(Updates with links)
Jan 14 The top U.S. futures market regulator on
Thursday proposed sweeping rules to limit the influence of big
traders in energy markets.
The Commodity Futures Trading Commission said the proposed
regulations are aimed at preventing excessive concentration and
speculation in these markets.
Below are some key details from the CFTC's proposal. For
more information, please see [ID:nCFTCREG]
> Proposed rulemaking Q+A: r.reuters.com/ryh63h
> Proposal to set position limits:
-- CFTC's proposed position limits would apply to natural
gas, crude oil, heating oil and gasoline futures and options
contracts traded on NYMEX and ICE.
-- Unlike position limits already imposed in some
agriculture markets, these energy rules establish aggregated
position limits across physically settled and cash-settled
contracts, across reporting markets and at the owner level.
-- Aggregate limits are set by a formula based on open
-- The all-months-combined position limit would be 10
percent of the first 25,000 contracts of open interest and 2.5
percent of open interest beyond 25,000 contracts.
The single-month position limit is set at two-thirds of the
all-months-combined position limit. The spot-month limit in the
physical delivery contract is 25 percent of the estimated
-- For a small reporting market, the all-months-combined
limit would be up to 30 percent of a contract's total open
interest on that exchange.
-- A trader holding cash-settled contracts would be subject
to a spot-month position limit of five times the level fixed
for the cash-settled contract's physically-settled counterpart
if the trader holds no physically-settled contracts in the spot
Otherwise, traders would be subject to the same limit fixed
for a contract's physically settled counterpart.
-- Entities using the futures markets to hedge commercial
risks, or bona fide hedgers, would still be exempt from
position limits under this proposal.
-- Swap dealers establishing positions to offset customer
initiated swap positions could qualify for a limited risk
management exemption for positions held outside the spot
The limited risk management exemption for swap dealers
would be administered by the CFTC and the names of exempted
dealers would be publicly disclosed.
(Compiled by Ayesha Rascoe; Editing by Lisa Shumaker)