[Federal Register Volume 73, Number 110 (Friday, June 6, 2008)]
[Proposed Rules]
[Pages 32261-32262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-12723]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 150

RIN 3038-AC40


Risk Management Exemption From Federal Speculative Position 
Limits

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rules; withdrawal.

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SUMMARY: On November 27, 2007, the Commodity Futures Trading Commission 
(Commission or CFTC) published proposed rules to create a ``risk 
management exemption'' from Federal speculative position limits--the 
limits on the size of speculative positions that traders may hold or 
control in futures and futures equivalent option contracts on certain 
designated agricultural commodities. The Commission has determined to 
withdraw these proposed rules.

FOR FURTHER INFORMATION CONTACT: Donald Heitman, Senior Special 
Counsel, Division of Market Oversight, Commodity Futures Trading 
Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, 
DC 20581, telephone (202) 418-5041, facsimile number (202) 418-5507, 
electronic mail [email protected]; or John Fenton, Director of 
Surveillance, Division of Market Oversight, telephone (202) 418-5298, 
facsimile number (202) 418-5507, electronic mail [email protected].

SUPPLEMENTARY INFORMATION: Commission regulation 150.2 imposes limits 
on the size of speculative positions that traders may hold or control 
in futures and futures equivalent option contracts on certain 
designated agricultural commodities named therein. Commission 
regulation 150.3 lists certain types of positions that may be exempted 
from these Federal speculative position limits.
    On November 27, 2007, the Commission published proposed amendments 
that would provide an additional exemption from Federal speculative 
position limits for ``risk management positions'' (proposed 
rulemaking).\1\ The proposal defined a risk management position as a 
futures or futures equivalent position, held as part of a broadly 
diversified portfolio of long-only or short-only futures or futures 
equivalent positions, that is based upon either: (1) A fiduciary 
obligation to match or track the results of a broadly diversified index 
that includes the same commodity markets in fundamentally the same 
proportions as the futures or futures equivalent position; or (2) a 
portfolio diversification plan that has, among other substantial asset 
classes, an exposure to a broadly diversified index that includes the 
same commodity markets in fundamentally the same proportions as the 
futures or futures equivalent position. The exemption, as proposed, 
would have been subject to certain conditions, including that the 
positions be passively managed, unleveraged, and not carried into the 
spot month.
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    \1\ Risk Management Exemption from Federal Speculative Position 
Limits, 72 FR 66097 (November 27, 2007).
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    The Commission requested public comment by January 28, 2008. The 
Commission received a total of 10 comment letters in response to its

[[Page 32262]]

Federal Register publication.\2\ Three letters generally favored the 
proposed regulations and seven letters were generally opposed to their 
adoption. An Agricultural Forum held by the Commission on April 22, 
2008 served as an additional venue for the presentation of views with 
respect to the proposed rulemaking and a related Commission proposal to 
revise the Federal speculative position limits delineated in Commission 
regulation 150.2.\3\
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    \2\ Federal Register Comment File 07-015, available at http://www.cftc.gov/lawandregulation/federalregister/federalregistercomments/2007/07-015.html.
    \3\ Revision of Federal Speculative Position Limits, 72 FR 65483 
(November 21, 2007) (to be withdrawn).
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    Collectively, the comments received in response to the proposed 
rulemaking and at the Commission's April 22 Agricultural Forum 
reflected differing perspectives on a wide range of issues of 
substantive import to the proposed rulemaking. The issues covered by 
the commenters, both in favor and opposed to the Commission's proposal 
to adopt a risk management exemption from the Federal speculative 
position limits, included product margin requirements, the convergence 
of cash and futures transaction prices, the impact of commodity-linked 
instruments traded on national securities exchanges on CFTC regulated 
transactions, the degree of transparency for market participation, and 
the quantification of the impact of speculative trading on market 
volatility. In light of the wide range of divergent positions that have 
been put forth by interested parties, the current market conditions for 
the contracts that would be affected by the proposed rulemaking, and in 
order to determine whether further consensus among the affected parties 
should be sought, the Commission has determined to withdraw the 
proposed rulemaking pending further consideration of the relevant 
issues.

    Issued by the Commission June 2, 2008, in Washington, DC.
David Stawick,
Secretary of the Commission.
[FR Doc. E8-12723 Filed 6-5-08; 8:45 am]
BILLING CODE 6351-01-P