CFTC May Ease Dodd-Frank Commodity Speculation Limits

UPDATE: The CFTC has announced that it has raised the ownership threshold from 10% to 50%. Read more here.

The U.S. Commodity Futures Commission is considering changes to rules limiting speculation in commodities such as oil and natural gas, according to people with knowledge of the matter.

The rules put a limit on the number of contracts a trader can have. The change being considered by the CFTC concerns provisions that regulate how companies with ownership stakes in other firms aggregate their trading positions. While the current ownership threshold above which a company must add the trading positions is 10%, the CFTC may raise it to 50%.

CFTC spokesman Steven Adamske declined to comment.

When the position cap was introduced in October, it prompted a lawsuit by the International Swaps and Derivatives Association (ISDA) and the Securities Industry and Financial Markets Association (SIFMA)seeking to overturn the regulation.

News that the CFTC may reverse course was criticized by some. “This change goes in the wrong direction,” Marcus Stanley, policy director for Americans for Financial Reform, said. “The position limit rule already has serious weaknesses that could permit excessive speculation. Loosening the aggregation rules would weaken it further.”

If the CFTC decides to go ahead with the change, it would be open to public comment before it is finalized, the people said.

Read more about the change.

Photo credit: Mike Baird


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