* CFTC's Gensler says won't have final rule in mid-January
* CFTC plans to phase in limits starting with spot month
* Some lawmakers say CFTC is acting before it has data
By Charles Abbott and Tom Doggett
WASHINGTON, Dec 15 The U.S. futures regulator
acknowledged on Wednesday it will miss the January target for
issuing a final rule on limiting the amount of contracts a
trader can control in agricultural, energy and metals markets.
The U.S. Commodity Futures Trading Commission will also
propose phasing in position limits, putting them first on the
spot month and then deferred months or positions in all months
combined. The CFTC will unveil the details of its plan on
Thursday in its almost three-year crusade to prevent a repeat
of the 2008 surge in commodity prices to record highs.
Market participants already had doubts the CFTC would meet
the mid-January target for implementing position limits as
required under the new financial reform law. Some Republican
lawmakers, exchanges and large investors have urged the CFTC to
move more slowly to prevent curtailing liquidity and increasing
CFTC Chairman Gary Gensler told a House Agriculture
subcommittee that a final rule would be issued "as soon as we
can sort out" the public comments on the proposal, which would
be open to comment for 60 days. The Agriculture Committee has
jurisdiction over CFTC.
"We'll not finalize it by the statutory date," said
Gensler did not suggest the level at which limits would be
set. He said a formula could be used at first, with details
Gensler and CFTC Commissioner Bart Chilton said spot month
limits would be easier to implement than limits that cover
"The spot month, we could do now," said Chilton, and base
it on a fraction of the deliverable supply. CFTC considered a
similar approach when it looked solely at energy limits.
Gensler said spot-month limits "could be phased in sooner
than the all-month limits."
"The commission could consider proposing single-month and
all-months-combined position limits based on the open interest
for futures, options and economically equivalent swaps," he
Republicans on the panel said CFTC should move more slowly.
Frank Lucas, who will become Agriculture Committee chairman in
January when Republicans take control of the House of
Representatives, said he was "willing to consider an easing of
Jerry Moran, who will become a senator in January, said
CFTC was rushing to issue a rule before it has adequate
information on market size or appropriate limits.
In an interview last week, Lucas said he expected to hold
hearings next year to review CFTC rule-making for derivatives,
which are being brought under federal oversight for the first
Chilton said he believed a delay would be the wrong
approach. In prepared remarks, he said futures prices should be
based on the fundamentals of supply and demand. "We saw
delinked commodity prices in 2008 and some of us are concerned
that we see that taking place this year," he said.
Separately, CME Group Inc (CME.O) Executive Chairman
Terrence Duffy took aim at the CFTC's push to control
speculation in commodities trading, saying on Wednesday that
position limits on investors' holdings are not a "costless
Such limits will not bring down overly high prices because
they do not apply to the underlying cash markets, Duffy told
the House panel.
He said the CFTC should not try to set limits before it has
more information on the over-the-counter swaps markets, where
vast numbers of contracts change hands away from the eyes of
"Without a thorough understanding of such data, the
commission runs the risk of inappropriately setting position
limits," Duffy said said.
(Reporting by Charles Abbott and Tom Doggett in Washington;
additional reporting by Ann Saphir in Chicago; Editing by Lisa