In recent weeks, the US Commodity Futures Trading Commission has issued several final rules and rule proposals that directly affect hedge fund managers that trade in futures contracts (and in other commodity interests) and private equity fund managers with portfolio companies that may, as part of a hedging or raw materials acquisition effort, engage in commodity interest transactions. All fund managers should review these changes to determine if they present limitations on their business or require regulatory relief filings; registered commodity pool operators and commodity trading advisors, of course, should review all of the developments discussed in this article.
Expanded Position Limits
On Dec. 5, 2016, the CFTC reproposed rules that would, if adopted, expand the scope of the existing federal position limits regime for exchange-traded futures contracts (the “Reproposal”).1
CFTC rules currently impose position limits for nine futures and commodity options contracts (the “Legacy Contracts”). In 2011, the CFTC adopted rules to expand the position limits regime beyond the Legacy Contracts, but these rules were quickly vacated — on technical grounds — by a federal district court. In 2013, the CFTC again put forth a proposal for expanded position limits and most recently supplemented that proposal in May 2016. No final rule was adopted, however, and the CFTC issued the Reproposal earlier this month based on public comment and related reviews by the CFTC Staff.
The Reproposal, if adopted, would: