WASHINGTON Nov 15 U.S. futures regulators on Thursday appealed a judge's decision to knock back tough new rules to curb speculation in commodity markets, as legal challenges to an overhaul of Wall Street mounted.
The Commodity Futures Trading Commission (CFTC) appealed a September verdict to reassess its plan to impose caps on the size of positions a commodities speculator can hold.
"Our appeal should also send a message that the largest speculators on the planet can't litigate regulators to death," CFTC Commissioner Bart Chilton said in a statement.
Chilton said he wanted the Commission to work on proposing the so-called position limits rule in a new guise, a second line of defense should the appeal to the U.S. Court of Appeals for the District of Columba fall flat.
On Sept. 28, U.S. District court Judge Robert Wilkens said the Dodd-Frank financial oversight law did not give the CFTC a "clear and unambiguous mandate" to set position limits without showing they were necessary.
Since then, U.S. exchange operator CME Group has sued the CFTC over how it reports non-public swap transaction data. The Securities and Exchange Commission has also seen several of its rules challenged in court.
Two trade groups had objected to the position limits rule, saying regulators have failed to show it was necessary, or would reduce excessive speculation in commodities markets.
The ruling was a victory for banks like Goldman Sachs and JP Morgan, which had feared the rule would halt growth in their lucrative business selling commodity derivatives to financial investors.
An appeal had been widely expected after three people on the five-member panel signaled support for the idea, even if two of the five members on the panel voted against it.
One of the dissenters, Republican Scott O'Malia, said he wanted the CFTC to go back to the drawing board and study whether new position limits were necessary.
The Commission already had a large reporting program for futures in place, and was now setting up a similar program for swaps. Data generated by both these initiatives provided enough transparency in the market, O'Malia said.