U.S. regulators revise proposal on commodity position limits

(Reuters) by Tom Polansek – U.S. derivatives regulators are revising their proposal to limit the positions that traders can hold in commodity markets to make it easier for some hedge funds and banks to keep large trades. The Commodity Futures Trading Commission wants to allow financial firms to count their market positions separately from subsidiaries if the parent company says it does not control trading at the affiliate, according to a proposal issued on Tuesday. Under revised rules, a company would simply be able to file a notice with the CFTC saying that it has no control over trading at a subsidiary and that firewalls are in place to prevent access to information, CFTC Chairman Timothy Massad said. An earlier version of the proposal required firms to apply for and obtain prior approval from the CFTC to separate their positions from subsidiaries. “We are proposing a simplification of that exemption process,” Massad said. The CFTC proposed rules on positions limits in 2013 after Congress mandated that the agency address the risk of excessive speculation in commodity markets as part of the Dodd-Frank Wall Street reform law. Requiring firms to apply for CFTC permission to count their positions separately from subsidiaries and … continue reading

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