II 

112TH CONGRESS 

1ST SESSION S. 1598 

To amend the Commodity Exchange Act to prevent excessive speculation 

in commodity markets and excessive speculative position limits on energy 

contracts, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 21, 2011 

Mr. NELSON of Florida (for himself, Mr. SANDERS, Mr. BLUMENTHAL, and 

Mr. ROCKEFELLER) introduced the following bill; which was read twice 

and referred to the Committee on Agriculture, Nutrition, and Forestry 

A BILL 

To amend the Commodity Exchange Act to prevent excessive 

speculation in commodity markets and excessive speculative position limits on energy contracts, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Anti-Excessive Specu5 lation Act of 2011’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 


jbell on DSK7SPTVN1PROD with BILLS
2 

•S 1598 IS

1 (1) as scores of recent academic and govern2 mental studies, reports, and analyses have shown, 

3 unlimited and excessive speculation in commodity 

4 markets causes harm to consumers and commodity5 dependent businesses of the United States by con6 tributing to unnecessary volatility and unwarranted 

7 increases in food and energy prices; 

8 (2) for the purpose of diminishing, eliminating, 

9 or preventing the burdens imposed on interstate 

10 commerce by excessive speculation in commodities, 

11 section 4a(a)(1) of the Commodity Exchange Act (7 

12 U.S.C. 6a(a)(1)) directs the Commodity Futures 

13 Trading Commission to proclaim and fix speculative 

14 position limits, as necessary, on the amount of com15 modity trading by any person, including any group 

16 or class of traders other than bona fide hedgers; 

17 (3) pursuant to the standards set forth in sec18 tion 4a(a)(1) of the Commodity Exchange Act (7 

19 U.S.C. 6a(a)(1)), section 4a(a)(2) of that Act directs 

20 the Commodity Futures Trading Commission to es21 tablish limits on the positions that may be held by 

22 commodity traders, other than bona fide hedge posi23 tions, and establishes a specific timetable for imple24 mentation of those limits; 


jbell on DSK7SPTVN1PROD with BILLS
3 

•S 1598 IS

1 (4) the rulemaking authority of section 4a of 

2 the Commodity Exchange Act (7 U.S.C. 6a) pro3 vides the Commodity Futures Trading Commission 

4 with ample authority to impose meaningful specula5 tive position limits on commodity trading by indi6 vidual speculators, as well as position limits on the 

7 overall level of speculative trading in the market8 place; 

9 (5) in recent years, the interpretation of the 

10 Commodity Futures Trading Commission of the 

11 term ‘‘excessive speculation’’ has focused on the 

12 threat that singular, concentrated positions pose to 

13 the liquidity and efficient management of commodity 

14 trading; 

15 (6) the historically narrow emphasis of the 

16 Commodity Futures Trading Commission on the 

17 burden created by concentrated speculative positions 

18 has deterred the Commission from adopting addi19 tional measures to ensure that the aggregate level of 

20 speculation in the market does not contribute to un21 warranted increases in commodity price levels; 

22 (7) this Act clarifies that— 

23 (A) one of the fundamental objectives of 

24 the Commodity Exchange Act (7 U.S.C. 1 et 

25 seq.) is to ensure that the commodity markets 


jbell on DSK7SPTVN1PROD with BILLS
4 

•S 1598 IS

1 accurately reflect the fundamental supply and 

2 demand for commodities; and 

3 (B) the deterrence and prevention of exces4 sive speculation is an express purpose of that 

5 Act; 

6 (8) in order to end decades of legal uncertainty 

7 and regulatory ambiguity that has undermined en8 forcement efforts, this Act defines the term ‘‘exces9 sive speculation’’ and creates legal presumptions 

10 that give rise to a determination that excessive spec11 ulation is present in a commodity market; and 

12 (9) the individual and aggregate position limits 

13 set forth in this Act and applicable to energy con14 tracts seek to strengthen, and not replace, any limits 

15 established by the Commodity Futures Trading 

16 Commission under the rulemaking processes of the 

17 Commission. 

18 SEC. 3. FINDINGS AND PURPOSE. 

19 Section 3 of the Commodity Exchange Act (7 U.S.C. 

20 5) is amended— 

21 (1) in subsection (a), by striking ‘‘, or’’ and in22 serting ‘‘that accurately reflect the fundamental sup23 ply and demand for commodities, and’’; and 


jbell on DSK7SPTVN1PROD with BILLS
5 

•S 1598 IS

1 (2) in subsection (b), in the second sentence, by 

2 inserting ‘‘and excessive speculation’’ after ‘‘prevent 

3 price manipulation’’. 

4 SEC. 4. FOREIGN BOARDS OF TRADE. 

5 Section 4(b)(1)(A)(i) of the Commodity Exchange 

6 Act (7 U.S.C. 6(b)(1)(A)(i)) is amended by striking ‘‘sub7 ject to comparable, comprehensive’’ and inserting the fol8 lowing: ‘‘subject to— 

9 ‘‘(I) rules and restrictions prohib10 iting excessive speculation by govern11 mental authorities that are com12 parable to the law, regulations, and 

13 orders applicable to boards of trade in 

14 the United States; and 

15 ‘‘(II) comparable, comprehen16 sive’’. 

17 SEC. 5. EXCESSIVE SPECULATION. 

18 Section 4a of the Commodity Exchange Act (7 U.S.C. 

19 6a) is amended— 

20 (1) in subsection (a)— 

21 (A) in paragraph (1)— 

22 (i) in the first sentence, by striking 

23 ‘‘Excessive speculation’’ and inserting the 

24 following: 

25 ‘‘(A) EXCESSIVE SPECULATION.— 


jbell on DSK7SPTVN1PROD with BILLS
6 

•S 1598 IS

1 ‘‘(i) IN GENERAL.—Excessive specula2 tion’’; 

3 (ii) by inserting after the first sen4 tence the following: 

5 ‘‘(ii) FACTORS.—Excessive speculation 

6 in a commodity market exists if speculative 

7 traders have a substantial impact on price 

8 discovery. 

9 ‘‘(iii) PRESUMPTION OF EXCESSIVE

10 SPECULATION.—For purposes of this Act, 

11 speculative traders shall be presumed to 

12 have a substantial impact on price dis13 covery if the Commission determines 

14 that— 

15 ‘‘(I) gross positions, long or 

16 short, attributable to speculative trad17 ing in a contract for future delivery, 

18 an option on such a contract, a swaps 

19 contract listed for trading on a des20 ignated contract market, or a swaps 

21 contract listed for trading on a swaps 

22 execution facility exceed the gross po23 sitions, long or short, attributable to 

24 bona fide hedging transactions traded 

25 in such a contract or option; or 


jbell on DSK7SPTVN1PROD with BILLS
7 

•S 1598 IS

1 ‘‘(II) the average percentage of 

2 open interest, long or short, held by 

3 persons primarily engaged in specula4 tive trading during the most recent 

5 12-month period for which data are 

6 available exceeds by more than 10 

7 percent the average annual percentage 

8 of open interest, long or short, held by 

9 persons primarily engaged in specula10 tive trading during— 

11 ‘‘(aa) the preceding 25-year 

12 period; or 

13 ‘‘(bb) if the interest is held 

14 by the persons for less than the 

15 25-year period, the period during 

16 which the contract has been trad17 ed on a designated contract mar18 ket.’’; 

19 (iii) in the second sentence, by strik20 ing ‘‘For the purpose of diminishing, elimi21 nating, or preventing such burden’’ and in22 serting the following: 

23 ‘‘(B) POSITION LIMITS.— 

24 ‘‘(i) IN GENERAL.—For the purpose 

25 of diminishing, eliminating, or preventing 


jbell on DSK7SPTVN1PROD with BILLS
8 

•S 1598 IS

1 the burden on interstate commerce de2 scribed in subparagraph (A)(i)’’; and 

3 (iv) by designating the third, fourth, 

4 fifth, and sixth sentences (as those sen5 tences existed before the amendments 

6 made by clauses (i) through (iii)) as 

7 clauses (ii), (iii), (iv), and (v), respectively, 

8 of subparagraph (B) (as added by clause 

9 (iii)); 

10 (B) by redesignating paragraph (7) as 

11 paragraph (8); 

12 (C) by inserting after paragraph (6) the 

13 following: 

14 ‘‘(7) SPECULATIVE POSITION LIMITS ON EN15 ERGY CONTRACTS.— 

16 ‘‘(A) DEFINITIONS.—In this paragraph: 

17 ‘‘(i) ENERGY CONTRACT.—The term 

18 ‘energy contract’ means— 

19 ‘‘(I) a contract referencing the 

20 price of crude oil, gasoline, diesel fuel, 

21 jet fuel, heating oil, or natural gas 

22 and traded on a registered entity; 

23 ‘‘(II) with respect to an agree24 ment, contract, or transaction that 

25 settles against any price (including 


jbell on DSK7SPTVN1PROD with BILLS
9 

•S 1598 IS

1 the daily or final settlement price) of 

2 one or more contracts referencing the 

3 price of crude oil, gasoline, diesel fuel, 

4 jet fuel, heating oil, or natural gas 

5 and listed for trading on a registered 

6 entity, a contract traded on a foreign 

7 board of trade that provides members 

8 or other participants located in the 

9 United States with direct access to 

10 the electronic trading and order 

11 matching system of the foreign board 

12 of trade; and 

13 ‘‘(III) swap contracts referencing 

14 the price of crude oil, gasoline, diesel 

15 fuel, jet fuel, heating oil, or natural 

16 gas that perform or affect a signifi17 cant price discovery function with re18 spect to regulated entities. 

19 ‘‘(ii) EXCESSIVE SPECULATIVE POSI20 TION.—The term ‘excessive speculative po21 sition’ means a position that affects— 

22 ‘‘(I) in the spot month, more 

23 than 5 percent of the estimated deliv24 erable supply of the same commodity; 

25 and 


jbell on DSK7SPTVN1PROD with BILLS
10 

•S 1598 IS

1 ‘‘(II) in a single month or all 

2 months combined, more than 5 per3 cent of the open interest in a contract. 

4 ‘‘(B) INDIVIDUAL POSITION LIMITS ON EN5 ERGY CONTRACTS.—No person may hold or 

6 control an excessive speculative position, long or 

7 short, in an energy contract in any single mar8 ket described in subclause (I), (II), or (III) of 

9 subparagraph (A)(i) and aggregated across all 

10 markets described in those subclauses in the 

11 spot month, a single month, or all months com12 bined. 

13 ‘‘(C) AGGREGATE SPECULATIVE POSITION

14 LIMITS ON ENERGY CONTRACTS.— 

15 ‘‘(i) IN GENERAL.—Not later than 45 

16 days after the date of enactment of the 

17 Anti-Excessive Speculation Act of 2011, 

18 the Commission shall issue an order that 

19 establishes aggregate speculative position 

20 limits for long energy contracts held by 

21 speculators as a class of traders in any sin22 gle market described in subclause (I), (II), 

23 or (III) of subparagraph (A)(i) and in all 

24 markets described in those subclauses. 


jbell on DSK7SPTVN1PROD with BILLS
11 

•S 1598 IS

1 ‘‘(ii) REQUIREMENTS.—The aggregate 

2 speculative position limits shall be estab3 lished at levels that are not greater than 

4 the average annual percentage of long open 

5 interest held by speculators in any single 

6 market described in subclause (I), (II), or 

7 (III) of subparagraph (A)(i) and in all 

8 markets described in those subclauses dur9 ing— 

10 ‘‘(I) the preceding 25-year pe11 riod; or 

12 ‘‘(II) if the interest is held by 

13 speculators for less than the 25-year 

14 period, the period during which the 

15 contract has been traded. 

16 ‘‘(iii) PROCEDURES.—To the extent 

17 necessary, the order shall include transi18 tion rules to ensure an orderly and gradual 

19 reduction in aggregate speculative posi20 tions in a manner that does not mandate 

21 or require the unwinding of contracts and 

22 agreements existing on the date of enact23 ment of the Anti-Excessive Speculation Act 

24 of 2011. 


jbell on DSK7SPTVN1PROD with BILLS
12 

•S 1598 IS

1 ‘‘(D) EXEMPTION FOR BONA FIDE ENERGY

2 HEDGING TRANSACTIONS.— 

3 ‘‘(i) DEFINITION OF BONA FIDE EN4 ERGY HEDGING.— 

5 ‘‘(I) IN GENERAL.—In this sub6 paragraph, the term ‘bona fide energy 

7 hedging’ means a transaction or posi8 tion that is proportionate and eco9 nomically appropriate for the reduc10 tion of risks in the conduct and man11 agement of a trade or business that 

12 produces, processes, merchandises, 

13 manufactures, or consumes an energy 

14 commodity. 

15 ‘‘(II) EXCLUSION.—For purposes 

16 of this paragraph, the management of 

17 financial risk associated with swaps or 

18 other similar contracts, by itself, shall 

19 not constitute bona fide energy hedg20 ing. 

21 ‘‘(ii) EXCLUSION.—For purposes of 

22 this paragraph, bona fide energy hedging 

23 shall be excluded when computing the posi24 tions held or controlled by a person. 


jbell on DSK7SPTVN1PROD with BILLS
13 

•S 1598 IS

1 ‘‘(E) ANTI-ABUSE REGULATORY AUTHOR2 ITY.—The Commission shall issue such rules, 

3 regulations, or orders as are necessary— 

4 ‘‘(i) to prevent persons from circum5 venting or evading the speculative position 

6 limits established under this paragraph; or 

7 ‘‘(ii) to carry out the purpose of lim8 iting excessive speculation in energy mar9 kets.’’; and 

10 (D) in paragraph (8) (as redesignated by 

11 subparagraph (B)), by striking ‘‘The Commis12 sion’’ and inserting ‘‘Except as provided in 

13 paragraph (7), the Commission’’. 

Æ 


jbell on DSK7SPTVN1PROD with BILLS