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22 June 2016
On May 26 2016 the US Commodity Futures Trading Commission (CFTC) issued for public comment a supplement to its position limits proposal of December 2013. The supplement would permit exchanges to recognise, subject to CFTC review, certain positions in commodity derivative contracts as non-enumerated bona fide hedges or enumerated anticipatory bona fide hedges, as well as to exempt certain spread positions from federal position limits.
In a statement issued concurrently with the proposed rule, CFTC Chairman Timothy Massad noted that the proposed supplemental rule is a critical piece of the CFTC's effort to finalise rules on position limits in 2016.
In a separate statement, CFTC Commissioner Christopher Giancarlo also voiced support for the proposal, stating that the proposal reflects practical realities by recognising that most exchanges do not have access to sufficient swap position information to effectively monitor swap position limits.
If adopted, the proposed supplement would relieve designated contract markets and swap execution facilities from setting and monitoring exchange limits on swaps until designated contract markets and swap execution facilities have access to data that would enable them to do so.
For further information on this topic please contact Donna M Parisi, Geoffrey B Goldman or Azam H Aziz at Shearman & Sterling LLP by telephone (+1 212 848 4000) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Shearman & Sterling website can be accessed at www.shearman.com.
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