Comment Letter to the CFTC in Response to its Request for Comments on Position Limits for Derivatives

March 28, 2011

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Topics: CFTC Commodity Futures Trading Commission, position limits, derivatives, futures, option contract, swap contract, futures market, price risk, commercial participants, operating company, financial institution, energy market infrastructure, liquid price discovery, risk-shifting market, market manipulation, federal limits, crowding out provision, spot month, disaggregation relief, deliverable supply, inter-commodity spread transactions, bona fide hedger, price discovery, risk management, commodity market, annual recalculation methodology, U.S. futures exchange, delivery point, individual class rules, legacy position limits, agricultural commodities, disorderly markets, spot-month position limits, referenced contracts, aggregate spot-month position limits, swaptions, DCMs, physically delivered contracts, cash-settled contracts, conditional-spot month limit, cash position, forward position, physical commodity deliverable, aggregate all-months-combined, aggregate single-month, futures class all-months-combined, futures class single-month, swaps class all-months-combined, swaps class single-month, open interest, non-spot position limits, calendar-spread exemption, hedging transaction, cash market transaction, cash market risk, swap dealer hedge exemption, pool participant, future commission merchants, FCMs, independently controlled and managed trader, account aggregation requirements, enumerated agricultural commodities, open interest formula, position visibility, reporting requirements, offsetting positions, excessive speculation, interstate commerce, physical commodity, interest rates, stock indices, squeezes, market liquidity, global commodity, regulatory oversight, risk transfer, energy price volatility, CTFC Inter-Agency Task Force on Commodity Markets, GAO, IOSCO, IMG, UK Treasury, CME, The Economist, supply and demand, U.S. dollar, price volatility, NYMEX crude oil price, speculative investment, crude oil futures, International Organization of Securities Commission, IOSCO Technical Committee, IMF World Economic outlook, HM Treasury Global Commodities, OECD publishing, JP Morgan, long positions, hedge funds, short positions, Chicago onions, Berlin wheat, Credit Agricole, Energy Risk, University of Calgary, PKVerleger LLC, Wall St. Journal, Artificial limits, Barclays Capital, OECD Food, Jacks Study, Commission Energy Complex Report, Global Energy Management Institute, Bauer College of Business, University of Houston, House Committee on Agriculture, Pirrong Testimony, price spikes, agricultural model, metal commodity, seasonal variation, market surveillance, OTC, WTI, independently controlled accounts, independent third party, commodity trading advisors, common parent, CPO, CTA, control standard, commodity pool operator, commodity trading advisor, eligible entity, order routing arrangement, disclosure documents, non-financial entity exemption, active trading program, passive trading program, funds of funds, private equity investments, passive investors, pension plan, independent account controller exemption, asset manager, corporate enterprises, speculative trading ventures, CFTC docket no. 11-05, CFTC docket no. 08-02, pool participant exemption, equity interest, market depth, no-action relief, percentage interest, real-time basis, university endowment, liquidity provisions, application based exemption, approval based exemption, annual renewal based exemption, self-executing disaggregation, reporting obligation, surveillance, audit, enforcement, cross-ownership of traders, statement of reporting trader, benchmark contracts, NYMEX Henery Hub Natural Gas contract, commercial hedgers, inter-commodity spread exemption, arbitrage exemption, directional position, outright positions, submarket, large trader data, seasonality, annual limits, CBOT, NYBOT, KCBOT, pre-existing position exemption, significant price discovery contracts, index fund manager, class limits, rounding, hypothetical portfolios, cleared bilateral contracts, non-cleared bilateral contracts, front month position, deferred month positions, last day swaps, penultimate swaps, options, delta, financial cal spread options, physical cal spread options, physical options, HH natural gas,
From: MFA, Richard Baker

To:

David Stawick, CFTC
Gary Gensler, Michael Dunn, Bart Chilton, Jill Sommers, Scott O'Malia, Stephen Sherrod, Bruce Fekrat (all) CFTC.

MFA submitted comments to the CFTC in response to its request for comments on position limits for derivatives. MFA remains concerned that the CFTCs proposal is not empirically driven and that it may place a greater burden on interstate commerce by hindering the ability of futures markets to perform their fundamental price discovery, risk transfer and risk management functions. MFA is especially concerned that the proposal will result in unnecessary aggregation of independently controlled accounts, burden investors and investment managers, and potentially reduce liquidity in U.S. futures markets by diverting from the CFTC and exchanges longstanding policy of disaggregating accounts based upon independence for purposes of determining positions.

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