SEPTEMBER 22, 2015

AAC
CME GROUP AGRICULTURAL FUTURES

2

COMMODITY

FEDERAL LIMITS EXCHANGE LIMITS

SPOT SINGLE ALL SPOT SINGLE ALL

Corn X X X X X X

Soybean X X X X X X

Soybean Meal X X X X X X

Soybean Oil X X X X X X

Wheat X X X X X X

Oat X X X X X X

KC HRW 

Wheat X X X X X X

Rough Rice X X X

Black Sea 

Wheat X X X
CME GROUP AGRICULTURAL FUTURES

3

COMMODITY

FEDERAL LIMITS EXCHANGE LIMITS

SPOT SINGLE ALL SPOT SINGLE ALL

Class III Milk X

Nonfat Dry Milk X X

Class IV Milk X

Cash Settled 

Butter X X

CME Dry Whey X X

Cheese X

Live Cattle X X

Feeder Cattle X X

Lean Hog X X

Random Length 

Lumber X X
• A CME Group department with offices in Chicago & New York 

• Market Surveillance 56 employees

– Monitor reported large trader positions (90% of OI) and physical market 

prices, fundamentals and news 

– Detect and deter market manipulation 

– Ensure (real-time) that price aberrations in the futures or physical markets 

are not caused by the market power of large traders 

– Oversee orderly liquidation of contracts 

– Review compliance with CFTC & exchange imposed position limits 

– Review and inspect physical delivery sites for approval to deliver

– Review positions exceeding position accountability levels 

– Review Exchange for Related Position (EFRP) transactions 

– Monitor deliveries in cooperation with CME Clearing 

CME GROUP MARKET REGULATION RESOURCES & 

RESPONSIBILITIES 

4
CONCEPTS

• Exchange to obtain detailed information from position holders

• Exchange has the authority to require the participant not increase their 

position or to order liquidation of a position

CONSIDERATIONS

• The absolute size of a position relative to open interest/stocks held and 

other positions

• Nature of the customer’s business (e.g. speculator/hedger/swap dealer)

• Position holder’s historical position level and handling of large positions

• Market fundamentals (e.g. congested market, unusual basis or spread 

relationship)

DCM SURVEILLANCE PRACTICES

5
• List of enumerated hedges (proposed: Fixed Price Purchases/Sales, 

Inventory, Anticipatory Processing, Cross Hedge) should be expanded to 

include the examples of hedging activity described in comment letters 

and petitions. This is an essential top priority.

• The Commission should authorize through the passage of rule(s), the 

authority for DCM/SEF (“Exchange”) to determine what constitutes 

permissible Non-Enumerated hedging exempt from federal and Exchange 

speculative position limits.

• The Commission may alter or reverse any Exchange exercise of such 

granted authority through an interpretive action process by staff which 

provides Exchanges the ability to respond ahead of any final action by the 

Commission. 

CORNERSTONE POINTS

6
CURRENT EXCHANGE EXEMPTION PROCESS

7

EXCHANGE REVIEW

Market Surveillance Reviews

• Justification and supporting documentation

• Applicant internal procedures

APPLICATION

• Applicant applies before exceeding limit, Rule carve out for ex post

• Market participant requests exemption limit for certain strategy(s)

• Applicant provides documentation to support underlying exposure

ONGOING SURVEILLANCE

• Per surveillance procedures, there will be continued oversight of positions even though they are subject to an 

exemption

EXCHANGE DETERMINATION

• May approve, deny or conditionally approve the exemption

• Will determine the appropriate exemption level, which may be less than requested level

• Provide applicant with written determination
• The application and exchange review processes for non- enumerated exemptions remains the same

• Any hedger granted an exemption from Exchange speculative position 

limits for a non-enumerated hedge who transacts and/or maintains 

positions on the Exchange, shall also be permitted by Commission 

rule, to effect exemption from federal speculative position limits for 

OTC transactions with respect to the strategy underlying the 

transactions/positions.

• Based on the analysis conducted by the Exchange, the determined 

overall exposure for a particular strategy will be sent to the CFTC and 

may act as a boundary for the hedger which the CFTC can rely upon in 

monitoring the hedger’s OTC positions or their impact on the hedger’s 

compliance with federal speculative position limits

CONCEPTUAL FOR NON-ENUMERATED EXEMPTIONS

8
• All approvals and denials would be forwarded to the Commission. 

• Exchange maintains responsibility for ongoing surveillance on 

its market, but CFTC takes responsibility for OTC monitoring 

and for Federal limit

• Exchanges would publish on their website a summary of the type of Non-Enumerated exemptions they have approved and coordinate to offer similar characterization, where possible, 

regarding description.

• Commission, through the RER process or any other time, may 

request from an Exchange all materials and documentation 

supporting an exemption it approved or denied

CHANGES FROM ENUMERATED PROCESS

9
• Single and All-Month Accountability allows the market surveillance process to review and/or manage large positions

• Exchange accountability rules can be more readily effective than 

limits due to the ability to force hold/reduction

• Data across multiple asset classes reflects that accountability is 

an effective tool 

EFFECTIVENESS OF ACCOUNTABILITY VS. LIMITS

10
ICE FUTURES U.S. SOFT COMMODITIES

11

Comm

odity

Commod

ity origin

Federal limits Exchange limits

Spot Single All Spot Single All

Cotton Domestic X X X X X X

FCOJ Domestic X X X

Sugar 

16 Domestic X X X

World 

Cotton Intl X X X

Cocoa Intl X A A

Coffee Intl X A A

Sugar 

11 Intl X A A

*A: denotes single and all-month accountability
Reference text goes here

COCOA PRICE PAST 5 YEARS: +4%

INTERCONTINENTAL EXCHANGE 12
Reference text goes here

COTTON PRICE PAST 5 YEARS: -24%

INTERCONTINENTAL EXCHANGE 13