Commodity Futures Trading Commission January 26, 2011 – Federal Register Recent Federal Regulation Documents

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank Act'') requires the Commodity Futures Trading Commission (``Commission'' or ``CFTC'') to establish position limits for certain physical commodity derivatives. The Commission is proposing to simultaneously establish position limits and limit formulas for certain physical commodity futures and option contracts executed pursuant to the rules of designated contract markets (``DCM'') and physical commodity swaps that are economically equivalent to such DCM contracts. In compliance with the requirements of the Dodd- Frank Act, the CFTC is also proposing aggregate position limits that would apply across different trading venues to contracts based on the same underlying commodity. The Commission is proposing to establish position limits in two phases: The first phase would involve adopting current DCM spot-month limits, while the second phase would involve establishing non-spot-month limits based on open interest levels as well as establishing Commission-determined spot-month limits. The proposal includes exemptions for bona fide hedging transactions and for positions that are established in good faith prior to the effective date of specific limits that could be adopted pursuant to final regulations. This notice of rulemaking also proposes new account aggregation standards, visibility regulations that are similar to current reporting obligations for large bona fide hedgers, and new regulations establishing requirements and standards for position limits and accountability rules that are implemented by registered entities. The Commission solicits comment on any aspect of the proposal. The Commission also solicits comment on particular issues throughout the preamble.