Risk Management Exemption From Federal Speculative Position Limits
Section 150.2 of the Commodity Futures Trading Commission's (``Commission'') regulations imposes limits on the size of speculative positions that traders may hold or control in futures and futures equivalent option contracts on certain designated agricultural commodities named therein. Section 150.3 lists certain types of positions that may be exempted from these Federal speculative position limits. The Commission is proposing to provide an additional exemption for ``risk management positions.'' A risk management position would be defined as a futures or futures equivalent position, held as part of a broadly diversified portfolio of long-only or short-only futures or futures equivalent positions, that is based upon either: A fiduciary obligation to match or track the results of a broadly diversified index that includes the same commodity markets in fundamentally the same proportions as the futures or futures equivalent position; or a portfolio diversification plan that has, among other substantial asset classes, an exposure to a broadly diversified index that includes the same commodity markets in fundamentally the same proportions as the futures or futures equivalent position. The exemption would be subject to conditions, including that the positions must be passively managed, must be unleveraged, and may not be carried into the spot month.
Conflicts of Interest in Self-Regulation and Self-Regulatory Organizations
On January 31, 2007, the Commission adopted Acceptable Practices for Section 5(d)(15) (``Core Principle 15'') of the Commodity Exchange Act. The new Acceptable Practices were published in the Federal Register on February 14, 2007, and became effective on March 16, 2007. On March 26, 2007, the Commission published certain proposed amendments to the Acceptable Practices in an effort to clarify the definition of ``public director'' contained therein.\1\ The Commission has yet to act upon the proposed amendments, which are central to every element of the Acceptable Practices. Accordingly, the Commission hereby notifies all designated contract markets (``DCMs'') that, until further notice, the Acceptable Practices contained in paragraph (b) of Core Principle 15 in Appendix B to 17 CFR part 38 are stayed indefinitely.
Revision of Federal Speculative Position Limits
The Commodity Futures Trading Commission (``Commission'') periodically reviews the speculative position limits for certain agricultural commodities set out in Commission regulation 150.2 (``Federal speculative position limits''). In this regard, the Commission has reviewed the existing levels for Federal speculative position limits and is now proposing to increase these limits for all single-month and all-months-combined positions in all commodities except oats, based on the formula set out in Commission Regulation 150.5(c). In addition, the Commission is also proposing to aggregate traders' positions for purposes of ascertaining compliance with Federal speculative position limits when a designated contract market (``DCM'') lists for trading a futures contract that shares substantially identical terms with a Regulation 150.2-enumerated contract listed on another DCM, including a futures contract that is cash-settled based on the settlement prices for a futures contract that is already enumerated. The Commission is requesting comment on these rule amendments.
Exemption From Registration for Certain Foreign Persons
The Commodity Futures Trading Commission (``Commission'') has amended Commission Regulation 3.10 concerning the registration of firms located outside the U.S. that are engaged in intermediating commodity interest transactions on U.S. designated contract markets (``DCMs'') and U.S. derivative transaction execution facilities (``DTEFs'').\1\ The amended regulation codifies past actions of the Commission or its staff to permit certain foreign firms that limit their customers to foreign customers, and submit U.S. DCM and DTEF business on behalf of those customers for clearing on an omnibus basis through a registered futures commission merchant (``FCM''), to be exempt from registration as an FCM pursuant to section 4d of the Commodity Exchange Act (``Act''). The amended regulation similarly extends the relief from registration to those foreign persons acting in the capacity of an introducing broker (``IB''), commodity trading advisor (``CTA'') and commodity pool operator (``CPO'') solely on behalf of foreign customers.
Termination of Associated Persons and Principals of Futures Commission Merchants, Introducing Brokers, Commodity Trading Advisors, Commodity Pool Operators and Leverage Transaction Merchants
The Commodity Futures Trading Commission (``Commission'' or ``CFTC'') has amended Commission Regulations 3.12 and 3.31 to extend the period during which a registered futures commission merchant (``FCM''), introducing broker (``IB''), commodity trading advisor (``CTA''), commodity pool operator (``CPO'') or leverage transaction merchant (``LTM'') must file a notice with the National Futures Association (``NFA'') to report the termination of any associated person (``AP'') or principal of the registered intermediary. The amendments modify existing requirements and specify that such intermediaries must file termination notices within 30 days, rather than 20 days, after the termination of the association with any AP or principal.