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Federal Register/Vol. 85, No. 39/Thursday, February 27, 2020

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Federal Register/Vol. 85, No. 39/Thursday, February 27, 2020 11596 Federal Register / Vol. 85, No. 39 / Thursday, February 27, 2020 / Proposed Rules COMMODITY FUTURES TRADING All comments must be submitted in F. § 150.8—Severability COMMISSION English, or if not, be accompanied by an G. § 150.9—Process for Recognizing Non- English translation. Comments will be Enumerated Bona Fide Hedging 17 CFR Parts 1, 15, 17, 19, 40, 140, 150, posted as received to https:// Transactions or Positions With Respect and 151 to Federal Speculative Position Limits comments.cftc.gov. You should submit H. Part 19 and Related Provisions— RIN 3038–AD99 only information that you wish to make Reporting of Cash-Market Positions available publicly. If you wish the I. Removal of Part 151 Position Limits for Derivatives Commission to consider information III. Legal Matters that you believe is exempt from A. Introduction AGENCY: Commodity Futures Trading disclosure under the Freedom of B. Key Statutory Provisions Commission. Information Act (‘‘FOIA’’), a petition for C. Ambiguity of Section 4a With Respect ACTION: Proposed rule. to Necessity Finding confidential treatment of the exempt D. Resolution of Ambiguity SUMMARY: The Commodity Futures information may be submitted according E. Evaluation of Considerations Relied Trading Commission (‘‘Commission’’ or to the procedures established in § 145.9 Upon by the Commission in Previous 1 ‘‘CFTC’’) is proposing amendments to of the Commission’s regulations. Interpretation of Paragraph 4a(a)(2) regulations concerning speculative The Commission reserves the right, F. Necessity Finding but shall have no obligation, to review, G. Request for Comment position limits to conform to the Wall IV. Related Matters Street Transparency and Accountability pre-screen, filter, redact, refuse, or remove any or all submissions from A. Cost-Benefit Considerations Act of 2010 (‘‘Dodd-Frank Act’’) B. Paperwork Reduction Act amendments to the Commodity https://www.comments.cftc.gov that it C. Regulatory Flexibility Act Exchange Act (‘‘CEA’’ or ‘‘Act’’). Among may deem to be inappropriate for D. Antitrust Considerations publication, such as obscene language. other amendments, the Commission I. Background proposes new and amended federal spot All submissions that have been redacted month limits for 25 physical commodity or removed that contain comments on A. Introduction the merits of the rulemaking will be derivatives; amended single month and The Commission has long established retained in the public comment file and all-months-combined limits for most of and enforced speculative position limits will be considered as required under the the agricultural contracts currently for futures and options on futures Administrative Procedure Act and other subject to federal limits; new and contracts on various agricultural applicable laws, and may be accessible amended definitions for use throughout commodities as authorized by the CEA.2 under FOIA. the position limits regulations, The existing part 150 position limits including a revised definition of ‘‘bona FOR FURTHER INFORMATION CONTACT: regulations 3 include three components: fide hedging transactions or positions’’ Aaron Brodsky, Senior Special Counsel, (1) The level of the limits, which and a new definition of ‘‘economically (202) 418–5349, [email protected]; currently apply to nine agricultural equivalent swaps’’; amended rules Steven Benton, Industry Economist, commodity derivatives contracts and set governing exchange-set limit levels and (202) 418–5617, [email protected]; a maximum that restricts the number of grants of exemptions therefrom; a new Jeanette Curtis, Special Counsel, (202) speculative positions that a person may streamlined process for bona fide 418–5669, [email protected]; Steven hold in the spot month, individual hedging recognitions for purposes of Haidar, Special Counsel, (202) 418– month, and all-months-combined; 4 (2) federal limits; new enumerated hedges; 5611, [email protected]; Harold Hild, exemptions for positions that constitute and amendments to certain regulatory Policy Advisor, 202–418–5376, hhild@ bona fide hedges and for certain other provisions that would eliminate Form cftc.gov; or Lillian Cardona, Special types of transactions; 5 and (3) 204, enabling the Commission to Counsel, (202) 418–5012, lcardona@ regulations to determine which leverage cash-market reporting cftc.gov; Division of Market Oversight, accounts and positions a person must submitted directly to the exchanges. in each case at the Commodity Futures aggregate for the purpose of determining DATES: Comments must be received on Trading Commission, Three Lafayette compliance with the position limit or before April 29, 2020. Centre, 1155 21st Street NW, levels.6 The existing federal speculative Washington, DC 20581. ADDRESSES: You may submit comments, position limits function in parallel to identified by ‘‘Position Limits for SUPPLEMENTARY INFORMATION: exchange-set limits required by Derivatives’’ and RIN 3038–AD99, by Table of Contents any of the following methods: 2 7 U.S.C. 1 et seq. • CFTC Comments Portal: https:// I. Background 3 17 CFR part 150. Part 150 of the Commission’s A. Introduction regulations establishes federal position limits (that comments.cftc.gov. Select the ‘‘Submit B. Executive Summary is, position limits established by the Commission, Comments’’ link for this rulemaking and C. Summary of Proposed Amendments as opposed to exchange-set limits) on nine follow the instructions on the Public D. The Commission Preliminarily agricultural contracts. Agricultural contracts refers Comment Form. Construes CEA Section 4a(a) To Require to the list of commodities contained in the • definition of ‘‘commodity’’ in CEA section 1a; 7 Mail: Send to Christopher the Commission To Make a Necessity U.S.C. 1a. This list of agricultural contracts Kirkpatrick, Secretary of the Finding Before Establishing Position currently includes nine contracts: CBOT Corn (and Commission, Commodity Futures Limits for Physical Commodities Other Mini-Corn) (C), CBOT Oats (O), CBOT Soybeans Trading Commission, Three Lafayette Than Excluded Commodities (and Mini-Soybeans) (S), CBOT Wheat (and Mini- Centre, 1155 21st Street NW, II. Proposed Rules Wheat) (W), CBOT Soybean Oil (SO), CBOT A. § 150.1—Definitions Soybean Meal (SM), MGEX Hard Red Spring Wheat Washington, DC 20581. (MWE), CBOT KC Hard Red Winter Wheat (KW), • B. § 150.2—Federal Limit Levels Hand Delivery/Courier: Follow the C. § 150.3—Exemptions From Federal and ICE Cotton No. 2 (CT). See 17 CFR 150.2. The position limits on these agricultural contracts are same instructions as for Mail, above. Position Limits Please submit your comments using referred to as ‘‘legacy’’ limits because these D. § 150.5—Exchange-Set Position Limits contracts have been subject to federal position only one of these methods. To avoid and Exemptions Therefrom limits for decades. possible delays with mail or in-person E. § 150.6—Scope 4 See 17 CFR 150.2. deliveries, submissions through the 5 See 17 CFR 150.3. CFTC Comments Portal are encouraged. 1 17 CFR 145.9. 6 See 17 CFR 150.4. VerDate Sep<11>2014 18:41 Feb 26, 2020 Jkt 250001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\27FEP3.SGM 27FEP3 lotter on DSKBCFDHB2PROD with PROPOSALS3 Federal Register / Vol. 85, No. 39 / Thursday, February 27, 2020 / Proposed Rules 11597 designated contract market (‘‘DCM’’) exchanges 13 to recognize certain Commission proposes new regulations, Core Principle 5.7 Certain contracts are positions as bona fide hedges, and thus rather than finalizing the 2016 thus subject to both federal and DCM- exempt from position limits. Reproposal.16 set limits, whereas others are subject To date, the Commission has not First, the Commission preliminarily only to DCM-set limits and/or position issued any final rulemaking based on believes that any position limits regime accountability. the 2013 Proposal, 2016 Supplemental must take into account differences As part of the Dodd-Frank Act, Proposal, or 2016 Reproposal. The 2016 across commodity and contract types. Congress amended the CEA’s position Reproposal generally addressed The existing federal position limits limits provisions, which, since 1936, comments received in response to those regulations apply only to nine contracts, have authorized the Commission (and prior rulemakings. In a companion all of which are physically-settled its predecessor) to impose limits on proposed rulemaking, the CFTC also futures on agricultural commodities. speculative positions to prevent the proposed, and later adopted in 2016, Limits on these commodities have been amendments to rules governing in place for decades, as have the federal harms caused by excessive speculation. aggregation of positions for purposes of program for exemptions from these As discussed below, the Commission compliance with federal position limits and the federal rules governing interprets these amendments as, among limits.14 These aggregation rules DCM-set limits on such commodities. other things, tasking the Commission currently apply only to the nine The existing framework is largely a with establishing such position limits as agricultural contracts subject to existing historical remnant of an approach that it finds are ‘‘necessary’’ for the purpose federal limits, and going forward would predates cash-settled futures contracts, of ‘‘diminishing, eliminating, or apply to the commodities that would be let alone swaps, institutional-investor preventing’’ ‘‘[e]xcessive speculation subject to federal limits under this interest in commodity indexes, and . causing
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