(Adds second meeting, background)
By Douwe Miedema
WASHINGTON Oct 23 The U.S. derivatives
regulator will meet next month to adopt a rule that will curtail
Wall Street's ability to speculate with commodities, a measure
investment banks are fighting in court.
The Commodity Futures Trading Commission is revising the
rule on so-called position limits, even as its lawyers are
preparing to defend an earlier version knocked down by a U.S.
court last year.
But Mark Wetjen, one of the CFTC's four commissioners, said
this week that the dual strategy of pursuing the appeal and a
new rule at the same time was not necessarily the best, and that
the agency could drop the appeal.
Reuters reported earlier that the CFTC was finishing the new
rule, which would remove an important irritant for the bank
groups fighting the rule before the court, by allowing broader
The new rule would contain a better legal justification to
conform with the U.S. District 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.
Separately, the CFTC said it would meet next Wednesday to
adopt a rule telling futures brokers to better protect their
clients' money, a measure put in place after the collapse of MF
Global in October 2011.
The rule will bar brokers from using excess money a customer
has lodged with it to back futures trades - so-called margin -
to cover the temporary shortfall of another customer, which the
industry has complained will raise costs.
The fact that the CFTC is now calling a public meeting is
ordinarily a sign that a majority of the Commission is behind
it, even though Scott O'Malia - currently the only Republican on
the Commission - has publicly criticized it.
(Reporting by Douwe Miedema; Editing by Andre Grenon and Dan