Federal Court Strikes Down CFTC’s Position Limits Rule

The Court's Ruling

On September 28, the United States District Court for the District of Columbia struck down a new position limit rule that the U.S. Commodity Futures Trading Commission (CFTC) had promulgated in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).¹ The rule, 17 CFR 151, which was scheduled to become effective on October 12, would have imposed limits on the position that any trader or group of traders could take in 28 different commodities, including NYMEX Light Sweet Crude, NYMEX Henry Hub Natural Gas, NYMEX NY Harbor Gasoline Blendstock, and NYMEX NY Harbor Heating Oil contracts, either through swaps or futures. Separate aggregation rules, which were still under consideration by the CFTC when the court's ruling was issued, would require a trader to aggregate its positions with positions held by entities that the trader controls. Shortly after the position limits were adopted, the International Swaps