WASHINGTON Oct 28 The U.S. derivatives
regulator promised to drop its legal fight to retain a rule that
would set limits on commodity speculation, instead opting for a
rewritten version, which it is set to adopt in a vote next
A District Court last year knocked out the rule on so-called
position limits issued by the Commodity Futures Trading
Commission. The agency then appealed, while at the same time
starting to write a new rule.
"If the Commission votes to issue the (proposed rule) as
anticipated, it will immediately file a motion in this Court ...
to dismiss voluntarily this appeal," the CFTC said in a court
document on Monday.
The CFTC has called a vote over the new rule on Nov. 5,
ordinarily a sign that a majority of commissioners is in favor.
The new rule will remove an important irritant for the bank
groups fighting the rule.
It will also contain a better legal justification to conform
with the court ruling that the CFTC had failed to prove that the
limits were needed, and will better weigh the costs and benefits
of the rule.
The CFTC has always had the possibility of imposing position
limits on market parties, but the Dodd-Frank law to overhaul
Wall Street after the financial crisis of 2007-09 gave it far
greater powers to do so.
Banks like Goldman Sachs and Barclays had
said before the court that the fact that they needed to
aggregate holdings of companies in which they owned as little as
10 percent meant high compliance costs.
The new rule now allows exemptions for positions held by
firms in which they own minority stakes of between 10 and 50
percent, Reuters reported this month.