Position points

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"Position points" refers to a proposal by CFTC Commissioner Bart Chilton, outlined in testimony to the U.S. Congress on December 15, 2010, and reiterated in his statement at the CFTC Open Meeting, December 16, 2010. Chilton's statement is as follows:

"On Tuesday [December 14, 2010], in remarks to Americans for Financial Reform, I discussed a proposal that could serve as an interim step prior to the implementation of mandatory position limits required by the new financial reform law. I detailed this "Position Point" proposal yesterday in testimony before Congress. I have also spoken with the heads of exchanges and market participants about Position Points. Here are the details of my proposal:

  • Once a trader reaches a specific Position Point, it triggers a new level of heightened regulatory scrutiny.
  • A Position Point is reached when a trader has an aggregate, on-exchange position limit of 10% of the first 25,000 contracts of open interest in one of 28 commodities (in energy, metals, and agricultural commodities), then 2.5% of open interest above 25,000 contracts.
  • This triggers a special call of that trader’s swaps positions.
  • If the swaps positions, netted with on-exchange positions, reduced the aggregate to below the Position Point, there is no regulatory action.
  • If the swaps positions, netted with on-exchange positions, increases the aggregate to above the Position Point, then regulators use all available authorities, as appropriate, to reduce those positions."[1]
  1. "Position Points". Commodity Futures Trading Commission. Retrieved on January 31, 2011.

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