[Federal Register Volume 79, Number 233 (Thursday, December 4, 2014)]
[Proposed Rules]
[Pages 71973-71975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28482]


=======================================================================
-----------------------------------------------------------------------

COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 1, 15, 17, 19, 32, 37, 38, 140, and 150

RIN 3038-AD99; 3038-AD82


Position Limits for Derivatives and Aggregation of Positions

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed rulemaking; reopening of comment periods.

-----------------------------------------------------------------------

SUMMARY: On December 12, 2013, the Commodity Futures Trading Commission 
(``Commission'') published in the Federal Register a notice of proposed 
rulemaking (the ``Position Limits Proposal'') to establish speculative 
position limits for 28 exempt and agricultural commodity futures and 
options contracts and the physical commodity swaps that are 
economically equivalent to such contracts. On November 15, 2013, the 
Commission published in the Federal Register a notice of proposed 
rulemaking (the ``Aggregation Proposal'') to amend existing regulations 
setting out the Commission's policy for aggregation under its position 
limits regime. The Commission's Agricultural Advisory Committee has 
scheduled a public meeting to be held on December 9, 2014, which will 
consider, among other matters, deliverable supply and exemptions for 
bona fide hedging positions. To provide commenters with a sufficient 
period of time to respond to questions raised and points made at the 
Agricultural Advisory Committee meeting, the Commission is reopening 
the comment periods for an additional 45 days. Comments should be 
limited to the

[[Page 71974]]

following issues as they pertain to agricultural commodities: Hedges of 
a physical commodity by a commercial enterprise; and the process for 
estimating deliverable supplies used in the setting of spot month 
limits.

DATES: The comment periods for the Aggregation Proposal published 
November 15, 2013, at 78 FR 68946, and for the Position Limits Proposal 
published December 12, 2013, at 78 FR 75680, will reopen on December 9, 
2014, and close on January 22, 2015.

ADDRESSES: You may submit comments, identified by RIN 3038-AD99 for the 
Position Limits Proposal or RIN 3038-AD82 for the Aggregation Proposal, 
by any of the following methods:
     Agency Web site: http://comments.cftc.gov;
     Mail: Christopher Kirkpatrick, Secretary of the 
Commission, Commodity Futures Trading Commission, Three Lafayette 
Centre, 1155 21st Street NW., Washington, DC 20581;
     Hand Delivery/Courier: Same as Mail, above; or
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow instructions for submitting comments.
    Please submit your comments using only one method. All comments 
must be submitted in English, or if not, accompanied by an English 
translation. Comments will be posted as received to http://www.cftc.gov. You should submit only information that you wish to make 
available publicly. If you wish the Commission to consider information 
that may be exempt from disclosure under the Freedom of Information 
Act, a petition for confidential treatment of the exempt information 
may be submitted under Sec.  145.9 of the Commission's regulations (17 
CFR 145.9).
    The Commission reserves the right, but shall have no obligation, to 
review, pre-screen, filter, redact, refuse or remove any or all of your 
submission from http://www.cftc.gov that it may deem to be 
inappropriate for publication, such as obscene language. All 
submissions that have been redacted or removed that contain comments on 
the merits of the rulemaking will be retained in the public comment 
file and will be considered as required under the Administrative 
Procedure Act and other applicable laws, and may be accessible under 
the Freedom of Information Act.

FOR FURTHER INFORMATION CONTACT: Stephen Sherrod, Senior Economist, 
Division of Market Oversight, (202) 418-5452, [email protected]; or 
Riva Spear Adriance, Senior Special Counsel, Division of Market 
Oversight, (202) 418-5494, [email protected]; Commodity Futures 
Trading Commission, Three Lafayette Centre, 1155 21st Street NW., 
Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

I. Background

    The Commission has long established and enforced speculative 
position limits for futures and options contracts on various 
agricultural commodities as authorized by the Commodity Exchange Act 
(``CEA'').\1\ The part 150 position limits regime \2\ generally 
includes three components: (1) The level of the limits, which set a 
threshold that restricts the number of speculative positions that a 
person may hold in the spot-month, individual month, and all months 
combined,\3\ (2) exemptions for positions that constitute bona fide 
hedging transactions and certain other types of transactions,\4\ and 
(3) rules to determine which accounts and positions a person must 
aggregate for the purpose of determining compliance with the position 
limit levels.\5\ The Position Limits Proposal generally sets out 
proposed changes to the first and second components of the position 
limits regime and would establish speculative position limits for 28 
exempt and agricultural commodity futures and option contracts, and 
physical commodity swaps that are ``economically equivalent'' to such 
contracts (as such term is used in CEA section 4a(a)(5)).\6\ The 
Aggregation Proposal generally sets out proposed changes to the third 
component of the position limits regime.\7\
---------------------------------------------------------------------------

    \1\ 7 U.S.C. 1 et seq.
    \2\ See 17 CFR part 150. Part 150 of the Commission's 
regulations establishes federal position limits on futures and 
option contracts in nine enumerated agricultural commodities.
    \3\ See 17 CFR 150.2.
    \4\ See 17 CFR 150.3.
    \5\ See 17 CFR 150.4.
    \6\ See Position Limits for Derivatives, 78 FR 75680 (Dec. 12, 
2013).
    \7\ See Aggregation of Positions, 78 FR 68946 (Nov. 15, 2013).
---------------------------------------------------------------------------

    The Commission published the Position Limits Proposal and the 
Aggregation Proposal separately because it believes that the proposed 
amendments regarding aggregation of positions could be appropriate 
regardless of whether the Position Limits Proposal is finalized.\8\ If 
the Aggregation Proposal is finalized first, the modifications would 
apply to the current position limits regime for futures and option 
contracts on nine enumerated agricultural commodities. If the Position 
Limits Proposal is subsequently finalized, the modifications in the 
Aggregation Proposal would apply to the position limits regime for 28 
exempt and agricultural commodity futures and options contracts and the 
physical commodity swaps that are economically equivalent to such 
contracts.
---------------------------------------------------------------------------

    \8\ See Aggregation Proposal, 78 FR at 68947.
---------------------------------------------------------------------------

    In order to provide interested parties with an opportunity to 
comment on the Aggregation Proposal during the comment period on the 
Position Limits Proposal, the Commission extended the comment period 
for the Aggregation Proposal to February 10, 2014, the same end date as 
the comment period for the Position Limits Proposal.\9\
---------------------------------------------------------------------------

    \9\ See 79 FR 2394 (Jan. 14, 2014).
---------------------------------------------------------------------------

    Subsequent to publication of the Position Limits Proposal and the 
Aggregation Proposal, the Commission directed staff to schedule a June 
19, 2014, public roundtable to consider certain issues regarding 
position limits for physical commodity derivatives. The roundtable 
focused on hedges of a physical commodity by a commercial enterprise, 
including gross hedging, cross-commodity hedging, anticipatory hedging, 
and the process for obtaining a non-enumerated exemption. Discussion 
included the setting of spot month limits in physical-delivery and 
cash-settled contracts and a conditional spot-month limit exemption. 
Further, the roundtable included discussion of: The aggregation 
exemption for certain ownership interests of greater than 50 percent in 
an owned entity; and aggregation based on substantially identical 
trading strategies. As well, the Commission invited comment on whether 
to provide parity for wheat contracts in non-spot month limits. In 
conjunction with the roundtable, staff questions regarding these topics 
were posted on the Commission's Web site.
    To provide commenters with a sufficient period of time to respond 
to questions raised and points made at the roundtable, the Commission 
published a notice in the Federal Register on May 29, 2014, reopening 
the comment periods for the Position Limit Proposal and the Aggregation 
Proposal for three weeks, from June 12, 2014 to July 3, 2014. The 
Commission published notice in the Federal Register on July 3, 2014, 
further extending the comment periods to August 4, 2014.
    Comment letters received on the Position Limits Proposal are 
available at http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1436. Comment letters received on the Aggregation 
Proposal are available at http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1427.

[[Page 71975]]

II. Reopening of Comment Period

    The Commission's Agricultural Advisory Committee has scheduled a 
meeting to be held on December 9, 2014, and adopted an agenda that 
includes consideration, among other matters, of two issues associated 
with the Position Limits rulemaking: Deliverable supply and exemptions 
for bona fide hedging positions. To provide interested persons with a 
sufficient period of time to respond to questions raised and points 
made at the Agricultural Advisory Committee meeting, the Commission is 
reopening both the Position Limit Proposal and the Aggregation Proposal 
for an additional 45-day comment period. Comments should be limited to 
the following issues as they pertain to agricultural commodities: 
Hedges of a physical commodity by a commercial enterprise; and the 
process for estimating deliverable supplies used in the setting of spot 
month limits, as each pertains to agricultural commodities.
    Both comment periods will reopen on December 9, 2014, and close on 
January 22, 2015.

    Issued in Washington, DC, on December 1, 2014, by the 
Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.

    Note:  The following appendices will not appear in the Code of 
Federal Regulations.

Appendices to Position Limits for Derivatives and Aggregation of 
Positions Reopening of Comment Periods--Commission Voting Summary and 
Commissioner's Statement

Appendix 1--Commission Voting Summary

    On this matter, Chairman Massad and Commissioners Wetjen, Bowen, 
and Giancarlo voted in the affirmative. No Commissioner voted in the 
negative.

Appendix 2--Statement of Commissioner Sharon Y. Bowen

    I support this reopening of the comment period for our position 
limits rule. As I've previously said, this is a key rule and we are 
well-served by giving stakeholders another chance to comment.
    However, we cannot allow this rule to linger indefinitely on our 
docket. It has been over a year since we re-proposed this rule and 
nearly four years since it was first proposed. We need to finish 
this rule next year, and I believe we can release a final rule by 
spring 2015.
    As we continue to finalize and fine-tune our Dodd-Frank 
rulemakings, we have to avoid the temptation to simply ratchet back 
or weaken prior versions of those rules. In fact, I think the best 
way of viewing changes to our rules is not that we are tweaking 
them, but rather that we are enhancing them. Sometimes that may mean 
making the rules more cost-effective and leaner, but at other times 
that will mean making them stronger than before. Enhancing a rule 
can mean reducing burdens to business while strengthening 
protections for the public. I believe our position limits proposal 
is exactly the sort of rule that needs to be enhanced, and I look 
forward to working with my fellow Commissioners to finish and 
release this rule in a timely fashion.

[FR Doc. 2014-28482 Filed 12-3-14; 8:45 am]
BILLING CODE 6351-01-P