[Federal Register Volume 80, Number 37 (Wednesday, February 25, 2015)]
[Proposed Rules]
[Pages 10022-10026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-03834]


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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; provision of Table 11a; and 
reopening of comment periods.

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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 Energy and Environmental Markets 
Advisory Committee has scheduled a public meeting to be held on 
February 26, 2015, which will consider, among other matters, exemptions 
for bona fide hedging positions. In conjunction with the meeting of the 
Commission's Energy and Environmental Markets Advisory Committee, the 
Commission will post an agenda and associated materials, if any, on the 
Commission's Web site; additionally, access to a video webcast of the 
meeting will be added to the Web site. In addition, and in connection 
with the meeting, the Commission is providing counts of the unique 
persons over percentages of the 28 proposed position limit levels 
(currently provided in Table 11 of the Position Limits Proposal based 
on counts from the period of January 1, 2011, to December 31, 2012 
period) in a new table, Table

[[Page 10023]]

11a, based on counts from the period of January 1, 2013, to December 
31, 2014. To provide commenters with a sufficient period of time to 
respond to questions raised and points made at the Energy and 
Environmental Markets Committee meeting, as well as to provide an 
opportunity to comment on Table 11a, the Commission will reopen the 
comment periods for an additional 30 days. The Commission is providing 
notice that comments may be made on the issues addressed at the meeting 
or in the associated materials posted to the Commission's Web site, as 
they pertain to energy commodities. Furthermore, comments may be made 
on Table 11a, showing counts of the unique persons over percentages of 
the 28 proposed position limit levels based on counts from the period 
of January 1, 2013, to December 31, 2014.

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 February 
26, 2015, and will close on March 28, 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\
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    \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).
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    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.
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    \8\ See id. at 68947.
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    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\
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    \9\ See 79 FR 2394 (Jan. 14, 2014).
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    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 document in the Federal Register on May 29, 2014 (79 FR 
30762), reopening

[[Page 10024]]

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 a document in the Federal Register on July 3, 2014 
(79 FR 37973), further extending the comment periods to August 4, 2014.
    The Commission's Agricultural Advisory Committee met on December 9, 
2014. The agenda adopted for the meeting included consideration, among 
other matters, of two issues associated with the Position Limits 
rulemaking: Deliverable supply and exemptions for bona fide hedging 
positions. In conjunction with the meeting of the Commission's 
Agricultural Advisory Committee, the Commission posted questions and 
presentation materials on the Commission's Web site; additionally, 
access to a video webcast of the meeting was added to the Web site.\10\ 
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 reopened both the Position 
Limit Proposal and the Aggregation Proposal for an additional 45-day 
comment period.\11\
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    \10\ Questions, presentation materials, and a video webcast have 
been made available at http://www.cftc.gov/PressRoom/Events/opaevent_aac120914.
    \11\ See 79 FR 71973 (Dec. 4, 2014). The Commission also 
provided notice and clarification that, in addition to commenting on 
the agenda issues noted in the December 4, 2014, Federal Register 
release providing notice of the reopened comment period, comments 
could be made on the issues addressed at the meeting or in 
associated materials posted to the Commission's Web site, as they 
pertained to agricultural commodities, including 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 pertained to agricultural commodities. See also 80 
FR 200 (Jan. 5, 2015).
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    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.

II. Reopening of Comment Period

    The Commission's Energy and Environmental Markets Advisory 
Committee has scheduled a meeting on February 26, 2015. The agenda 
adopted for the meeting includes consideration of exemptions for bona 
fide hedging positions. In conjunction with the meeting of the 
Commission's Energy and Environmental Markets Advisory Committee, the 
Commission will post associated materials on the Commission's Web site; 
additionally, access to a video webcast of the meeting will be added to 
the Web site. To provide interested persons with a sufficient period of 
time to respond to questions raised and points made at the Energy and 
Environmental Markets Advisory Committee meeting, the Commission is 
reopening both the Position Limit Proposal and the Aggregation Proposal 
for an additional 30-day comment period. The Commission is providing 
notice that, in addition to commenting on the agenda issues, comments 
may be made on the issues addressed at the meeting or in associated 
materials posted to the Commission's Web site, as they pertain to 
energy commodities, including hedges of a physical commodity by a 
commercial enterprise, as pertains to energy commodities.
    In addition, and in connection with the Energy and Environmental 
Markets Advisory Committee meeting, the Commission is providing counts 
of the unique persons exceeding the 28 proposed position limit levels 
(currently provided in Table 11 of the Positions Limits Proposal based 
on counts from the period of January 1, 2011, to December 31, 2012 
period \12\) by certain specified percentages in a new table, Table 
11a, based on counts from the period of January 1, 2013, to December 
31, 2014. As was the case with Table 11, to provide the public with 
additional information regarding the number of large position holders 
in the past two calendar years, Table 11a provides counts of unique 
persons over 60, 80, 100, and 500 percent of the levels of the position 
limits proposed for 28 core referenced futures products.\13\ Note that 
the 500 percent line is omitted from Table 11a for contracts where no 
person held a position over that level. The Commission notes that in 
addition to commenting on the agenda issues and on the issues addressed 
at the meeting or in associated materials posted to the Commission's 
Web site, as they pertain to energy commodities, comments may be made 
on Table 11a.
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    \12\ See 78 FR 75680 at 75731 (Dec. 12, 2013).
    \13\ As is the case for Table 11, the Commission notes that 
Table 11a is presented using the proposed initial limit levels, 
without regard to alternatives presented in the proposed rule. See 
78 FR at 75839 for the proposed initial limit levels for the spot 
month. The Commission also proposed alternatives methods for setting 
initial levels for the spot month. See FR at 75727-8. The proposed 
initial limit levels for the non-spot months are found at 78 FR 
76787 (Dec. 19, 2013). The Commission also proposed an alternative 
method to establish higher initial limit levels in the non-spot 
months. See FR 78 at 75734.

 Table 11a--Unique Persons Over Percentages of Proposed Position Limit Levels, January 1, 2013, to December 31,
                                                      2014
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                                                                     Unique persons over level
                                                 ---------------------------------------------------------------
 Commodity type/core referenced     Percent of      Spot month
        futures contract               level        (physical-      Spot month     Single month     All months
                                                     delivery)    (cash-settled)
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                                               Legacy Agricultural
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CBOT Corn (C)...................              60             206              --              12              25
                                              80             147              --               4               7
                                             100              49              --             (*)               5
                                             500               4              --              --              --
CBOT Oats (O)...................              60             (*)              --              11              12
                                              80             (*)              --               6               8
                                             100              --              --             (*)               5
CBOT Soybeans (S)...............              60             127              --              14              18
                                              80              90              --               9              11
                                             100              31              --               6               9
                                             500               9              --              --              --
CBOT Soybean Meal (SM)..........              60              53              --              42              54
                                              80              31              --              12              19

[[Page 10025]]

 
                                             100              16              --               6              11
                                             500             (*)              --              --              --
CBOT Soybean Oil (SO)...........              60              82              --              31              38
                                              80              51              --              10              18
                                             100              18              --               5              11
                                             500             (*)              --              --              --
CBOT Wheat (W)..................              60              39              --              35              33
                                              80              30              --              12              17
                                             100              10              --               8              11
                                             500             (*)              --              --              --
ICE Cotton No. 2 (CT)...........              60              16              --              15              22
                                              80              10              --              10              14
                                             100               7              --               8              10
                                             500               4              --              --              --
KCBT Hard Winter Wheat (KW).....              60              17              --              32              39
                                              80               7              --              16              27
                                             100             (*)              --              12              12
MGEX Hard Red Spring Wheat (MWE)              60               7              --              33              36
                                              80               4              --              20              29
                                             100             (*)              --              15              21
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                                               Other Agricultural
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CBOT Rough Rice (RR)............              60               9              --               6               5
                                              80               7              --               4               4
                                             100             (*)              --             (*)             (*)
CME Milk Class III (DA).........              60              NA               5             (*)              26
                                              80              NA               4              --              15
                                             100              NA             (*)              --              10
CME Feeder Cattle (FC)..........              60              NA             113               8              14
                                              80              NA              70             (*)               8
                                             100              NA              28              --               5
CME Lean Hog (LH)...............              60              NA              98              19              34
                                              80              NA              74               8              24
                                             100              NA              45             (*)              14
CME Live Cattle (LC)............              60              51              --              14              29
                                              80               7              --               7              16
                                             100               5              --             (*)               8
ICUS Cocoa (CC).................              60               4              --              47              42
                                              80               4              --              38              30
                                             100             (*)              --              21              21
ICE Coffee C (KC)...............              60              14              --              30              32
                                              80              10              --              13              16
                                             100               6              --               8              11
                                             500             (*)              --              --              --
ICE FCOJ-A (OJ).................              60               5              --               7               7
                                              80               5              --               4               4
                                             100               5              --               4               4
ICE Sugar No. 11 (SB)...........              60              55              --              41              39
                                              80              42              --              31              29
                                             100              16              --              21              22
                                             500             (*)              --              --              --
ICE Sugar No. 16 (SF)...........              60               5              --               6              13
                                              80               5              --               6              11
                                             100               4              --               5              11
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                                                     Energy
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NYMEX Henry Hub Natural Gas (NG)              60             187             236             (*)               7
                                              80             142             205             (*)             (*)
                                             100              83             187              --             (*)
                                             500             (*)              46              --              --
NYMEX Light Sweet Crude Oil (CL)              60             135             100             (*)              12
                                              80              95              87             (*)               7
                                             100              44              65              --             (*)
                                             500              --              --              --              --
NYMEX NY Harbor ULSD (HO).......              60              76              68              13              16

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                                              80              49              63               7               9
                                             100              31              44             (*)               6
                                             500              --               5              --              --
NYMEX RBOB Gasoline (RB)........              60              97              57              26              30
                                              80              67              52              15              17
                                             100              36              37              11              12
                                             500              --             (*)              --              --
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                                                     Metals
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COMEX Copper (HG)...............              60              12              --              61              62
                                              80               9              --              37              40
                                             100               4              --              29              30
COMEX Gold (GC).................              60              13              --              22              24
                                              80               9              --              14              14
                                             100               5              --              10              11
COMEX Silver (SI)...............              60               9              --              34              32
                                              80               4              --              20              21
                                             100             (*)              --              16              16
NYMEX Palladium (PA)............              60               9              --              12              13
                                              80               5              --               9               5
                                             100             (*)              --               4               4
NYMEX Platinum (PL).............              60              11              --              29              29
                                              80               7              --              18              18
                                             100             (*)              --               9               9
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Legend:
* means fewer than 4 unique owners exceeded the level.
-- means no unique owner exceeded the level.
NA means not applicable.\14\

    Both comment periods will reopen on February 26, 2015, and will 
close on March 28, 2015.
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    \14\ Table notes: (1) Aggregation exemptions were not used in 
computing the counts of unique persons; (2) the position data was 
for futures, futures options and swaps that are significant price 
discovery contracts (SPDCs).

    Issued in Washington, DC, on February 19, 2015, by the 
Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.

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

Appendix to Position Limits for Derivatives and Aggregation of 
Positions Reopening of Comment Periods--Commission Voting Summary

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

[FR Doc. 2015-03834 Filed 2-24-15; 8:45 am]
BILLING CODE 6351-01-P