CFTC Position Limits Update: GOP Taps Hensarling, Won’t Change Tune


The U.S. Commodity and Futures Trading Commission (CFTC) will likely be at odds with new GOP Financial Services Committee head, Jeb Hensarling. Hensarling previously served as committee Vice Chairman under Spencer Bachus, who stepped down after reaching the maximum term limit for committee chairman.

Hensarling, who represents Texas’ 5th congressional district, is currently the chairman of the House Republican Conference. He is known as an opponent of “too-big-to-fail” banking, bailouts, and was nicknamed “budget nanny” by National Review—a position he is thought to have inherited from Phil Gramm.

Hensarling is considered a rising figure in matters of finance on the American legislative scene. In 2008 he coauthored the Economic Growth Act.

Hensarling vs. CFTC on Position Limits

It is unlikely that Hensarling will change the GOP’s tune on position limits. In October he served as one of the “four horsemen” who worked to undermine the CFTC through a letter that called the agency’s pursuit of position limits “ideological” and “wasteful.”

The CFTC suffered a setback in late September when its position limits rule was blocked by U.S. District Court Judge Robert Wilkins. The rule would have limited the number of contracts traders can hold in 28 commodities, including oil, coffee and gold. The agency is currently looking to appeal the ruling.

There is controversy over whether position limits are actually mandated by the Dodd-Frank Act, a piece of legislation meant to curtail another financial crisis. Current CFTC chairman Gary Gensler has called position limits “critical” to financial regulation more broadly.

“As part of the Dodd-Frank Act, Congress directed the Commission to limit promptly speculative positions in physical commodity futures and options contracts and economically equivalent swaps. The rule addresses Congress’ concern that that no single trader be permitted to obtain too large a share of the market, and that derivatives markets remain fair and competitive,” Gensler said earlier this month.

Read more here.

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About the Author

Felix Shipkevich
Mr. Shipkevich’s practice focuses on regulatory, transactional, and enforcement matters in the fields of futures, commodities, and derivatives. He works with Futures Commission Merchants (FCMs), Retail Forex Exchange Dealers (RFEDs), Introducing Brokers (IBs), Commodity Pool Operators (CPOs), Commodity Trading Advisors (CTAs), Swap Dealers (SDs), Swap Execution Facilities (SEFs), and domestic and offshore hedge funds. Mr. Shipkevich guides clients on procedures related to registration with the U.S. Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), as well as domestic and international regulators in local jurisdictions. Mr. Shipkevich prepares and helps implement compliance, anti-money laundering (AML), and Electronic Trading Systems (ETS) procedures for clients in the commodities and derivatives fields.