expressed 
confidence in the use of speculative position limits as an effective 
means of preventing unreasonable or unwarranted price fluctuations. See 
H.R. Rep. No. 421, 74th Cong., 1st Sess. 1 (1935). In this regard, 
section 4a(a) of the Act, 7 U.S.C. 6a(a), states that:

    Excessive speculation in any commodity under contracts of sale 
of such commodity for future delivery made on or subject to the 
rules of contract markets or derivatives transaction execution 
facilities causing sudden or unreasonable fluctuations or 
unwarranted changes in the price of such commodity, is an undue and 
unnecessary burden on interstate commerce in such commodity.

    Accordingly, section 4a(a) provides the Commission with the 
authority to:

    Fix such limits on the amounts of trading which may be done or 
positions which may be held by any person under contracts of sale of 
such commodity for future delivery on or subject to the rules of any 
contract market or derivatives transaction execution facility as the 
Commission finds are necessary to diminish, eliminate, or prevent 
such burden.

    This longstanding statutory framework providing for Federal 
speculative position limits was supplemented with the passage of the 
Futures Trading Act of 1982, which acknowledged the role of exchanges 
in setting their own speculative position limits. The 1982 legislation 
also provided, under section 4a(e) of the Act, that limits set by 
exchanges and approved by the Commission were subject to Commission 
enforcement.
    Finally, the Commodity Futures Modernization Act (CFMA) of 2000 
established designation criteria and core principles with which a DCM 
must comply to maintain designation. Among these, Core Principle 5 in 
section 5(d) of the Act states:

    Position Limitations or Accountability--To reduce the potential 
threat of market manipulation or congestion, especially during 
trading in the delivery month, the board of trade shall adopt 
position limitations or position accountability for speculators, 
where necessary and appropriate.

B. Regulatory Framework

    As noted above, the current regulatory framework of speculative 
position limits is two-pronged: (1) For a limited number of 
agricultural commodities, Federal speculative position limits have been 
set and are enforced by the Commission; and (2) for virtually all other 
commodities under Commission jurisdiction, speculative position limits 
or position accountability provisions have been established and 
enforced by individual DCMs, subject to Commission oversight and 
enforcement. An abbreviated history of the regulatory framework 
follows.
    Federal speculative position limits were first promulgated by the 
Commodity Exchange Commission (CEC),\3\ a predecessor of the 
Commission, for futures contracts in grains (then defined as wheat, 
corn, oats, barley, flaxseed, grain sorghums, and rye) on December 22, 
1938 (3 FR 4136). A Federal speculative position limit was established 
for cotton on August 26, 1940 (5 FR 3198), and for soybeans on August 
13, 1951 (16 FR 8107). The CEC also established Federal speculative 
position limits for fats and oils, including soybean oil, on April 1, 
1953, but soon suspended the enforcement of those limits and eventually 
revoked them (33 FR 7624, May 23, 1968). At various other times, the 
CEC also established Federal speculative position limits on lard, 
onions, eggs, and potatoes.
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    \3\ Prior to the CFTC's creation in 1974, the Commodity Exchange 
Authority administered the Commodity Exchange Act under the 
direction of the Secretary of Agriculture and the Commodity Exchange 
Commission, which was composed of the Secretaries of Agriculture and 
Commerce and the Attorney General.
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    The CEC never established Federal speculative position limits for 
many of

[[Page 33876]]

the agricultural commodities subject to its jurisdiction, including 
butter, wool, wool tops, livestock, and livestock products. It is worth 
noting that the Chicago Mercantile Exchange (CME) began trading pork 
belly futures in 1961, live cattle futures in 1964, and live hog 
futures in 1966. Even before those contracts were added to the list of 
regulated commodities in 1968, the CME, under its own authority, 
established speculative position limits for those contracts. While the 
record is unclear on this matter, the existence of exchange-set 
speculative position limits may explain why the CEC (and its successor, 
the Commission) never determined that Federal speculative position 
limits were necessary in livestock futures contracts.
    The Commodity Futures Trading Commission Act of 1974 (CFTC Act) 
created the Commission and granted it exclusive jurisdiction over 
futures trading in all commodities, not just specifically enumerated 
agricultural commodities. The CFTC Act transferred authority over 
Federal limits to the Commission from the CEC, but did not otherwise 
substantively amend section 4a. The CFTC Act also gave the Commission 
the authority to oversee, and, if necessary, to amend, exchange rules, 
including speculative position limit provisions proposed by exchanges. 
In 1981, the Commission, for the first time, required exchanges to 
establish speculative position limits for all commodities not subject 
to Federal limits (see 45 FR 50938, October 16, 1981). Provisions for 
the establishment of exchange-set speculative position limits are 
contained in Commission regulation 150.5.\4\ In addition, as noted 
above, the Futures Trading Act of 1982 modified section 4a of the Act 
to provide the Commission with the authority to separately enforce 
exchange-set limits that have been approved by the Commission.
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    \4\ Provisions regarding the establishment of exchange-set 
speculative position limits were originally set forth in CFTC 
regulation 1.61. In 1999, the Commission simplified and reorganized 
its rules by relocating the substance of regulation 1.61's 
requirements to part 150 of the Commission's rules, thereby 
incorporating within part 150 provisions for both Federal 
speculative position limits and exchange-set speculative position 
limits (see 64 FR 24038, May 5, 1999).
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    Since the Commission's founding, it has retained Federal 
speculative position limits on those commodities where such limits had 
previously been established by the CEC. For other commodities, the 
Commission has allowed exchanges to set speculative position limits or 
position accountability provisions, subject to Commission oversight and 
enforcement. The one exception is that the Commission established 
Federal speculative position limits in 1987 on soybean oil and soybean 
meal (52 FR 38914, October 20, 1987), at the request of the CBT, in 
order to make the regulatory treatment of soybean products consistent 
with the regulatory treatment of soybeans.
    In 2000, the enactment of the CFMA resulted in the establishment of 
designation criteria and core principles with which a DCM must comply 
to maintain its designation, including Core Principle 5, as noted 
above. To implement these new statutory provisions, the Commission 
adopted part 38 to the Commission's regulations, which provides 
guidance and acceptable practices concerning the core principles under 
section 5(d) of the Act (66 FR 42256, August 10, 2001).\5\ Regarding 
compliance with Core Principle 5 (position limitations or 
accountability), the acceptable practices provide, in relevant part, 
that spot-month limits should be adopted for markets based on 
commodities having more limited deliverable supplies or where otherwise 
necessary to minimize the susceptibility of the market to manipulation 
or price distortions, and that markets may elect not to provide all-
months-combined and non-spot individual month limits. In addition, 
under part 38, the existing provisions governing the establishment of 
exchange-set speculative position limits contained in regulation 150.5 
may still serve as acceptable practices.
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    \5\ Part 38 specifically notes, however, that ``The guidance * * 
* is illustrative only of the types of matters a board of trade may 
address, as applicable, and is not intended to be a mandatory 
checklist.''
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III. The Exchange Petitions for Repeal or Amendment of the Speculative 
Position Limits in Commission Regulation 150.2

A. Introduction

    As noted above, the CBT, KCBT, and MGE petitions essentially seek 
to repeal, in whole or in part, the Federal limits set out in 
regulation 150.2. In place of the repealed speculative position limits, 
DCMs would bear the sole responsibility for setting their own position 
limits or position accountability standards, subject to Commission 
oversight. In this regard, as noted above, the CBT currently specifies 
speculative position limits independently of, but at the same or lower 
levels as, the existing Federal speculative position limits. However, 
should the Commission repeal Federal speculative position limits, then 
the exchange would be free to retain those limits or to adjust them, as 
long as the exchange-set speculative position limits or position 
accountability standards comply with Core Principle 5. In contrast, the 
MGE and NYCE specify speculative position limits for their respective 
commodity markets that are currently subject to Federal limits only by 
reference to the provisions of regulation 150.2, and the KCBT does not 
have any specifications regarding speculative position limits for hard 
winter wheat. Consequently, if the Commission were to repeal Federal 
limits, the MGE (for hard red spring wheat and white wheat), the NYCE 
(for cotton No. 2), and the KCBT (for hard winter wheat) would need to 
adopt speculative position limits or position accountability provisions 
to comply with Core Principle 5 and the acceptable practices set forth 
in Part 38 of the Commission's regulations.
    As discussed below, the CBT, KCBT, and MGE petitions include 
analytical information in support of their respective propositions and, 
additionally, seek other action either as a supplement, or an 
alternative, to the requested repeal of the limits in regulation 150.2.

B. The CBT Petition

    Fundamentally, the CBT petition seeks to have the Commission repeal 
the Federal limits set out in regulation 150.2 and to allow designated 
contract markets to bear the sole responsibility for setting their own 
position limits, subject to Commission oversight. In support of this 
initiative, the CBT notes that the CFMA has substituted a more flexible 
regulatory model, based upon core principles, for the former rules-
based approach to regulation. In this respect, the CBT notes that Core 
Principle 5 of section 5(d) of the Act states that:

    To reduce the potential threat of market manipulation or 
congestion, especially during trading in the delivery month, the 
board of trade shall adopt position limitations or position 
accountability for speculators, where necessary and appropriate.

The CBT acknowledges that the Commission retains authority under 
section 4a(a) of the Act to establish speculative position limits, but 
concludes that Core Principle 5 of the CFMA should be interpreted to 
place that responsibility upon the exchanges.
    As a secondary initiative, the CBT asks that, if the Commission 
determines to retain Federal spot month speculative position limits, at 
a minimum it should consider eliminating the single-month and all-
months-combined limits from regulation 150.2. In support of this 
proposition, the CBT cites the

[[Page 33877]]

discussion of acceptable practices for spot-month limits under Core 
Principle 5 in appendix B to part 38 of the Commission's regulations. 
For markets having limited deliverable supplies, the CBT notes that the 
acceptable practices state ``[m]arkets may elect not to provide all-
months-combined and non-spot month limits.''
    Finally, as an alternative to repeal of all or part of the limits 
included in regulation 150.2, the CBT requests that the Commission 
amend that regulation to increase the single-month and all-months-
combined speculative position limits for the corn, soybeans, wheat, 
soybean oil, and soybean meal contracts traded at the CBT. Under this 
part of the petition, the CBT seeks to increase the speculative 
position limit levels as set out below.

------------------------------------------------------------------------
                                                                  CBT-
                    CBT contract                       Current  proposed
                                                        level     level
------------------------------------------------------------------------
                           Single Month Limit
------------------------------------------------------------------------
Corn................................................     5,500    10,000
Soybeans............................................     3,500     6,500
Wheat...............................................     3,000     4,500
Soybean Oil.........................................     3,000     4,500
Soybean Meal........................................     3,000     4,500
-----------------------------------------------------
                        All-Months-Combined Limit
------------------------------------------------------------------------
Corn................................................     9,000    17,000
Soybeans............................................     5,500    10,000
Wheat...............................................     4,000     5,500
Soybean Oil.........................................     4,000     6,500
Soybean Meal........................................     4,000     6,000
------------------------------------------------------------------------

    The CBT cites several criteria in support of the levels proposed in 
this part of the petition. Among these, the CBT notes that it conducted 
a survey of the agricultural trading community and found that a 
majority of respondents supported an increase in single-month and/or 
all-months-combined limits. Additionally, the CBT notes that most 
respondents supporting an increase in limits also sought to retain the 
same approximate ratio of single-month to all-months-combined limits. 
The CBT asserts that the higher levels conform to this standard and 
preserve the same approximate ratio as sought by supporting survey 
respondents.
    The CBT also comments that the proposed increases are consistent 
with the percentage of open interest formula included in regulation 
150.5.\6\ In this regard, the CBT acknowledges that the formula applies 
to exchange-set limits not enumerated in Regulation 150.2 but also 
observes that the Commission applied this same formula when it 
initiated action to increase CBT agricultural commodity limits to their 
present levels (57 FR 12766, April 13, 1992).
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    \6\ Regulation 150.5 stipulates that individual, non-spot month 
or all-months-combined limit levels should be set at no greater than 
1,000 contracts at the time of initial listing of agricultural 
commodities. The regulation further provides that adjustments to 
those levels may be made provided that the resultant levels are no 
greater than 10% of the average combined futures and delta-adjusted 
option month-end open interest for the most recent calendar year up 
to 25,000 contracts with a marginal increase of 2.5% thereafter, or 
be based on position sizes customarily held by speculative traders 
on the contract market, which shall not be extraordinarily large 
relative to total open positions in the contract, the breadth and 
liquidity of the cash market underlying each delivery month and the 
opportunity for arbitrage between the futures markets and the cash 
market.
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    Finally, the CBT asserts that the proposed increases are supported 
by the distribution of large trader positions in the relevant markets. 
In support of this, the CBT contends that the Commission has 
acknowledged that the distribution of speculative traders is a relevant 
consideration in determining limit levels and could conceivably support 
higher limits than justified under the open interest formula where such 
levels ``would constrain the normal pattern of speculative trading.'' 
(57 FR 12766, April 13, 1992).

C. The KCBT Petition

    As with the CBT petition, the KCBT seeks the repeal of Federal 
limits for the KCBT wheat contract as set out in regulation 150.2, but 
in contrast to the CBT petition, the KCBT seeks to operate its hard 
winter wheat contract without any exchange-set speculative position 
limits. Like the CBT, the KCBT finds support for this initiative in 
Core Principle 5 of the CFMA, and emphasizes the core principle's focus 
on the role of speculative limits in reducing the potential threat of 
manipulation.
    In discussing this aspect of its petition, the KCBT notes that Core 
Principle 5 of section 5(d) of the Act requires DCMs to adopt 
speculative position limits or position accountability provisions to 
reduce the potential threat of market manipulation or congestion, 
especially during trading in the delivery month, where necessary and 
appropriate. The KCBT further notes that the acceptable practices for 
speculative position limits under Core Principle 5 in appendix B to 
part 38 of the Commission's regulations instructs that spot-month 
limits should be adopted for commodity markets ``having more limited 
deliverable supplies,'' and are to be based upon an analysis of 
deliverable supplies and the history of spot-month liquidations for the 
applicable contract. In this respect, the KCBT notes, among other 
things, that gross underlying supply represents about 45 percent of 
U.S. wheat production. The KCBT concludes that the supply 
characteristics of its wheat contract, in combination with its 
surveillance practices, including heightened surveillance of spot-month 
liquidations, justify the elimination of spot-month limits from 
regulation 150.2, as well as single-month, and all-months-combined 
limits.
    If the Commission chooses to retain Federal speculative position 
limits, the KCBT petition also includes a request that the Commission 
continue to maintain ``parity'' in speculative position limit levels 
across wheat exchanges. In support of this portion of its petition, the 
KCBT includes a discussion of the volume and composition of trading in 
its wheat contract. Here, KCBT notes that significant trading volume is 
generated from arbitrage opportunities that exist between markets, and 
that differing limits between exchanges could affect the growth 
potential for inter-market spread volume. Following on this, the KCBT 
notes that growth in trading volume has been strong in recent years, 
and attributes this growth to the maintenance of parity in speculative 
limits between exchanges. In this respect, the KCBT also observes that 
the increased growth in volume since 1999 has also attracted commodity 
fund business to the KCBT wheat market, and again observes that, if 
parity in speculative limits is not maintained, fund business could be 
lost to other markets with higher limits.
    Finally, the KCBT comments that reportable commercial traders 
continue to hold the majority of open interest in KCBT wheat futures, 
and that increasing speculative limits would permit an increase in 
speculative activity and in turn increase liquidity to the benefit of 
commercial users.

D. The MGE Petition

    In its petition, the MGE seeks the repeal of Federal limits for 
trading in MGE hard red spring wheat, and acknowledges its intention to 
establish speculative position limits for the MGE hard red spring wheat 
contract pursuant to Core Principle 5. Like the other petitioning DCMs, 
the MGE finds support for this initiative in Core Principle 5, and it 
also emphasizes that core principle's focus on speculative limits as a 
means of reducing the potential threat of manipulation.
    In this part of its petition, the MGE notes that Federal 
speculative limits for wheat were most recently increased during 1999, 
and concludes that this increase was intended to recognize the

[[Page 33878]]

greater interest and activity in wheat futures trading, including the 
hard red spring wheat contract at the MGE. The MGE states that it has 
not observed any increased susceptibility to manipulation or price 
distortion in the hard red spring wheat contract during the period 
following the 1999 increase in Federal speculative limits. Rather, the 
MGE remarks that the increase in Federal speculative limits appears to 
have added liquidity and stability to the marketplace.
    The MGE observes that Core Principle 5 requires DCMs to adopt 
position limits or position accountability for speculators where 
necessary and appropriate. The MGE further notes that the acceptable 
practices for under Core Principle 5 set forth in appendix B to part 38 
of the Commission's regulations provides that spot-month limits adopted 
for physical delivery markets are to be based upon an analysis of 
deliverable supplies and the history of spot-month liquidations for the 
applicable contract. In addressing this provision, the MGE notes that 
its review of the hard red spring wheat contract confirms the presence 
of an adequate deliverable supply before and during each delivery 
period, and that the largest position holders have been commercial 
traders. Thus, the MGE concludes that the hard red spring wheat 
contract's susceptibility to manipulation by speculators is limited by 
these characteristics. The MGE also observes that the current 
speculative limits mandated under regulation 150.2 have the effect of 
limiting MGE's ability to exercise its self-regulatory duties under 
Core Principle 5.
    Should Federal speculative position limits not be repealed, the MGE 
requests that the Commission continue to maintain ``parity'' in 
speculative limits for its hard red spring wheat contract with the 
comparable speculative limits for the wheat contracts at the CBT and 
KCBT. The MGE notes that speculative limits historically have been 
uniform at the three domestic DCMs trading wheat contracts and that 
failure to maintain this equality would be unfairly discriminatory, not 
only to the MGE, but also to its market participants. In this regard, 
the MGE observes that many traders at the MGE, and in particular the 
commodity funds, utilize arbitrage opportunities among the wheat 
markets, and that any disparate treatment in speculative limits could 
drive away participants and reduce market liquidity.

E. The NYBOT Letter of Support

    As noted above, NYBOT did not submit a petition of its own, but 
submitted a letter stating that it ``fully supports the CBOT 
petition.'' In particular, NYBOT expressed support for the repeal of 
Regulation 150.2 in its entirety. If the Commission does not repeal 
Regulation 150.2, NYBOT supports the elimination of all non-spot, 
individual month and all-months-combined limits. In support of its 
position, NYBOT expresses its belief that the provisions of the 
Commodity Futures Modernization Act of 2000 place the responsibility of 
establishing any appropriate position limits on exchanges. Furthermore, 
NYBOT observes, ``There appears to be no compelling reason to have the 
Commission set speculative position limits for a narrow segment of 
agricultural products, while directing the exchanges to set limits for 
all other agricultural products,'' which NYBOT contends is ``more the 
result of historical development rather than market regulatory 
considerations.'' Accordingly, NYBOT concludes that exchanges should 
have sole responsibility for establishing speculative position limits, 
subject to Commission oversight.

IV. Request for Comments

    The Commission requests comment on all aspects of the CBT, KCBT, 
and MGE petitions, including the issues identified below.
    (1) Should the Commission continue to impose Federal speculative 
position limits for all of the agricultural commodities enumerated in 
regulation 150.2? If Federal limits were repealed, then the exchanges 
would be required to adopt speculative position limits or position 
accountability provisions for these commodities in accordance with Core 
Principle 5 and the acceptable practices thereunder, subject to 
Commission oversight and enforcement.
    (2) If recommending that Federal limits be retained for the 
agricultural commodities enumerated in regulation 150.2, please explain 
why these commodities should be treated differently, for speculative 
limit purposes, from other agricultural and non-agricultural 
commodities where the Commission does not impose Federal speculative 
position limits.
    (3) If recommending that regulation 150.2 not be repealed, please 
address whether that regulation should nevertheless be modified to 
eliminate the non-spot, individual-month limits or the all-months-
combined limits, as requested in the petitions.
    (4) If recommending that the non-spot, individual-month limits and/
or the all-months-combined limits be retained in regulation 150.2, what 
criteria should be considered in determining the acceptable levels? 
Should the existing criteria in regulation 150.5, based on open 
interest, be retained, or, if not, what other criteria should be 
adopted by the Commission?
    (5) If Federal speculative position limits are retained, should the 
increases requested by the CBT in the non-spot, individual month and 
all-months-combined limits pertaining to the CBT commodity markets be 
granted? If the increases to the CBT commodity markets are granted, 
should the KCBT and MGE requests for continuing parity in setting 
Federal limits also be granted?
    (6) If Federal speculative position limits were eliminated, should 
the Commission modify its acceptable practices for Core Principle 5 to 
provide greater clarity as to the types of markets for which spot-month 
speculative position limits are necessary? Should these acceptable 
practices also include criteria to be considered regarding the setting 
of non-spot, individual-month limits and all-months-combined limits by 
the exchanges? If so, what criteria should be adopted by the 
Commission? Should the Commission require the setting of non-spot, 
individual-month and all-months-combined limits by the exchanges, in 
general and for the specific commodities enumerated in Regulation 150.2 
in particular?

V. Conclusion

    As noted above, the full text of the exchange petitions are 
available through the Commission's Office of the Secretariat, and are 
posted on the Commission's Web site.

    Issued by the Commission this 9th day of June, 2004, in 
Washington, DC.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 04-13678 Filed 6-16-04; 8:45 am]
BILLING CODE 6351-01-P