Galen Stops looks at the implications of the court ruling to block the position limits rule.
On the September 28, US district judge Robert Wilkins
rejected a proposal by the Commodity and Futures Trading
Commission (CFTC) to introduce position limits in the
commodities markets. What does the mean for the implementation
of the controversial trading curbs?
At the heart of the case was CFTC’s belief that
it has a clear mandate from congress to introduce position
limits in commodities to prevent what it perceives as excessive
speculation in these markets. This was countered by ISDA and
SIFMA, which both claimed that the CFTC needed to first prove
that there is speculation in the commodity markets and
therefore that position limits are necessary.
"This case largely turns on whether the CFTC, in
promulgating the Position Limits Rule, correctly interpreted
[the Commodity Exchange Act] Section 6a as amended by
Dodd-Frank," reads Wilkins’ judgment.
Section 6a states that: "The Commission shall,
from time to time, after due notice and opportunity for
hearing, by rule, regulation, or order, proclaim and fix such
limits ... as the Commission finds may be necessary to
diminish, eliminate or prevent the burden of excessive
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