6351-0l 

COMMODITY FUTURES TRADING COMMISSION 

17 CFR Part 150 

RIN 3038- AC40 

Risk Management Exemption from Federal Speculative Position Limits 

AGENCY: Commodity Futures Trading Commission 

ACTION: Proposed rules; withdrawal. 

SUMMARY: On November 27, 2007, the Commodity Futures Trading Commission 

(Commission or CFTC) published proposed rules to create a "risk management exemption" from 

Federal speculative position limits- the limits on the size of speculative positions that traders 

may hold or control in futures and futures equivalent option contracts on certain designated 

agricultural commodities. The Commission has determined to withdraw these proposed rules. 

FOR FURTHER INFORMATION CONTACT: Donald Heitman, Senior Special Counsel, 

Division of Market Oversight, Commodity Futures Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW, Washington, DC 20581, telephone (202) 418-5041, facsimile 

number (202) 418-5507, electronic mail dheitman@cftc.gov; or John Fenton, Director of 

Surveillance, Division ofMarket Oversight, telephone (202) 418-5298, facsimile number (202) 

418-5507, electronic mail jfenton@cftc.gov. 

SUPPLEMENTARY INFORMATION: 

Commission regulation 150.2 imposes limits on the size of speculative positions that 

traders may hold or control in futures and futures equivalent option contracts on certain 
designated agricultural commodities named therein. Commission regulation 150.3 lists certain 

types of positions that may be exempted from these Federal speculative position limits. 

On November 27,2007, the Commission published proposed amendments that would 

provide an additional exemption from Federal speculative position limits for "risk management 

positions" (proposed rulemaking). 1 The proposal defined a risk management position as a 

futures or futures equivalent position, held as part of a broadly diversified portfolio oflong-only 

or short-only futures or futures equivalent positions, that is based upon either: (1) a fiduciary 

obligation to match or track the results of a broadly diversified index that includes the same 

commodity markets in fundamentally the same proportions as the futures or futures equivalent 

position; or (2) a portfolio diversification plan that has, among other substantial asset classes, an 

exposure to a broadly diversified index that includes the same commodity markets in 

fundamentally the same proportions as the futures or futures equivalent position. The 

exemption, as proposed, would have been subject to certain conditions, including that the 

positions be passively managed, unleveraged, and not carried into the spot month. 

The Commission requested public comment by January 28,2008. The Commission 

received a total of 10 comment letters in response to its Federal Register publication.2 Three 

letters generally favored the proposed regulations and seven letters were generally opposed to 

their adoption. An Agricultural Forum held by the Commission on April22, 2008 served as an 

additional venue for the presentation of views with respect to the proposed rulemaking and a 

1 Risk Management Exemption from Federal Speculative Position Limits, 72 FR 66097 

(November 27, 2007). 

2 Federal Register Comment File 07-015, available at 

www .cftc.gov/lawandregulation/federalregister/federalregistercomments/2007 /07-015 .html. 

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related Commission proposal to revise the Federal speculative position limits delineated in 

Commission regulation 150.2.3 

Collectively, the comments received in response to the proposed rulemaking and at the 

Commission's April22 Agricultural Forum reflected differing perspectives on a wide range of 

issues of substantive import to the proposed rulemaking. The issues covered by the commenters, 

both in favor and opposed to the Commission's proposal to adopt a risk management exemption 

from the Federal speculative position limits, included product margin requirements, the 

convergence of cash and futures transaction prices, the impact of commodity-linked instruments 

traded on national securities exchanges on CFTC regulated transactions, the degree of 

transparency for market participation, and the quantification of the impact of speculative trading 

on market volatility. In light of the wide range of divergent positions that have been put forth by 

interested parties, the current market conditions for the contracts that would be affected by the 

proposed rulemaking, and in order to determine whether further consensus among the affected 

parties should be sought, the Commission has determined to withdraw the proposed rulemaking 

pending further consideration of the relevant issues. 

Issued by the Commission this June 2, 2008, in Washington, DC. 

David Stawick 

Secretary of the Commission 

3 Revision ofFederal Speculative Position Limits, 72 FR 65483 (November 21, 2007) (to be 

withdrawn). 

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