Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080

Commodity Futures Trading Commission

Office of Public Affairs

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

www.cftc.gov

Q & A – Position Limits for Futures and Swaps

What is the goal of the final rulemaking?

The final rulemaking establishes limits on speculative positions in 28 physical commodity futures contracts traded 

pursuant to the rules of a designated contract market (“DCM”) as well as swaps that are economically equivalent to 

those contracts, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The 

final rulemaking on position limits will enable the Commission to meet its statutory responsibility to set such limits 

in order to prevent excessive speculation and manipulation while ensuring sufficient market liquidity for bona fide 

hedgers and protecting the price discovery process.

Which commodities are covered by the final regulations?

The final rule establishes speculative position limits for 28 physical commodity futures contracts (“Core Referenced 

Futures Contracts”) as well as futures and swaps that are economically equivalent to those contracts (collectively 

“Referenced Contracts”). 

The 28 Core Referenced Futures Contracts include the following contracts, by commodity category:

 Nine “legacy” agricultural contracts: (1) CBOT Corn (C); (2) CBOT Oats (O); (3) CBOT Soybeans (S); (4) 

CBOT Soybean Meal (SM); (5) CBOT Soybean Oil (BO); (6) CBOT Wheat (W); (7) ICE Futures U.S. 

Cotton No.2 (CT); (8) KCBT Hard Winter Wheat (KW); and (9) MGEX Hard Red Spring Wheat (MWE).

 Ten non-“legacy” agricultural contracts: (1) CME Class III Milk (DA); (2) CME Feeder Cattle (FC); (3) 

CME Lean Hog (LH); (4) CME Live Cattle (LC); (5) CBOT Rough Rice (RR); (6) ICE Futures U.S. Cocoa 

(CC); (7) ICE Futures U.S. Coffee C (KC); (8) ICE Futures U.S. FCOJ-A(OJ); (9) ICE Futures U.S. Sugar 

No. 11 (SB); and (10) ICE Futures U.S. Sugar No. 16 (SF). 

 Four energy contracts: (1) NYMEX Henry Hub Natural Gas (NG); (2) NYMEX Light Sweet Crude Oil 

(CL); (3) NYMEX New York Harbor Gasoline Blendstock (RB); and (4) NYMEX New York Harbor 

Heating Oil (HO). 

 Five metal contracts: (1) COMEX Copper (HG); (2) COMEX Gold (GC); (3) COMEX Silver (SI), (4) 

NYMEX Palladium (PA); and (5) NYMEX Platinum (PL).

How will the speculative limits be set?

The final rules set forth two types of speculative limits: spot-month position limits and non-spot-month position limits. Spotmonth position limits apply in the period immediately before delivery obligations are incurred for physical delivery 

contracts or a period immediately before contracts are liquidated by the clearinghouse based on a reference price for 

cash-settled contracts. The spot-month period is specific to each commodity contract, need not correspond to a 

month-long period, and may extend through the period when delivery obligations are incurred. 
2

Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080

Generally, spot-month position limits for Referenced Contracts will be set at 25% of estimated deliverable supply. 

These limits will be applied separately for positions in the physical-delivery and all cash-settled Referenced 

Contracts combined. For example, a trader’s position in all cash-settled futures and swaps Referenced Contracts 

will be combined to determine whether the trader’s position in cash-settled Referenced Contracts is below the 

limits. 

The cash-settled NYMEX Henry Hub Natural Gas contracts will be subject to a cash-settled spot-month position 

limit and an aggregate limit (extending across positions in both physical-delivery and cash-settled natural gas 

contracts) set at five-times the limit that applies to the physical-delivery NYMEX Henry Hub Natural Gas contract. 

The non-spot-month position limits apply to positions a trader may have in all contract months combined or in a single 

contract month. For each Referenced Contract, these limits will be set at 10 percent of open interest in the first 

25,000 contracts and 2.5 percent thereafter. Open interest used in determining non-spot-month position limits will 

be based on futures open interest, cleared swaps open interest, and uncleared swaps open interest. 

Generally, initial non-spot-month position limits will be set by Commission order using one year of open interest 

data and biennially thereafter. 

The legacy agricultural contracts will be subject to non-spot-month limit levels that will be reset pursuant to future 

Commission rulemakings, consistent with the approach taken historically for establishing position limits for such 

contracts.

What makes a swap economically equivalent to a futures contract?

For the purposes of these regulations, a swap contract may be economically equivalent to a futures contract when: 

(1) it is a “look-alike” contract (i.e., it settles off of the Core Referenced Futures Contract or contracts that are based 

on the same commodity for the same delivery location as the Core Referenced Futures Contract); (2) it is a contract 

with a reference price based on only the combination of at least one Referenced Contract price and one or more 

prices in the same or substantially the same commodity as that underlying the relevant Core Referenced Futures 

Contract, provided that such a contract is not a locational basis swap; (3) it is an intercommodity spread contract 

with two reference price components, one or both of which are based on Referenced Contracts; or (4) it is priced at 

a fixed differential to a Core Referenced Futures Contract.

Why do these regulations provide for visibility levels in addition to position limits?

The final rule also requires quarterly position visibility reporting requirements for traders exceeding a non-spotmonth position visibility level in energy and metal Referenced Contracts. These position visibility reports provide 

the Commission additional visibility into the physical and swaps portfolios of the largest traders. These position 

visibility reports will provide the Commission with a better understanding of trading activity in the physical 

commodity futures and swaps markets, allowing the Commission to make future adjustments, as necessary, to the 

position limit framework in order to better achieve the statutory objectives of position limits. In addition, these 

reports will improve the Commission’s ability to enforce position limits.

How many market participants will be affected by the final regulations?

With respect to the spot-month position limits, the Commission estimates based on historical patterns that, on an annual 

basis, approximately 84 traders in legacy agricultural Core Referenced Futures Contracts, 50 traders in non-legacy 

agricultural Referenced Contracts, 85 traders in energy Referenced Contracts, and 12 traders in metal Referenced 

Contract would hold or control positions that could exceed these limits.
3

Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080

With respect to the non-spot-month position limits, the Commission estimates, on an annual basis, approximately 84 

traders in legacy agricultural Core Referenced Futures Contracts, 80 traders in non-legacy agricultural Referenced 

Contracts, 10 traders in energy Referenced Contracts, and 25 traders in metal Referenced Contracts would hold or 

control positions that could exceed these limits. 

These estimates of traders with positions that may exceed spot-month or non-spot-month position limits do not 

take into account the number of traders that would be eligible for bona fide hedging or pre-existing position 

exemptions.

How many entities will be required to make reports under these regulations?

The Commission estimates that the final regulations may require reporting from approximately six entities with 

respect to deliverable supply estimates, 200 traders with respect to bona fide hedging exemptions, 48 traders with 

respect to visibility level reporting, and 90 entities with respect to account aggregation applications.

Why is the Commission implementing position limits in two phases?

The Dodd-Frank Act provides a timeframe for the Commission to establish position limits on exempt and 

agricultural commodity derivatives. The formula for determining Referenced Contract position limits outside of the 

spot-month is based on the overall size of the physical commodity futures and swap markets, as measured by open 

interest. Determining the applicable limits using this formula requires swaps position data. 

Spot-month limits, in contrast, are based on estimates of deliverable supply, a measure of the size of the physical 

market underlying the futures and swap markets for a commodity. The Commission and DCMs currently estimate 

deliverable supply in determining existing DCM-administered spot-month position limits. The Commission, 

therefore, can implement spot-month limits expeditiously in the initial phase while waiting to receive the necessary 

data to implement non-spot-month limits in the second phase after obtaining swaps open interest data.

How will the regulations affect current Commission regulations?

The regulations replace the Commission’s existing part 150 position limits regulations and amend regulation 1.3(z) 

to apply the bona fide hedging standard to excluded commodities. The proposed regulations retain, with certain 

modifications, current Commission position limits on legacy agricultural commodity DCM contracts. In addition to 

changing the size and scope of speculative position limits, the Commission has amended the scope of the bona fide

hedging exemption, consistent with the definition of bona fide hedging transactions in the new Commodity Exchange 

Act. The Commission has also adopted a modified version of its existing account aggregation regulations, including 

the long-standing independent account controller exemption to aggregation.