TUESDAY, 2016 MAY 31 – DELTA STRATEGY GROUP:

Friday, the U.S. Commodity Futures Trading Commission (CFTC or Commission) voted unanimously to issue for public comment a supplement to its December 2013 position limits proposal that will:

• Provide a new process for exchanges to recognize certain positions in commodity derivative contracts as non-enumerated bona fide hedges or enumerated anticipatory bona fide hedges;
• Exempt from federal position limits certain spread positions;
• Further amend certain relevant definitions, including the general definition of “bona fide hedging position” for physical commodities; and
• Delay the requirement to establish and monitor position limits on swaps for designated contract markets (DCMs) and swap execution facilities (SEFs) that lack access to sufficient swap position information.

All other aspects of the 2013 position limits proposal will remain the same.  Chairman Massad said “this proposal is a critical piece of [the CFTC’s] effort to complete the position limits rule this year” and that the “[Commission] is working to review exchange estimates of deliverable supply so that spot month limits may be set used on current data.”  Commissioner Giancarlo said “the supplemental proposal leverages exchange expertise and resources to enable exemptions to be granted in an efficient and timely manner without sacrificing market integrity,” and that “the Commission would remain the ultimate arbiter of exemptions from position lists by retaining the authority to review and reverse any exchange-granted exemption.”

Delta Strategy Group (DSG) will be providing a summary of the supplement in the near future, but please see attached three documents for your recollection:

• December 2013 position limits proposal
• DSG update on the September 23, 2015 supplemental notice of proposed rulemaking to modify the CFTC’s December 2013 proposal for aggregating positions
• The May 26, 2016 supplement to the December 2013 proposal on bona fide hedging

The Commission will solicit comments on the supplemental proposal for 30 days after publication in the Federal Register.

Please let us know if you have any questions.