II 

110TH CONGRESS 

2D SESSION S. 3248 

To amend the Commodity Exchange Act to clarify the treatment of purchases 

of certain commodity futures contracts and financial instruments with 

respect to limits established by the Commodity Futures Trading Commission relating to excessive speculation, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 10 (legislative day, JULY 9), 2008 

Mr. LIEBERMAN (for himself, Ms. COLLINS, and Ms. CANTWELL) introduced 

the following bill; which was read twice and referred to the Committee 

on Agriculture, Nutrition, and Forestry 

A BILL 

To amend the Commodity Exchange Act to clarify the treatment of purchases of certain commodity futures contracts and financial instruments with respect to limits 

established by the Commodity Futures Trading Commission relating to excessive speculation, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Commodity Specula5 tion Reform Act of 2008’’. 


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1 SEC. 2. AUTHORITY OF COMMODITY FUTURES TRADING 

2 COMMISSION TO ISSUE NO ACTION LETTERS. 

3 Section 2(a)(1) of the Commodity Exchange Act (7 

4 U.S.C. 2(a)(1)) is amended by adding at the end the fol5 lowing: 

6 ‘‘(G) AUTHORITY TO ISSUE NO ACTION

7 LETTERS TO FOREIGN BOARDS OF TRADE.— 

8 ‘‘(i) IN GENERAL.—Except as pro9 vided in clause (ii), the Commission may 

10 not issue a no action letter to any foreign 

11 board of trade that lists a contract the 

12 price of which settles on the price of a con13 tract traded on an exchange regulated by 

14 the Commission. 

15 ‘‘(ii) EXCEPTION.—The Commission 

16 may issue a no action letter to a foreign 

17 board of trade described in clause (i) if the 

18 foreign board of trade provides to the 

19 Commission information and data accessi20 bility the scope of which is comparable to 

21 the information and data accessibility pro22 vided to the Commission by entities under 

23 the jurisdiction of the Commission.’’. 


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1 SEC. 3. ADDITIONAL EMPLOYEES. 

2 Section 2(a)(7) of the Commodity Exchange Act (7 

3 U.S.C. 2(a)(7)) is amended by adding at the end the fol4 lowing: 

5 ‘‘(D) ADDITIONAL EMPLOYEES.—As soon 

6 as practicable after the date of enactment of 

7 this subparagraph, the Commission shall ap8 point at least 100 full-time employees (in addi9 tion to the employees employed by the Commis10 sion as of the date of enactment of this sub11 paragraph) to assist in carrying out section 

12 4a(a)(2).’’. 

13 SEC. 4. TREATMENT OF PURCHASES OF CERTAIN COM14 MODITY FUTURES CONTRACTS AND FINAN15 CIAL INSTRUMENTS. 

16 (a) IN GENERAL.—Section 4a of the Commodity Ex17 change Act (7 U.S.C. 6a) is amended— 

18 (1) by striking ‘‘SEC. 4a. (a) Excessive specula19 tion’’ and inserting the following: 

20 ‘‘SEC. 4a. EXCESSIVE SPECULATION. 

21 ‘‘(a) BURDEN ON INTERSTATE COMMERCE; TRADING

22 OR POSITION LIMITS.— 

23 ‘‘(1) IN GENERAL.—Excessive speculation and’’; 

24 and 

25 (2) in subsection (a) (as amended by paragraph 

26 (1)), by adding at the end the following: 


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1 ‘‘(2) TREATMENT OF PURCHASES OF CERTAIN

2 COMMODITY FUTURES CONTRACTS AND FINANCIAL

3 INSTRUMENTS.— 

4 ‘‘(A) DEFINITIONS.—In this paragraph: 

5 ‘‘(i) BONA FIDE HEDGING TRANS6 ACTION.— 

7 ‘‘(I) IN GENERAL.—The term 

8 ‘bona fide hedging transaction’ means 

9 a transaction that— 

10 ‘‘(aa) represents a substitute 

11 for a transaction to be made or a 

12 position to be taken at a later 

13 time in a physical marketing 

14 channel; 

15 ‘‘(bb) is economically appro16 priate for the reduction of risks 

17 in the conduct and management 

18 of a commercial enterprise; and 

19 ‘‘(cc) arises from the poten20 tial change in the value of— 

21 ‘‘(AA) assets that a 

22 person owns, produces, man23 ufactures, possesses, or mer24 chandises (or anticipates 

25 owning, producing, manufacVerDate Aug 31 2005 07:31 Jul 11, 2008 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3248.IS S3248

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1 turing, possessing, or mer2 chandising); 

3 ‘‘(BB) liabilities that a 

4 person incurs or anticipates 

5 incurring; or 

6 ‘‘(CC) services that a 

7 person provides or purchases 

8 (or anticipates providing or 

9 purchasing). 

10 ‘‘(II) EXCLUSION.—The term 

11 ‘bona fide hedging transaction’ does 

12 not include a transaction entered into 

13 on a designated contract market for 

14 the purpose of offsetting a financial 

15 risk arising from an over-the-counter 

16 commodity derivative. 

17 ‘‘(ii) OVER-THE-COUNTER COMMODITY

18 DERIVATIVE.—The term ‘over-the-counter 

19 commodity derivative’ means any agree20 ment, contract, or transaction that— 

21 ‘‘(I)(aa) is traded or executed in 

22 the United States; or 

23 ‘‘(bb) is held by a person located 

24 in the United States; 


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1 ‘‘(II) is not traded on a des2 ignated contract market or derivatives 

3 transaction execution facility; and 

4 ‘‘(III)(aa) is a put, call, cap, 

5 floor, collar, or similar option of any 

6 kind for the purchase or sale of, or 

7 substantially based on the value of, 1 

8 or more qualifying commodities or an 

9 economic or financial index or meas10 ure of economic or financial risk pri11 marily associated with 1 or more 

12 qualifying commodities; 

13 ‘‘(bb) provides on an executory 

14 basis for the applicable transaction, 

15 on a fixed or contingent basis, of 1 or 

16 more payments substantially based on 

17 the value of 1 or more qualifying com18 modities or an economic or financial 

19 index or measure of economic or fi20 nancial risk primarily associated with 

21 1 or more qualifying commodities, and 

22 that transfers between the parties to 

23 the transaction, in whole or in part, 

24 the economic or financial risk associ25 ated with a future change in any such 


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1 value without also conveying a current 

2 or future direct or indirect ownership 

3 interest in an asset or liability that in4 corporates the financial risk that is 

5 transferred; or 

6 ‘‘(cc) is any combination or per7 mutation of, or option on, any agree8 ment, contract, or transaction de9 scribed in item (aa) or (bb). 

10 ‘‘(iii) OVER-THE-COUNTER COM11 MODITY DERIVATIVE DEALER.—The term 

12 ‘over-the-counter commodity derivative 

13 dealer’ means a person that regularly of14 fers to enter into, assume, offset, assign, 

15 or otherwise terminate positions in over16 the-counter commodity derivatives with 

17 customers in the ordinary course of a trade 

18 or business of the person. 

19 ‘‘(iv) QUALIFYING COMMODITY.—The 

20 term ‘qualifying commodity’ means— 

21 ‘‘(I) an agricultural commodity; 

22 and 

23 ‘‘(II) an energy commodity. 

24 ‘‘(B) REGULATIONS.— 


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1 ‘‘(i) IN GENERAL.—Not later than 90 

2 days after the date of enactment of this 

3 paragraph, in accordance with clauses (ii) 

4 and (iii), the Commission shall promulgate 

5 regulations to establish and enforce— 

6 ‘‘(I) speculative position limits 

7 for qualifying commodities; 

8 ‘‘(II) a methodology— 

9 ‘‘(aa) to enable persons to 

10 aggregate the positions held or 

11 controlled by the persons on des12 ignated contract markets, on de13 rivatives transaction execution fa14 cilities, and in over-the-counter 

15 commodity derivatives; and 

16 ‘‘(bb) to ensure, to the max17 imum extent practicable, that the 

18 determinations made by the 

19 Commission with respect to each 

20 person examined under subpara21 graph (C) accurately reflect the 

22 net long and net short positions 

23 held or controlled by the person 

24 in the underlying qualifying com25 modity; and 


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1 ‘‘(III) information reporting rules 

2 to facilitate the monitoring and en3 forcement by the Commission of the 

4 speculative position limits established 

5 under subclause (I), including the 

6 monitoring of positions held in over7 the-counter commodity derivatives. 

8 ‘‘(ii) APPLICABILITY.— 

9 ‘‘(I) POSITION LIMITS.—The 

10 speculative position limits established 

11 under clause (i)(I) shall apply to posi12 tion limits that, with respect to each 

13 applicable position limit, expire dur14 ing— 

15 ‘‘(aa) the spot month; 

16 ‘‘(bb) each separate futures 

17 trading month (other than the 

18 spot month); or 

19 ‘‘(cc) the sum of each trad20 ing month (including the spot 

21 month). 

22 ‘‘(II) SUM OF POSITIONS.—The 

23 speculative position limits established 

24 under clause (i)(I) shall apply to the 


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1 sum of the positions held by a per2 son— 

3 ‘‘(aa) on designated contract 

4 markets; 

5 ‘‘(bb) on derivatives trans6 action execution facilities; and 

7 ‘‘(cc) in over-the-counter 

8 commodity derivatives. 

9 ‘‘(iii) MAXIMUM LEVEL OF POSITION

10 LIMITS.—In establishing the speculative 

11 position limits under clause (i)(I), the 

12 Commission shall set the speculative posi13 tion limits at the minimum level prac14 ticable to ensure sufficient market liquidity 

15 for the conduct of bona fide hedging activi16 ties. 

17 ‘‘(C) PROHIBITION RELATING TO CERTAIN

18 POSITIONS.— 

19 ‘‘(i) IN GENERAL.—Notwithstanding 

20 any other provision of this Act, no person 

21 may hold or control a position, separately 

22 or in combination, net long or net short, 

23 for the purchase or sale of a commodity for 

24 future delivery or, on a futures-equivalent 

25 basis, any option, or an over-the-counter 


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1 commodity derivative that exceeds a specu2 lative position limit established by the 

3 Commission under subparagraph (B)(i)(I). 

4 ‘‘(ii) BONA FIDE HEDGING TRANS5 ACTIONS.—In determining whether the 

6 sum of a position held or controlled by a 

7 person has exceeded the applicable specula8 tive position limit established by the Com9 mission under subparagraph (B)(i)(I), the 

10 Commission shall not consider positions at11 tributable to a bona fide hedging trans12 action. 

13 ‘‘(iii) DETERMINATION OF POSITION

14 LIMITS FOR OVER-THE-COUNTER COM15 MODITY DERIVATIVE DEALERS.—To deter16 mine the position of an over-the-counter 

17 commodity derivative dealer, the sum of 

18 the positions held or controlled by the over19 the-counter commodity derivative dealer 

20 shall be— 

21 ‘‘(I) calculated on the last day of 

22 each month; and 

23 ‘‘(II) considered, for the monthly 

24 period covered by the determination, 

25 to be the average daily net position 


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1 held or controlled by the over-the2 counter commodity derivative dealer 

3 for the period beginning on the first 

4 day of the month and ending on the 

5 last day of the month.’’. 

6 (b) REPORTS.— 

7 (1) NECESSARY ADDITIONAL FUNDING.—Not 

8 later than 45 days after the date of enactment of 

9 this Act, the Commodity Futures Trading Commis10 sion (referred to in this subsection as the ‘‘Commis11 sion’’) shall submit to the Committee on Appropria12 tions of the House of Representatives and the Com13 mittee on Appropriations of the Senate a report pro14 viding the recommendations of the Commission for 

15 any additional funding that the Commission con16 siders to be necessary to carry out the amendments 

17 made by subsection (a), including funding for addi18 tional staffing and technological needs. 

19 (2) SPECULATIVE ACTIVITY TRENDS.— 

20 (A) STUDY.—The Commission shall con21 duct a study— 

22 (i) to identify trends in speculative ac23 tivity relating to metals; and 

24 (ii) to determine whether the author25 ity of the Commission under section 


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1 4a(a)(2) of the Commodity Exchange Act 

2 (7 U.S.C. 6a(a)(2)) (as added by sub3 section (a)(2)) should be extended to cover 

4 the trading of metals. 

5 (B) REPORT.—Not later than 180 days 

6 after the date of enactment of this Act, the 

7 Commission shall submit a report containing 

8 the results of the study conducted under sub9 paragraph (A) to— 

10 (i) the Committee on Agriculture of 

11 the House of Representatives; 

12 (ii) the Committee on Agriculture, 

13 Nutrition, and Forestry of the Senate; and 

14 (iii) the Committee on Homeland Se15 curity and Governmental Affairs of the 

16 Senate. 

17 (3) AUTHORIZATION OF APPROPRIATIONS.— 

18 There are authorized to be appropriated such sums 

19 as are necessary to carry out this subsection. 

Æ 


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