Position Limits Regulation - Hearings & Testimony - Goldman Sachs Group, Discussions with CFTC on Position Limits, September 2010

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Dodd-Frank Timeline, Position Limits for Derivatives
Interim and Final Rule VACATED BY COURT ORDER Re-proposed Rule Issue Comment Deadline (reopen February 26, 2015)
November 18, 2011 September 28, 2012 November 5, 2013 March 28, 2015

In advance of the issuance of proposed rules on position limits, the CFTC met with several key industry players, in order to more fully understand the how the implementation of position limits will affect the various market participants. In September 2010, the commission met with Goldman Sachs Group. Below is an excerpt from the meeting -- a summary of the issues on which the commission should focus as it drafts the position limits proposal:[1]

  • Aggregate limits
    • Excessive speculation mandate
    • Netting of contracts having comparable underlying risk in order to ensure liquidity and price discovery
  • Exchange/Contract-Specific
    • Focus should be on spot month where squeezes, corners are risk
  • Swap Dealer Hedge Exemptions:
    • Reduced reliance on swap hedge exemption in light of reduced scope and manner in which dealers manage operations
  • Risks in Rulemaking
    • More expensive execution for customers
    • Volatility
    • Aberrations; movement of open interest
  • Other considerations
    • “Crowding out”
    • Account controller aggregation


References

  1. Goldman Sachs Provides Input in Response to Requests from the U.S. Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission. Goldman Sachs Group, Inc.. Retrieved on March 1, 2011.

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