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[Federal Register: June 17, 2004 (Volume 69, Number 116)]
[Proposed Rules]
[Page 33874-33878]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17jn04-21]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 150


Petitions of the Chicago Board of Trade, the Kansas City Board of
Trade, and the Minneapolis Grain Exchange Pursuant to Commission
Regulation 13.2 for Repeal or Amendment of Speculative Position Limits
in Commission Regulation 150.2

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of petitions for amendment, or repeal of a rule, and
request for comment on the petitions.

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SUMMARY: The Chicago Board of Trade (CBT), the Kansas City Board of
Trade (KCBT), and the Minneapolis Grain Exchange (MGE) have submitted
separate petitions to the Commodity Futures Trading Commission
(Commission) seeking repeal or amendment of the speculative position
limits set out in Commission regulation 150.2 (Federal speculative
position limits). In addition, the New York Board of Trade, while not
submitting a formal petition of its own, has submitted a letter in
support of the CBT petition. The Commission believes that publication
of the petitions for comment is in the public interest, will assist the
Commission in considering the views of interested persons, and is
consistent with the Commodity Exchange Act (Act) and Commission
regulations. Copies of the petitions will be available for inspection
at the Office of the Secretariat, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581, or
on the Commission's website at  href="http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.cftc.gov" shape="rect">http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.cftc.gov. Copies of the

proposed amendments can also be obtained through the Office of the
Secretariat by mail at the above address or by phone at (202) 418-5100.

DATES: Comments must be received on or before August 16, 2004.

ADDRESSES: Comments should be submitted to Jean A. Webb, Secretary,
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st
Street, NW., Washington, DC 20581. Comments also may be sent by
facsimile to (202) 418-5521, or by electronic mail to [email protected]. Reference should be made to ``Petitions for Repeal

or Amendment of Federal Speculative Position Limits.'' Comments may
also be submitted by connecting to the Federal eRulemaking Portal at
 href="http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov" shape="rect">http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov and following comment submission

instructions.

FOR FURTHER INFORMATION CONTACT: Clarence Sanders, Attorney, Division
of Market Oversight, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581,
telephone (202) 418-5068, facsimile number (202) 418-5507, electronic
mail [email protected]; or Martin Murray, Industry Economist, Division
of Market Oversight, telephone (202) 418-5276, facsimile number (202)
418-5507, electronic mail [email protected].

SUPPLEMENTARY INFORMATION:

[[Page 33875]]

I. Introduction

    Speculative position limits have been a tool for the regulation of
the futures markets for over a half-century. The current regulatory
framework is two-pronged. Under the first prong, the Commission
establishes and enforces speculative position limits for futures
contracts on various agricultural commodities. These Federal limits are
enumerated in Commission regulation 150.2, and apply to the following
futures and option markets: CBT corn, oats, soybeans, wheat, soybean
oil, and soybean meal; MGE hard red spring wheat and white wheat; New
York Cotton Exchange (NYCE) cotton No. 2; and KCBT hard winter
wheat.\1\ Under the second prong, individual designated contract
markets (DCMs) establish and enforce their own speculative position
limits or position accountability provisions, subject to Commission
oversight and separate authority to enforce exchange-set speculative
position limits that the Commission has approved.
---------------------------------------------------------------------------

    \1\ For each of these markets, regulation 150.2 establishes a
spot month limit, a non-spot individual month limit, and an all-
months-combined speculative position limit.
---------------------------------------------------------------------------

    The CBT, by letters dated March 26, 2004, and April 27, 2004, the
KCBT, by a letter dated April 27, 2004, and the MGE, by a letter dated
May 20, 2004, submitted petitions to the Commission pursuant to
Commission regulation 13.2.\2\ Specifically, the CBT petition requests
that the Commission repeal regulation 150.2 and thereby eliminate the
Federal speculative position limits for all commodity markets
enumerated under that rule. The KCBT petition requests that the
Commission repeal only that part of regulation 150.2 pertaining to
Federal speculative position limits for the KCBT commodity markets
(i.e., hard winter wheat). The MGE petition also seeks repeal of the
regulation 150.2 as it relates to Federal speculative limits for the
MGE market in hard red spring wheat but does not address that DCM's
market in white wheat, which is currently dormant. In addition, the New
York Board of Trade (NYBOT), the parent company of NYCE, while not
submitting a formal petition of its own, submitted a May 27, 2004,
letter stating that it ``fully supports the CBOT petition.''
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    \2\ Commission regulation 13.2 states in pertinent part that
``any person may file a petition with the Secretariat of the
Commission for the issuance, amendment, or repeal of a rule of
general application.''
---------------------------------------------------------------------------

    Under all three petitions, in place of the repealed speculative
position limits, designated contract markets would bear the sole
responsibility for setting their own position limits or position
accountability standards, subject to Commission oversight and
enforcement. In this regard, the CBT has previously established its own
exchange-set speculative position limits that are independent of, but
set at the same or lower levels as, the Federal limits. The MGE and
NYCE incorporate the existing Federal limits by reference in their
respective rulebooks; they have not established independent limits on
speculative positions for these commodity futures markets. Likewise,
the KCBT currently has no provisions pertaining to speculative position
limits for hard winter wheat. Therefore, if Federal limits were
abolished, these exchanges would need to adopt speculative position
limits or position accountability provisions, as appropriate, to comply
with Core Principle 5 and the acceptable practices thereunder.
    Although the CBT, KCBT, and MGE petitions differ in scope, they are
similar in topical substance and for this reason are being combined for
purposes of publishing notice and requesting comment.

II. Background

A. Statutory Framework

    During the past half-century, Congress consistently has expressed
confidence in the use of speculative position limits as an effective
means of preventing unreasonable or unwarranted price fluctuations. See
H.R. Rep. No. 421, 74th Cong., 1st Sess. 1 (1935). In this regard,
section 4a(a) of the Act, 7 U.S.C. 6a(a), states that:

    Excessive speculation in any commodity under contracts of sale
of such commodity for future delivery made on or subject to the
rules of contract markets or derivatives transaction execution
facilities causing sudden or unreasonable fluctuations or
unwarranted changes in the price of such commodity, is an undue and
unnecessary burden on interstate commerce in such commodity.

    Accordingly, section 4a(a) provides the Commission with the
authority to:

    Fix such limits on the amounts of trading which may be done or
positions which may be held by any person under contracts of sale of
such commodity for future delivery on or subject to the rules of any
contract market or derivatives transaction execution facility as the
Commission finds are necessary to diminish, eliminate, or prevent
such burden.

    This longstanding statutory framework providing for Federal
speculative position limits was supplemented with the passage of the
Futures Trading Act of 1982, which acknowledged the role of exchanges
in setting their own speculative position limits. The 1982 legislation
also provided, under section 4a(e) of the Act, that limits set by
exchanges and approved by the Commission were subject to Commission
enforcement.
    Finally, the Commodity Futures Modernization Act (CFMA) of 2000
established designation criteria and core principles with which a DCM
must comply to maintain designation. Among these, Core Principle 5 in
section 5(d) of the Act states:

    Position Limitations or Accountability--To reduce the potential
threat of market manipulation or congestion, especially during
trading in the delivery month, the board of trade shall adopt
position limitations or position accountability for speculators,
where necessary and appropriate.

B. Regulatory Framework

    As noted above, the current regulatory framework of speculative
position limits is two-pronged: (1) For a limited number of
agricultural commodities, Federal speculative position limits have been
set and are enforced by the Commission; and (2) for virtually all other
commodities under Commission jurisdiction, speculative position limits
or position accountability provisions have been established and
enforced by individual DCMs, subject to Commission oversight and
enforcement. An abbreviated history of the regulatory framework
follows.
    Federal speculative position limits were first promulgated by the
Commodity Exchange Commission (CEC),\3\ a predecessor of the
Commission, for futures contracts in grains (then defined as wheat,
corn, oats, barley, flaxseed, grain sorghums, and rye) on December 22,
1938 (3 FR 4136). A Federal speculative position limit was established
for cotton on August 26, 1940 (5 FR 3198), and for soybeans on August
13, 1951 (16 FR 8107). The CEC also established Federal speculative
position limits for fats and oils, including soybean oil, on April 1,
1953, but soon suspended the enforcement of those limits and eventually
revoked them (33 FR 7624, May 23, 1968). At various other times, the
CEC also established Federal speculative position limits on lard,
onions, eggs, and potatoes.
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    \3\ Prior to the CFTC's creation in 1974, the Commodity Exchange
Authority administered the Commodity Exchange Act under the
direction of the Secretary of Agriculture and the Commodity Exchange
Commission, which was composed of the Secretaries of Agriculture and
Commerce and the Attorney General.
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    The CEC never established Federal speculative position limits for
many of

[[Page 33876]]

the agricultural commodities subject to its jurisdiction, including
butter, wool, wool tops, livestock, and livestock products. It is worth
noting that the Chicago Mercantile Exchange (CME) began trading pork
belly futures in 1961, live cattle futures in 1964, and live hog
futures in 1966. Even before those contracts were added to the list of
regulated commodities in 1968, the CME, under its own authority,
established speculative position limits for those contracts. While the
record is unclear on this matter, the existence of exchange-set
speculative position limits may explain why the CEC (and its successor,
the Commission) never determined that Federal speculative position
limits were necessary in livestock futures contracts.
    The Commodity Futures Trading Commission Act of 1974 (CFTC Act)
created the Commission and granted it exclusive jurisdiction over
futures trading in all commodities, not just specifically enumerated
agricultural commodities. The CFTC Act transferred authority over
Federal limits to the Commission from the CEC, but did not otherwise
substantively amend section 4a. The CFTC Act also gave the Commission
the authority to oversee, and, if necessary, to amend, exchange rules,
including speculative position limit provisions proposed by exchanges.
In 1981, the Commission, for the first time, required exchanges to
establish speculative position limits for all commodities not subject
to Federal limits (see 45 FR 50938, October 16, 1981). Provisions for
the establishment of exchange-set speculative position limits are
contained in Commission regulation 150.5.\4\ In addition, as noted
above, the Futures Trading Act of 1982 modified section 4a of the Act
to provide the Commission with the authority to separately enforce
exchange-set limits that have been approved by the Commission.
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    \4\ Provisions regarding the establishment of exchange-set
speculative position limits were originally set forth in CFTC
regulation 1.61. In 1999, the Commission simplified and reorganized
its rules by relocating the substance of regulation 1.61's
requirements to part 150 of the Commission's rules, thereby
incorporating within part 150 provisions for both Federal
speculative position limits and exchange-set speculative position
limits (see 64 FR 24038, May 5, 1999).
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    Since the Commission's founding, it has retained Federal
speculative position limits on those commodities where such limits had
previously been established by the CEC. For other commodities, the
Commission has allowed exchanges to set speculative position limits or
position accountability provisions, subject to Commission oversight and
enforcement. The one exception is that the Commission established
Federal speculative position limits in 1987 on soybean oil and soybean
meal (52 FR 38914, October 20, 1987), at the request of the CBT, in
order to make the regulatory treatment of soybean products consistent
with the regulatory treatment of soybeans.
    In 2000, the enactment of the CFMA resulted in the establishment of
designation criteria and core principles with which a DCM must comply
to maintain its designation, including Core Principle 5, as noted
above. To implement these new statutory provisions, the Commission
adopted part 38 to the Commission's regulations, which provides
guidance and acceptable practices concerning the core principles under
section 5(d) of the Act (66 FR 42256, August 10, 2001).\5\ Regarding
compliance with Core Principle 5 (position limitations or
accountability), the acceptable practices provide, in relevant part,
that spot-month limits should be adopted for markets based on
commodities having more limited deliverable supplies or where otherwise
necessary to minimize the susceptibility of the market to manipulation
or price distortions, and that markets may elect not to provide all-
months-combined and non-spot individual month limits. In addition,
under part 38, the existing provisions governing the establishment of
exchange-set speculative position limits contained in regulation 150.5
may still serve as acceptable practices.
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    \5\ Part 38 specifically notes, however, that ``The guidance * *
* is illustrative only of the types of matters a board of trade may
address, as applicable, and is not intended to be a mandatory
checklist.''
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III. The Exchange Petitions for Repeal or Amendment of the Speculative
Position Limits in Commission Regulation 150.2

A. Introduction

    As noted above, the CBT, KCBT, and MGE petitions essentially seek
to repeal, in whole or in part, the Federal limits set out in
regulation 150.2. In place of the repealed speculative position limits,
DCMs would bear the sole responsibility for setting their own position
limits or position accountability standards, subject to Commission
oversight. In this regard, as noted above, the CBT currently specifies
speculative position limits independently of, but at the same or lower
levels as, the existing Federal speculative position limits. However,
should the Commission repeal Federal speculative position limits, then
the exchange would be free to retain those limits or to adjust them, as
long as the exchange-set speculative position limits or position
accountability standards comply with Core Principle 5. In contrast, the
MGE and NYCE specify speculative position limits for their respective
commodity markets that are currently subject to Federal limits only by
reference to the provisions of regulation 150.2, and the KCBT does not
have any specifications regarding speculative position limits for hard
winter wheat. Consequently, if the Commission were to repeal Federal
limits, the MGE (for hard red spring wheat and white wheat), the NYCE
(for cotton No. 2), and the KCBT (for hard winter wheat) would need to
adopt speculative position limits or position accountability provisions
to comply with Core Principle 5 and the acceptable practices set forth
in Part 38 of the Commission's regulations.
    As discussed below, the CBT, KCBT, and MGE petitions include
analytical information in support of their respective propositions and,
additionally, seek other action either as a supplement, or an
alternative, to the requested repeal of the limits in regulation 150.2.

B. The CBT Petition

    Fundamentally, the CBT petition seeks to have the Commission repeal
the Federal limits set out in regulation 150.2 and to allow designated
contract markets to bear the sole responsibility for setting their own
position limits, subject to Commission oversight. In support of this
initiative, the CBT notes that the CFMA has substituted a more flexible
regulatory model, based upon core principles, for the former rules-
based approach to regulation. In this respect, the CBT notes that Core
Principle 5 of section 5(d) of the Act states that:

    To reduce the potential threat of market manipulation or
congestion, especially during trading in the delivery month, the
board of trade shall adopt position limitations or position
accountability for speculators, where necessary and appropriate.

The CBT acknowledges that the Commission retains authority under
section 4a(a) of the Act to establish speculative position limits, but
concludes that Core Principle 5 of the CFMA should be interpreted to
place that responsibility upon the exchanges.
    As a secondary initiative, the CBT asks that, if the Commission
determines to retain Federal spot month speculative position limits, at
a minimum it should consider eliminating the single-month and all-
months-combined limits from regulation 150.2. In support of this
proposition, the CBT cites the

[[Page 33877]]

discussion of acceptable practices for spot-month limits under Core
Principle 5 in appendix B to part 38 of the Commission's regulations.
For markets having limited deliverable supplies, the CBT notes that the
acceptable practices state ``[m]arkets may elect not to provide all-
months-combined and non-spot month limits.''
    Finally, as an alternative to repeal of all or part of the limits
included in regulation 150.2, the CBT requests that the Commission
amend that regulation to increase the single-month and all-months-
combined speculative position limits for the corn, soybeans, wheat,
soybean oil, and soybean meal contracts traded at the CBT. Under this
part of the petition, the CBT seeks to increase the speculative
position limit levels as set out below.

------------------------------------------------------------------------
                                                                  CBT-
                    CBT contract                       Current  proposed
                                                        level     level
------------------------------------------------------------------------
                           Single Month Limit
------------------------------------------------------------------------
Corn................................................     5,500    10,000
Soybeans............................................     3,500     6,500
Wheat...............................................     3,000     4,500
Soybean Oil.........................................     3,000     4,500
Soybean Meal........................................     3,000     4,500
-----------------------------------------------------
                        All-Months-Combined Limit
------------------------------------------------------------------------
Corn................................................     9,000    17,000
Soybeans............................................     5,500    10,000
Wheat...............................................     4,000     5,500
Soybean Oil.........................................     4,000     6,500
Soybean Meal........................................     4,000     6,000
------------------------------------------------------------------------

    The CBT cites several criteria in support of the levels proposed in
this part of the petition. Among these, the CBT notes that it conducted
a survey of the agricultural trading community and found that a
majority of respondents supported an increase in single-month and/or
all-months-combined limits. Additionally, the CBT notes that most
respondents supporting an increase in limits also sought to retain the
same approximate ratio of single-month to all-months-combined limits.
The CBT asserts that the higher levels conform to this standard and
preserve the same approximate ratio as sought by supporting survey
respondents.
    The CBT also comments that the proposed increases are consistent
with the percentage of open interest formula included in regulation
150.5.\6\ In this regard, the CBT acknowledges that the formula applies
to exchange-set limits not enumerated in Regulation 150.2 but also
observes that the Commission applied this same formula when it
initiated action to increase CBT agricultural commodity limits to their
present levels (57 FR 12766, April 13, 1992).
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    \6\ Regulation 150.5 stipulates that individual, non-spot month
or all-months-combined limit levels should be set at no greater than
1,000 contracts at the time of initial listing of agricultural
commodities. The regulation further provides that adjustments to
those levels may be made provided that the resultant levels are no
greater than 10% of the average combined futures and delta-adjusted
option month-end open interest for the most recent calendar year up
to 25,000 contracts with a marginal increase of 2.5% thereafter, or
be based on position sizes customarily held by speculative traders
on the contract market, which shall not be extraordinarily large
relative to total open positions in the contract, the breadth and
liquidity of the cash market underlying each delivery month and the
opportunity for arbitrage between the futures markets and the cash
market.
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    Finally, the CBT asserts that the proposed increases are supported
by the distribution of large trader positions in the relevant markets.
In support of this, the CBT contends that the Commission has
acknowledged that the distribution of speculative traders is a relevant
consideration in determining limit levels and could conceivably support
higher limits than justified under the open interest formula where such
levels ``would constrain the normal pattern of speculative trading.''
(57 FR 12766, April 13, 1992).

C. The KCBT Petition

    As with the CBT petition, the KCBT seeks the repeal of Federal
limits for the KCBT wheat contract as set out in regulation 150.2, but
in contrast to the CBT petition, the KCBT seeks to operate its hard
winter wheat contract without any exchange-set speculative position
limits. Like the CBT, the KCBT finds support for this initiative in
Core Principle 5 of the CFMA, and emphasizes the core principle's focus
on the role of speculative limits in reducing the potential threat of
manipulation.
    In discussing this aspect of its petition, the KCBT notes that Core
Principle 5 of section 5(d) of the Act requires DCMs to adopt
speculative position limits or position accountability provisions to
reduce the potential threat of market manipulation or congestion,
especially during trading in the delivery month, where necessary and
appropriate. The KCBT further notes that the acceptable practices for
speculative position limits under Core Principle 5 in appendix B to
part 38 of the Commission's regulations instructs that spot-month
limits should be adopted for commodity markets ``having more limited
deliverable supplies,'' and are to be based upon an analysis of
deliverable supplies and the history of spot-month liquidations for the
applicable contract. In this respect, the KCBT notes, among other
things, that gross underlying supply represents about 45 percent of
U.S. wheat production. The KCBT concludes that the supply
characteristics of its wheat contract, in combination with its
surveillance practices, including heightened surveillance of spot-month
liquidations, justify the elimination of spot-month limits from
regulation 150.2, as well as single-month, and all-months-combined
limits.
    If the Commission chooses to retain Federal speculative position
limits, the KCBT petition also includes a request that the Commission
continue to maintain ``parity'' in speculative position limit levels
across wheat exchanges. In support of this portion of its petition, the
KCBT includes a discussion of the volume and composition of trading in
its wheat contract. Here, KCBT notes that significant trading volume is
generated from arbitrage opportunities that exist between markets, and
that differing limits between exchanges could affect the growth
potential for inter-market spread volume. Following on this, the KCBT
notes that growth in trading volume has been strong in recent years,
and attributes this growth to the maintenance of parity in speculative
limits between exchanges. In this respect, the KCBT also observes that
the increased growth in volume since 1999 has also attracted commodity
fund business to the KCBT wheat market, and again observes that, if
parity in speculative limits is not maintained, fund business could be
lost to other markets with higher limits.
    Finally, the KCBT comments that reportable commercial traders
continue to hold the majority of open interest in KCBT wheat futures,
and that increasing speculative limits would permit an increase in
speculative activity and in turn increase liquidity to the benefit of
commercial users.

D. The MGE Petition

    In its petition, the MGE seeks the repeal of Federal limits for
trading in MGE hard red spring wheat, and acknowledges its intention to
establish speculative position limits for the MGE hard red spring wheat
contract pursuant to Core Principle 5. Like the other petitioning DCMs,
the MGE finds support for this initiative in Core Principle 5, and it
also emphasizes that core principle's focus on speculative limits as a
means of reducing the potential threat of manipulation.
    In this part of its petition, the MGE notes that Federal
speculative limits for wheat were most recently increased during 1999,
and concludes that this increase was intended to recognize the

[[Page 33878]]

greater interest and activity in wheat futures trading, including the
hard red spring wheat contract at the MGE. The MGE states that it has
not observed any increased susceptibility to manipulation or price
distortion in the hard red spring wheat contract during the period
following the 1999 increase in Federal speculative limits. Rather, the
MGE remarks that the increase in Federal speculative limits appears to
have added liquidity and stability to the marketplace.
    The MGE observes that Core Principle 5 requires DCMs to adopt
position limits or position accountability for speculators where
necessary and appropriate. The MGE further notes that the acceptable
practices for under Core Principle 5 set forth in appendix B to part 38
of the Commission's regulations provides that spot-month limits adopted
for physical delivery markets are to be based upon an analysis of
deliverable supplies and the history of spot-month liquidations for the
applicable contract. In addressing this provision, the MGE notes that
its review of the hard red spring wheat contract confirms the presence
of an adequate deliverable supply before and during each delivery
period, and that the largest position holders have been commercial
traders. Thus, the MGE concludes that the hard red spring wheat
contract's susceptibility to manipulation by speculators is limited by
these characteristics. The MGE also observes that the current
speculative limits mandated under regulation 150.2 have the effect of
limiting MGE's ability to exercise its self-regulatory duties under
Core Principle 5.
    Should Federal speculative position limits not be repealed, the MGE
requests that the Commission continue to maintain ``parity'' in
speculative limits for its hard red spring wheat contract with the
comparable speculative limits for the wheat contracts at the CBT and
KCBT. The MGE notes that speculative limits historically have been
uniform at the three domestic DCMs trading wheat contracts and that
failure to maintain this equality would be unfairly discriminatory, not
only to the MGE, but also to its market participants. In this regard,
the MGE observes that many traders at the MGE, and in particular the
commodity funds, utilize arbitrage opportunities among the wheat
markets, and that any disparate treatment in speculative limits could
drive away participants and reduce market liquidity.

E. The NYBOT Letter of Support

    As noted above, NYBOT did not submit a petition of its own, but
submitted a letter stating that it ``fully supports the CBOT
petition.'' In particular, NYBOT expressed support for the repeal of
Regulation 150.2 in its entirety. If the Commission does not repeal
Regulation 150.2, NYBOT supports the elimination of all non-spot,
individual month and all-months-combined limits. In support of its
position, NYBOT expresses its belief that the provisions of the
Commodity Futures Modernization Act of 2000 place the responsibility of
establishing any appropriate position limits on exchanges. Furthermore,
NYBOT observes, ``There appears to be no compelling reason to have the
Commission set speculative position limits for a narrow segment of
agricultural products, while directing the exchanges to set limits for
all other agricultural products,'' which NYBOT contends is ``more the
result of historical development rather than market regulatory
considerations.'' Accordingly, NYBOT concludes that exchanges should
have sole responsibility for establishing speculative position limits,
subject to Commission oversight.

IV. Request for Comments

    The Commission requests comment on all aspects of the CBT, KCBT,
and MGE petitions, including the issues identified below.
    (1) Should the Commission continue to impose Federal speculative
position limits for all of the agricultural commodities enumerated in
regulation 150.2? If Federal limits were repealed, then the exchanges
would be required to adopt speculative position limits or position
accountability provisions for these commodities in accordance with Core
Principle 5 and the acceptable practices thereunder, subject to
Commission oversight and enforcement.
    (2) If recommending that Federal limits be retained for the
agricultural commodities enumerated in regulation 150.2, please explain
why these commodities should be treated differently, for speculative
limit purposes, from other agricultural and non-agricultural
commodities where the Commission does not impose Federal speculative
position limits.
    (3) If recommending that regulation 150.2 not be repealed, please
address whether that regulation should nevertheless be modified to
eliminate the non-spot, individual-month limits or the all-months-
combined limits, as requested in the petitions.
    (4) If recommending that the non-spot, individual-month limits and/
or the all-months-combined limits be retained in regulation 150.2, what
criteria should be considered in determining the acceptable levels?
Should the existing criteria in regulation 150.5, based on open
interest, be retained, or, if not, what other criteria should be
adopted by the Commission?
    (5) If Federal speculative position limits are retained, should the
increases requested by the CBT in the non-spot, individual month and
all-months-combined limits pertaining to the CBT commodity markets be
granted? If the increases to the CBT commodity markets are granted,
should the KCBT and MGE requests for continuing parity in setting
Federal limits also be granted?
    (6) If Federal speculative position limits were eliminated, should
the Commission modify its acceptable practices for Core Principle 5 to
provide greater clarity as to the types of markets for which spot-month
speculative position limits are necessary? Should these acceptable
practices also include criteria to be considered regarding the setting
of non-spot, individual-month limits and all-months-combined limits by
the exchanges? If so, what criteria should be adopted by the
Commission? Should the Commission require the setting of non-spot,
individual-month and all-months-combined limits by the exchanges, in
general and for the specific commodities enumerated in Regulation 150.2
in particular?

V. Conclusion

    As noted above, the full text of the exchange petitions are
available through the Commission's Office of the Secretariat, and are
posted on the Commission's Web site.

    Issued by the Commission this 9th day of June, 2004, in
Washington, DC.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 04-13678 Filed 6-16-04; 8:45 am]
BILLING CODE 6351-01-P
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