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September 10, 2013

CFTC Readies Vote on Speculation Rule

Regulators are making a second run at a rule designed to limit speculation in commodity markets, a year after the Commodity Futures Trading Commission’s initial attempt was tossed out by a federal court.

The CFTC could vote as early as the end of the month on a revised version of the rule, which aims to curb sharp price spikes by limiting the percentage of the market any one firm can control in certain commodities.

The CFTC has tweaked the rule—authorized by the 2010 Dodd-Frank law—to address problems identified by the court, including providing further legal justification for the limits as well as a more thorough cost-benefit analysis, according to a person familiar with the matter.

Last September, the U.S. District Court for the District of Columbia sent the rule back to the CFTC, saying the Dodd-Frank statute was ambiguous as to whether the limits were mandatory and that regulators didn’t properly justify the imposition of the limits. The ruling was a big setback for the agency as it was trying to implement the Dodd-Frank law. The CFTC is appealing the decision.”

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Read full Wall Street Journal article here

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