By Jon H. Harsch

© Copyright Agri-Pulse Communications, Inc.

Washington, Dec. 15 – As the Commodity Futures Trading Commission (CFTC) races to write rules to implement the Dodd-Frank financial reform law, a House hearing Wednesday showed how difficult the CFTC's task is. CFTC Chair Gary Gensler told the House Agriculture Subcommittee on Farm Commodities & Risk Management that the CFTC may miss deadlines for setting position limits for commodities trading.

Gensler said the CFTC may decide to “phase in implementation of position limits rules as the agency obtains the necessary data regarding the swaps market . . . Staff is considering whether it would be possible to implement spot month limits sooner than the single-month or all-months-combined limits.

More details on likely CFTC action should emerge at the CFTC's public meeting Thursday on position limits.

In the House hearing Wednesday, Rep. Jim Marshall (D-GA) urged Gensler to move slowly and cautiously on setting position limits, warning that “position limits can screw the market up.” He stressed that the Dodd-Frank law does not mandate that CFTC set position limits but simply that the CFTC should consider position limits. He said the decision was left up to the CFTC because Congress itself “didn't know what to do” on position limits.

On the witness panel at the hearing, CME Group Executive Chairman Terrance Duffy also urged caution. Challenging “the theory that speculators are distorting futures markets,” he said that “Dodd-Frank requires the commission to make a finding that position limits are necessary to diminish, eliminate or prevent burdensome excessive speculation before imposing such limits.” He said “the CFTC is not permitted to act on the basis of assumptions or political demands.”

To read the testimony from the Wednesday House hearing, go to:

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