Groups representing the financial industry say the CFTC went beyond its limits in imposing restrictions on the number of contracts traders can hold in 28-commodities, such as oil, coffee and gold. The financial industry groups requested a block to CFTC’s position limits. Eugene Scalia, the lawyer representing the Securities Industry, the Financial Markets Association, and the International Swaps and Derivatives Association, told the court his clients would have to “drastically alter their business,” spend tens of millions of dollars, and lose customers as a result of the regulations.
Judge Robert Wilkins of the U.S. District Court for the District of Columbia did not make his decision directly from the bench, but said that he would try to “get a ruling out” as soon as possible after considering the merits of the regulations.
The CFTC’s representative, Jonathan Marcus, said the CFTC could implement limits for the spot month by June, but that the Commission must finish defining swaps before it can do so. He argued against Scalia’s claim that the regulations would force the financial industry to shoulder additional, irreparable costs, saying that the Commission conducted a “thorough cost-benefit analysis” and that costs are “minuscule” for billion dollar businesses. Marcus said the rules would only affect the biggest traders.
The decision, when it comes, will likely be appealed to the U.S. Court of Appeals for the Washington D.C. Circuit.