RiskTech Forum

CFTC Appeals Court Ruling Overturning Commodity Derivatives Position Limits

Posted: 21 November 2012  |  Source: FinCad

The U.S. Commodity Futures Trading Commission (CFTC) recently appealed a September court ruling that prevented the government agency from imposing position limits on commodity derivatives.

CFTC Commissioner Bart Chilton said in a statement that "our appeal should also send a message that the largest speculators on the planet can't litigate regulators to death. We will fight back. Your deep pockets can't protect you from what the law clearly states. Consumers will benefit from speculative position limits."

The government official added that the CFTC would likely create another rule affecting position limits to provide a contingency plan in case the appeal did not succeed.

The law was struck down on September 28, when U.S. District Court Judge Robert Wilkens ruled that the Dodd-Frank Act does not give the CFTC a "clear and unambiguous mandate" to establish position limits on commodity derivatives without illustrating that these restrictions are needed, according to Reuters.

Market experts predicted that the court ruling would open up financial regulators to more lawsuits, and the CFTC was recently sued by CME Group as the exchange operator attempts to get out of derivatives regulations requiring it to report swaps transaction data.