CFTC: delegate position limits to exchanges; ease core principles; unify cross-border definitions
CFTC should replace position-limits rules with exchange delegation, reduce overly prescriptive core-principle rules, apply 2020 Cross-Border U.S. Person/Guarantee definitions to 2013 Guidance requirements, and remove affiliate-conduit/foreign-consolidated-subsidiary categories.
Mandate
Mandate Ch. 27 (Financial Regulatory Agencies) — CFTC: allocate more resources to core functions; replace existing position limits rule with further delegation to exchanges to set position limits/accountability levels; reduce overly prescriptive rules implementing core principles; apply 2020 Cross-Border Rule definitions of U.S. Person and Guarantee to requirements still under 2013 Guidance; remove regulatory categories of affiliate conduit and foreign consolidated subsidiary from 2013 Guidance and uncleared-swaps margin cross-border rule.
Undo plan
1) Retain federal position-limit backstops for physically deliverable commodities prone to squeezes.
2) Harmonize cross-border definitions via full notice-and-comment without creating overseas regulatory gaps.
3) Keep Significant Risk Subsidiary concept from collapsing into under-regulation of bank affiliates.
4) Publish liquidity/volatility studies before gutting position limits.
5) Verify: exchange limit filings; cross-border compliance burden metrics.