Position Limits Regulation - Comment Letter - Shell Trading - March 28, 2011

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Position Limits for Derivatives
March 28, 2011

Shell Trading offers several serious concerns about the proposed rule, arguing that “the proposal may prevent large hedgers from effectively managing their commercial risks. This results from a reduction in the size of spot position limits, the inclusion of a large (but largely undefined) number of instruments under those limits, a restrictive hedge exemption process, and uncertainty about the treatment of inter-affiliate swaps. Just as important, Shell Trading believes that the rule is overly complex and contains many ambiguous provisions, and accordingly, exposes market participants to grave unnecessary costs and compliance risks. Examples of the complexity and ambiguity include the number of position limits applicable to each derivative contract, the lack of clarity about which contracts will be counted towards each limit, and the fact that these limits will be enforced in real-time.”

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