Position limits rule hinges on Dodd-Frank interpretation

Author: | Published: 13 Dec 2011

Litigation over the Commodity Futures Trading Commission’s position limits rule set to go into effect on January 17 2012 could depend on whether the court interprets language in Dodd-Frank – "the Commission shall set position limits as appropriate" – as a Congressional mandate.  

The Securities Industry and Financial Markets Association (Sifma) filed joint suits along with the International Swaps and Derivatives Association (Isda) in the US District Court for the District of Columbia and the US Court of Appeals for the D.C. Circuit on December 2, arguing the CFTC was incorrect in assuming that Dodd-Frank required a position limits rule absent any supportive economic analysis.

The market associations also claim the CFTC violated the Administrative Procedure and Commodity Exchange Acts by failing to allow market participants to meaningfully participate in the rulemaking and forgoing a...