Intercontinental Exchange was quick to dismiss CME
Group’s plan for introducing hard single exchange
position limits in energy commodities.
The Atlanta-based exchange group – which owns ICE
Futures Europe, the former International Petroleum Exchange,
and ICE Futures US – said that if position limits were
implemented, they should be imposed on each firm on an
That would govern the sum total of all positions held by
each firm that were reported to the US Commodity Futures
Trading Commission in designated contract markets, exempt
commercial markets, contracts that fall under CFTC supervision
because they are deemed to be significant price discovery
contracts, foreign boards of trade, and OTC markets.
ICE said CME’s proposal would undo all the work
done by the CFTC in implementing "the most challenging aspect
of such a system: collection, aggregation and reporting of
position data from these sources."
CME suggested that each exchange set position limits for
trading on its own market, for all expiry months combined, for
individual months and for the delivery period, based on
"traditional considerations". That meant a percentage of the
bourse’s open interest and, at or near the
delivery period, of the deliverable supply.
ICE rejected the CME proposal as anti-competitive, with a
"ICE believes that the imposition of position limits and
accountability levels should promote competition and customer
choice by being market- and exchange-agnostic," it said.
"Setting position limits in the manner suggested by CME, as a
percentage of an exchange’s open interest, would
be anti-competitive and contrary to the CFTC’s
statutory mandate to promote competition among exchanges and
seek to regulate the futures markets by the least
anticompetitive means available," the ICE statement read.
"Imposing smaller limits for newer exchanges by applying a
'percentage of open interest’ test for each
individual exchange would retard competition by mathematically
precluding new entrants from building liquidity in their
markets. We urge the CFTC to take this critical issue into
account and to implement market- and exchange-agnostic rules
that promote, not destroy, competition."
ICE said its opposition to the CME plan extended beyond the
two issues highlighted, but that it would outline directly to
the CFTC its extended challenge, including, but not limited to,
key distinctions between physical and cash-settled contracts
and enhancements to the existing accountability level
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