Comment in response to petition to the Commodity Futures Trading Commission for exemptive relief regarding “Aggregation, Position Limits for Futures and Swaps,”

IATP is grateful for the opportunity to share its views on questions posed by the Commodity Futures Trading Commission as it considers how to respond to the Commercial Energy Working Group (“Working Group”) petition for an exemption from the Part 151 rule regarding positions limits that requires aggregation of data on positions held in futures, options and swap contracts.[i] As the Commission notes in its position limits rule, “In light of the importance of aggregation standards in an effective position limits regime, it is critical that the Commission effectively and efficiently monitor the extent to which traders rely on any of the disaggregation exemptions.”[ii]  The requested exemption from aggregation would apply to all owned non-financial entities (i.e. entities that own 10 percent or more of a non-financial entity, subject to a demonstration of the independence of control of non-financial entity trading positions), including agricultural ones. IATP is among many analysts and scholars who believe that passively invested energy contract dominant commodity index funds and related instruments disrupt agricultural price formation based on fundamental factors.[iii]

IATP is therefore concerned that effective implementation of CFTC position limit rules to prevent excessive speculation on agricultural commodity contracts will be impeded if the proposed Working Group exemptions from aggregation of trading data are granted. Although the Commission estimates that just ninety entities will be affected by the filing requirements for the proposed amendment to the Position Limits Rules (FR 31781), these entities include the Designated Contract Markets, swaps execution facilities, Foreign Contract Markets, foreign brokers and large traders (FR. 31780). These entities will have the resources to apply for and received the proposed exemptions from aggregation.  

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[ii] “Position Limits for Futures and Swaps,” Commodity Futures Trading Commission, Federal Register, 76:223 (November 18, 2011), 71679.

[iii] For a bibliography of about a hundred recent academic and non-governmental organization studies on excessive speculation, see