MINNEAPOLIS GRAIN EXCHANGE 

Received C.FTC ~rds Section 

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COMMENT 

Electronic Mail January 21, 2008 

Mr. David Stawick 

Secretary of the Commission 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, NW 

Washington, D.C. 20581 

SUBJECT: Proposed Revision of Federal Speculative Position Limits 

Dear Mr. Stawick: 

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The Minneapolis Grain Exchange ("MGEX" or "Exchange") would like to take this 

opportunity to respond to the Commodity Futures Trading Commission's ("CFTC" or 

"Commission") proposed rules on the above referenced matter published in the 

November 21, 2007 Federal Register. 

The Exchange strongly supports the Commission's proposal to increase the federal 

speculative position limits for Hard Red Spring Wheat ("Spring Wheat") to the same 

level as that proposed for the wheat contracts at the Chicago Board of Trade and the 

Kansas City Board of Trade. The MGEX is extremely pleased the Commission 

continues to follow the parity approach previously adopted. Parity among the three 

domestic contract markets trading wheat is essential for those participants seeking 

arbitrage opportunities. Therefore, the MGEX supports the Commission's proposal to 

increase the single month limit from 5,000 to 11,100 contracts and the all months 

combined position limit from 6,500 to 14,500 contracts. 

The MGEX has continued to experience record volume and open interest in the Spring 

Wheat contract since the Commission last increased the limits in 2005. The economic 

reality is that additional individuals and entities are participating in the Spring Wheat 

commodity market. Commodity funds and other sophisticated market participants, in 

particular, are an essential and recognized element of the price discovery process. 

With the growth in volume and open interest combined with the increasing recognition 

that the Spring Wheat contract is a premium and reliable wheat futures contract, added 

to the fact that the underlying Spring Wheat cash market retains its breadth and 

liquidity, it is only natural and logical that the speculative position limits be increased. 

130 Grain Exchange Building 400 South 4th Street Minneapolis, MN 55415-1413 

mgex@mgex.com 800.827.4746 612.321.7101 Fax: 612.321.7196 equal opportunity employer 

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The Commission's proposed changes do not alter the spot month position limits; 

consequently, Spring Wheat deliverable supplies and the delivery process are not 

affected. However, the disparity between the spot month limits and single month limits 

increases with the proposed changes. Consequently, the MGEX, clearing members, 

futures commission merchants, and speculative position holders all will need to review 

procedures to monitor speculative positions as the spot month approaches to ensure 

adequate liquidation of positions prior to application of the spot month limit. Since 

Spring Wheat deliverable supplies are monitored by the MGEX, the Commission should 

revisit the spot month limit in the future. Further, since contract markets may set limits 

that are lower than the federal speculative limits, raising the spot month limit provides 

contract markets a wider option to set the spot month limit as needed. 

However, Exchange preference would be for the CFTC to delegate responsibility for all 

speculative position limits to contract markets and to treat all agricultural commodities 

equally by removing the discriminatory regulatory limits placed on a small select group 

of agricultural commodities which includes the delivery settled Spring Wheat contract. 

The Exchange believes each contract market is best qualified to establish the 

appropriate speculative position limits and must be able to modify those limits as 

needed without being subject to a potentially lengthy application and Commission 

review process. Each contract market and each commodity contract is unique and has 

variable economics. Therefore, as a general policy, the Exchange believes all 

speculative position limits need to be flexible and should be delegated to and controlled 

by contract markets. 

The Exchange is also pleased the Commission wisely recognized the distinction 

between those cash settled enumerated contracts whose settlement prices rely upon 

another enumerated contract and those cash settled contracts such as the MGEX Hard 

Red Spring Wheat Index contract that is independent of other futures contracts for its 

settlement price. Consequently, there is clearly no need to propose aggregating Spring 

Wheat Index traders' positions for the purpose of ascertaining compliance with the 

federal speculative position limits for Spring Wheat. 

However, the Exchange believes the better policy is not to attempt to aggregate 

positions across commodity contracts or across contract markets. Aggregating 

positions across separate contract markets appears to require additional CFTC 

monitoring and probable regulatory reporting burdens upon contract markets and 

position holders. Such a result would run counter to the move toward market oversight 

based on core principles. 
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The Exchange thanks the Commission for reviewing the speculative position limits; the 

MGEX supports the proposed parity position limit changes. If there are any questions 

regarding these comments, please contact me at (612) 321-7169. Thank you for your 

attention to this matter. 

cc: Mark G. Bagan 

President, MGEX 

Sincerely, 

Layne G. Carlson 

Corporate Secretary