FIA provides the Commodity Futures Trading Commission (“Commission”) with the comments and recommendations set forth below in response to the Commission’s Notice of Proposed Rulemaking concerning Position Limits for Derivatives, 76 Fed. Reg. 4752 (January 26, 2011).
FIA’s members, their affiliates and their customers actively participate in the listed and over-the-counter (“OTC”) derivatives markets as intermediaries, principals and users. For this reason, FIA participated in the legislative process that led to the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). Moreover, as the Commission and other federal agencies work to implement the Dodd-Frank Act, FIA has publicly committed to assist them by providing the information, comments, and recommendations they need to ensure that the U.S. derivatives markets remain the most efficient and competitive in the world.
Section 737 of the Dodd-Frank Act amended the Commission’s authority in Section 4a of the Commodity Exchange Act (“CEA”) to establish position limits by, for the first time, extending that authority to cleared and uncleared swaps. Unlike most other provisions in the legislation, amended Section 4a became effective on July 21, 2010. It authorizes the Commission in specified circumstances to set limits on the size of positions, other than bona fide hedging positions, in futures, options on futures, and swap contracts involving exempt and agricultural commodities that may be held by any person. As active participants in, and users of, the U.S. derivatives markets, FIA and its members have a significant interest in the Commission’s proposed federal speculative position limits and its proposed definition of bona fide hedging transactions.
