UPDATE 1-CFTC should be flexible on limits-Morgan Stanley

* Urges interim rule while CFTC collects new data on swaps

* Should provide exemptions for hedgers, risk managers
(Updates with details from comment letter, background)

WASHINGTON, Oct 27 (Reuters) - Morgan Stanley (MS.N) urged the
U.S. Commodity Futures Trading Commission to adopt a flexible
approach toward speculative position limits, a new regime that the
regulator is slated to unveil in coming weeks.

The banking firm recommended the CFTC propose interim limits
in energy markets, and possibly certain precious metals markets
that would not prevent businesses from using futures and swaps to
hedge risk.

"The levels should be high enough to allow a margin for the
possibility that the commission has insufficient data to determine
the true size of the market for which it establishes the limit,"
said Simon Greenshields, managing director and co-head of the
global commodities division, in a letter to the regulator.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Take a Look on CFTC's push for new limits: [ID:nCFTCREG]

Q+A on the CFTC's position limit rule: [ID:nN22121344]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The firm said it agreed with recommendations from the Futures
Industry Association, which also urged a flexible approach.
[ID:nN01107204]

The rule should include exemptions from the limits for hedgers
and risk managers, Morgan Stanley said, and should not prevent
hedgers and risk managers from also holding speculative positions
below the limit.

The agency also should aggregate positions by common control
-- rather than common ownership -- of accounts, the firm said.
(Reporting by Roberta Rampton and Christopher Doering; Editing
by Lisa Shumaker)