CFTC Proposes New Federal Position Limits and Exemptions for Certain Energy Commodity Contracts

On January 26, 2010, the U.S. Commodity Futures Trading Commission issued a notice of proposed rulemaking in which it proposes regulations that would, for the first time, impose federal, rather than exchange-based, spot month, single month and all-months-combined federal position limits for specific natural gas, crude oil, heating oil and gasoline futures and option contracts. In addition to market specific limits, the proposed regulations would aggregate and apply limits across all exchanges listing economically similar contracts (and all exempt commercial markets that are registered entities with respect to such contracts). Notably, under the proposed regulations, the Commission would modify, in respects that will potentially significantly limit, the scope and nature of the exemptions available to commercial market participants and swap dealers. The proposal would also alter the methodology by which positions are aggregated for purposes of applying the proposed federal energy position limits, specifically prohibiting disaggregation of positions controlled by “independent account controllers”.

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