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CFTC Issues Federal Speculative Position Limits Rule for Futures and Swaps

Client memorandum | January 28, 2021

On January 14, 2021, the Commodity Futures Trading Commission (the “Commission” or the “CFTC”) published in the Federal Register a final rule adopting various amendments to its current rules which set forth spot month, single month and all-months combined speculative position limits on nine agricultural futures contracts (the “legacy futures contracts”).  Among other things, the amendments: (1) expand the number of contracts subject to federal speculative position limits from nine to 25, comprised of the legacy futures contracts along with 16 futures contracts on certain agricultural, metals and energy commodities, certain linked futures contracts and options on such futures contracts (together with the legacy futures contracts, the “core referenced futures contracts”); (2) subject for the first time certain swaps deemed “economically equivalent” to referenced contracts (as defined herein) to the federal speculative position limits regime (such “economically equivalent swaps” together with core referenced futures contracts, “referenced contracts”); (3) increase most of the current federal spot month, single month, and all-months combined speculative position limits for legacy futures contracts; (4) modify and expand available exemptions from the federal speculative position limits regime; and (5) require exchanges to establish speculative position limits no higher than federal speculative position limits for referenced contracts and provide exchanges with flexibility in setting speculative position limits or position accountability levels for physical commodity contracts not subject to federal speculative position limits outside of the spot month.

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