The federal overseer of the futures markets, the Commodity Futures Trading Commission, re-proposed limits on speculative futures and swaps by investors in 25 physical commodities ranging from corn and soybeans to natural gas, crude oil and precious metals. The CFTC also re-proposed a definition of bonafide hedging — important to food processors, utilities and airlines, who use futures to assure the price and supply of materials.
Limits would range from 600 contracts in the “spot month” for some agricultural contracts to a high of 23,300 No. 11 sugar contracts. The 910-page package will be open for public comment for 60 days after publication in the Federal Register.
Congress expanded CFTC’s oversight of derivatives as part of the Dodd-Frank financial reform law of 2010. The CFTC’s initial proposal for position limits on futures and swaps was approved in October 2011 and overturned, for the most part, by federal court in September 2012. The commission presented a new iteration in December 2013 for comment, and a supplemental proposal in 2016. The commission said its re-proposal reflected the public comments.
House Agriculture chairman Michael Conaway said “end users” — companies that use futures and swaps to lock in supplies of raw materials — have stressed the need for a sensible bonafide hedging definition. “Today’s action will offer them the opportunity to refine this rule and ensure that it does not negatively impact their ability to manage their risks,” said Conaway. Michigan Sen. Debbie Stabenow, the senior Democrat on the Senate Agriculture Committee, said she was disappointed there was no final rule six years after Dodd-Frank was enacted.