The Commodity Futures Trading Commission (CFTC) withdrew two “no action” letters this week on speculative position limits, meaning two specific commodity pool operators who were exempted from position limits must now come into compliance with them.
CFTC had issued the no action letters in 2006 to two funds, which permitted them to take positions in corn and wheat futures that exceeded the speculative position limits in CFTC Regulation 150.2.
At the time the letters were issued, CFTC’s Division of Market Oversight stated that any change in circumstances or conditions could result in subsequent withdrawal of the letters. The activities of these two entities would not qualify for a bona fide hedge exemption – the type of exemption that applies to commercial entities who are hedging market risk in the physical commodity.
CFTC said in a press release about this week’s action that the withdrawal of these no-action positions is “very specific and limited and does not affect any other no-action or regulatory positions taken by the CFTC or its staff with regard to these entities or other market participants.”
“I believe that position limits should be consistently applied and vigorously enforced,” CFTC Chairman Gary Gensler said in the release. “Position limits promote market integrity by guarding against concentrated positions.”
NAWG maintains that speculative limits need to be applied across the board, and NAWG and U.S. Wheat Associates continue to follow discussions about commodity futures regulation to ensure futures markets work effectively and fairly for all participants in the market.