Position Limits Rumors Become Reality: CFTC Adopts Final Position Limits Rule Under Dodd-Frank

On October 18, 2011, the Commodity Futures Trading Commission ("Commission") adopted, by a vote of 3 to 2, a final rule regarding position limits for certain physical commodity derivatives ("Final Rule") pursuant to the Commodity Exchange Act ("CEA"), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act").¹

Although the text of the Final Rule is not yet available, the Commission has stated its intent to phase-in position limits in two parts following effectiveness of the Commission's final rulemaking regarding the further definition of "swap."

• Phase one: Spot-month position limits will be effective sixty days following effectiveness of the Commission's final rule further defining the term "swap" under the Dodd-Frank Act. This means that the first phase of position limits imposed by the Final Rule is likely not to become effective until at least mid-April 2012.²