Oct 3 Exchange operators CME Group and ICE Futures U.S. said on Wednesday they would stick with their existing position limits regimes after a court threw out the U.S. Commodity Futures Trading Commission's (CFTC) new rule to curb commodity market speculation.
CME Group and ICE, a subsidiary of IntercontinentalExchange Inc, had proposed revisions to their own position limit rules to bring them in line with the changes mandated by the CFTC. Those changes were due to come into effect on Oct. 12, but the rule was thrown out by the U.S. District Court of Columbia on Friday following a lengthy challenge by Wall Street banks.
CME Group said that "in light of the action by the District Court" they were withdrawing plans to revise the exchanges' "Rule 559" which governs the number of commodity contracts an individual can hold on the New York Mercantile Exchange, Chicago Board of Trade, and the Chicago Mercantile Exchange.
"The Exchanges will not be adopting any revisions to Rule 559 at this time, and will continue to consider all requests for exemptions subject to the existing provisions of Rule 559," CME Group said in an emailed notice.
ICE put out a similar statement.
CFTC Chairman Gary Gensler vowed on Tuesday to push ahead with efforts to reinstate the rule, arguing it was mandated by the Dodd-Frank financial reform law. He did not rule out an appeal to a higher court.
Bart Chilton, one of five CFTC commissioners, said Tuesday that he thought the CFTC should "immediately" appeal against the court decision and seek a stay so that it could go forward.
It should also start drafting yet another rule to address the concerns of the court, Chilton said.
U.S. District Judge Robert Wilkins, who was appointed by President Barack Obama, said the CFTC had failed to prove that it was necessary to impose new caps on speculative bets in 28 U.S. markets, including copper, corn and crude oil, to reduce price spikes and volatility.