Position Limits Regulation - Comment Letter - ICE Futures US - March 30, 2015

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Position Limits for Derivatives
February 10, 2013

From the comment letter:

"The Commission should adopt accountability levels rather than position limits for non-spot month positions. The position accountability regime has worked well for the Coffee “C”, Cocoa and Sugar No. 11 contracts for over 10 years and should be maintained. The data provided by the Commission in Table 11a demonstrates there are a significant number of unique persons that held positions in Exchange contracts above the proposed position limit levels in 2013 and 2014. If these persons are required to reduce their positions either because the positions are speculative or because they do not qualify as bona fide hedges under the proposed rules, the impact on the liquidity in these markets could be detrimental to the price discovery function that is critical to the market."

"The proposed rules conflict with long-standing commercial market practices involving international agricultural commodities, such as the use of unfixed price commitments. The proposed rules only recognize unfixed price commitments as bona fide hedging transactions in limited circumstances3 that often conflict with the typical provisions of physical contracts, particularly in the world sugar market. The failure to fully recognize these commitments as hedging transactions will prohibit commercial market participants from continuing to use risk management strategies that have worked well for years and have not been detrimental to the market."


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