The National Grain and Feed Association (NGFA) issued the following preliminary statement following the Commodity Futures Trading Commission’s (CFTC) approval, by a 3-2 vote on Oct. 18, of final regulations implementing speculative position limits for agricultural and other commodities under the Dodd-Frank regulatory reform law:
“While the text of the CFTC’s final regulations has not been released yet – and will warrant close examination once it is – the National Grain and Feed Association (NGFA) does conceptually support the Commodity Futures Trading Commission’s action to continue to apply speculative position limits for enumerated agricultural commodities, which include grains and oilseeds. We believe speculative position limits are a reasonable way to help prevent investment capital from overwhelming these comparatively small markets and to help promote efficient contract performance for bona fide hedgers.
“The NGFA also supports the agency’s action to limit hedge exemptions for swap dealers to the portion of their business with counterparties that are bona fide hedgers. This important reform will enhance contract performance and help encourage that convergence occurs in a timely and predictable manner for traditional market participants who are hedging physical commodity exposure.
“The NGFA does have some concerns about the CFTC’s interpretation of the bona fide hedge definition contained in the Dodd-Frank law. We will be reviewing the final rule very closely with the policy goal of maintaining the bona fide hedging status of commercial hedgers as traditionally applied by the agency .
“The NGFA likely will have additional reactions to the CFTC’s final rule on speculative position limits once the final regulations are issued and reviewed thoroughly by its Risk Management Committee.”