WASHINGTON, Oct 28 (Reuters) - The U.S. derivativesregulator promised to drop its legal fight to retain a rule thatwould set limits on commodity speculation, instead opting for arewritten version, which it is set to adopt in a vote nextmonth.
A District Court last year knocked out the rule on so-calledposition limits issued by the Commodity Futures TradingCommission. The agency then appealed, while at the same timestarting to write a new rule.
"If the Commission votes to issue the (proposed rule) asanticipated, it will immediately file a motion in this Court ...to dismiss voluntarily this appeal," the CFTC said in a courtdocument on Monday.
The CFTC has called a vote over the new rule on Nov. 5,ordinarily a sign that a majority of commissioners is in favor.The new rule will remove an important irritant for the bankgroups fighting the rule.
It will also contain a better legal justification to conformwith the court ruling that the CFTC had failed to prove that thelimits were needed, and will better weigh the costs and benefitsof the rule.
The CFTC has always had the possibility of imposing positionlimits on market parties, but the Dodd-Frank law to overhaulWall Street after the financial crisis of 2007-09 gave it fargreater powers to do so.
Banks like Goldman Sachs and Barclays hadsaid before the court that the fact that they needed toaggregate holdings of companies in which they owned as little as10 percent meant high compliance costs.
The new rule now allows exemptions for positions held byfirms in which they own minority stakes of between 10 and 50percent, Reuters reported this month.
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