Bridging the Week by Gary DeWaal: February 22–26 and 29, 2016 (Position Limits; Short Sales; Canadian Derivatives; Form PR)

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Published Date: February 28, 2016

An advisory committee of the Commodity Futures Trading Commission recommended scrapping the agency’s proposed rules imposing federal position limits on energy and certain other derivatives. Meanwhile, a broker-dealer was fined US $675,000 by the Financial Industry Regulatory Authority for allowing a customer to repeatedly fail to timely cover short sales involving exchange-traded funds. As a result, the following matters are covered in this week’s edition of Bridging the Week:

Video Version:

Article Version:


My View: According to a report this week in the Wall Street Journal (click here to access), CFTC Chairman Timothy Massad rejected the rationale of the EEMAC in recommending to scrap the CFTC’s latest proposed position limits rules principally that they are not necessary or may hurt liquidity. The newspaper quoted Mr. Massad as saying, “[i]t strikes me a bit like saying you’re against speed limits because they may make you late for work.” However, this comment ignores the existing practice of designated contract markets to enforce strict position limits for energy and other commodity derivatives in the spot month, and maintain accountability levels in other months. Utilizing an accountability level regime permits DCMs to closely monitor overall market activity, but only restrict trading size when they believe it is necessary. In his dissenting view, Mr. Slocum questioned the objectivity of DCMs to establish or enforce position limits' alternatives as they are for-profit enterprises. However, past articles on Bridging the Week are replete with examples of DCMs enforcing their position limit requirements. (Click here to access links to past articles in Bridging the Week on position limits violations.) Moreover, the CFTC always retains its authority to take disciplinary action against a DCM that it believes it not fulfilling its core requirement to prevent market disruption.

And more briefly:

For more information, see:

Broker-Dealer Fined US $675,000 by FINRA for Excessive Fails on Shares of 14 ETFs:

Canadian Securities Regulators Seek Comments on Revised Rule Regarding Mandatory Clearing of Derivatives:

CFTC Advisory Committee Says There Is No Evidence Justifying Proposed New Position Limits:

See also, Dissenting View:

CFTC to Hold Public Roundtable on Residual Interest Deadline:

FINRA Proposes to Require Brokers to Disclose Mark-Ups and Mark-Downs to Retail Clients on Fixed-Income Securities:

LCH.Clearnet Seeks CFTC Approval to Portfolio Margin Futures, Foreign Futures and Cleared Swaps in Cleared Swaps Accounts:

London-Based CTA Banned by NFA for Failing to File Mandatory Quarterly Reports:


The information in this article is for informational purposes only and is derived from sources believed to be reliable as of February 27, 2016. No representation or warranty is made regarding the accuracy of any statement or information in this article. Also, the information in this article is not intended as a substitute for legal counsel, and is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The impact of the law for any particular situation depends on a variety of factors; therefore, readers of this article should not act upon any information in the article without seeking professional legal counsel. Katten Muchin Rosenman LLP may represent one or more entities mentioned in this article. Quotations attributable to speeches are from published remarks and may not reflect statements actually made.


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Gary DeWaal

Gary DeWaal is currently Special Counsel with Katten Muchin Rosenman LLP in its New York office focusing on financial services regulatory matters. He provides advisory services and assists with investigations and litigation.

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