§ 6a.
(a)
Burden on interstate commerce; trading or position limits
(2)
Establishment of limitations
(B)
Timing
(ii)
Agricultural commodities
(3)
Specific limitations
In establishing the limits required in paragraph (2), the Commission, as appropriate, shall set limits—
(A)
on the number of positions that may be held by any person for the spot month, each other month, and the aggregate number of positions that may be held by any person for all months; and
(B)
to the maximum extent practicable, in its discretion—
(i)
to diminish, eliminate, or prevent excessive speculation as described under this section;
(ii)
to deter and prevent market manipulation, squeezes, and corners;
(iii)
to ensure sufficient market liquidity for bona fide hedgers; and
(iv)
to ensure that the price discovery function of the underlying market is not disrupted.
(4)
Significant price discovery function
In making a determination whether a swap performs or affects a significant price discovery function with respect to regulated markets, the Commission shall consider, as appropriate:
(C)
Material price reference
(E)
Other material factors
(5)
Economically equivalent contracts
(A)
Notwithstanding any other provision of this section, the Commission shall establish limits on the amount of positions, including aggregate position limits, as appropriate, other than bona fide hedge positions, that may be held by any person with respect to swaps that are economically equivalent to contracts of sale for future delivery or to options on the contracts or commodities traded on or subject to the rules of a designated contract market subject to paragraph (2).
(B)
In establishing limits pursuant to subparagraph (A), the Commission shall—
(i)
develop the limits concurrently with limits established under paragraph (2), and the limits shall have similar requirements as under paragraph (3)(B); and
(ii)
establish the limits simultaneously with limits established under paragraph (2).
(6)
Aggregate position limits
The Commission shall, by rule or regulation, establish limits (including related hedge exemption provisions) on the aggregate number or amount of positions in contracts based upon the same underlying commodity (as defined by the Commission) that may be held by any person, including any group or class of traders, for each month across—
(A)
contracts listed by designated contract markets;
(B)
with respect to an agreement contract, or transaction that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, contracts traded on a foreign board of trade that provides members or other participants located in the United States with direct access to its electronic trading and order matching system; and
(C)
swap contracts that perform or affect a significant price discovery function with respect to regulated entities.
(b)
Prohibition on trading or positions in excess of limits fixed by Commission
The Commission shall, in such rule, regulation, or order, fix a reasonable time (not to exceed ten days) after the promulgation of the rule, regulation, or order; after which, and until such rule, regulation, or order is suspended, modified, or revoked, it shall be unlawful for any person—
(1)
directly or indirectly to buy or sell, or agree to buy or sell, under contracts of sale of such commodity for future delivery on or subject to the rules of the contract market or markets, or swap execution facility or facilities with respect to a significant price discovery contract, to which the rule, regulation, or order applies, any amount of such commodity during any one business day in excess of any trading limit fixed for one business day by the Commission in such rule, regulation, or order for or with respect to such commodity; or
(2)
directly or indirectly to hold or control a net long or a net short position in any commodity for future delivery on or subject to the rules of any contract market or swap execution facility with respect to a significant price discovery contract in excess of any position limit fixed by the Commission for or with respect to such commodity: Provided, That such position limit shall not apply to a position acquired in good faith prior to the effective date of such rule, regulation, or order.
(c)
Applicability to bona fide hedging transactions or positions
(1)
No rule, regulation, or order issued under subsection (a) of this section shall apply to transactions or positions which are shown to be bona fide hedging transactions or positions as such terms shall be defined by the Commission by rule, regulation, or order consistent with the purposes of this chapter. Such terms may be defined to permit producers, purchasers, sellers, middlemen, and users of a commodity or a product derived therefrom to hedge their legitimate anticipated business needs for that period of time into the future for which an appropriate futures contract is open and available on an exchange. To determine the adequacy of this chapter and the powers of the Commission acting thereunder to prevent unwarranted price pressures by large hedgers, the Commission shall monitor and analyze the trading activities of the largest hedgers, as determined by the Commission, operating in the cattle, hog, or pork belly markets and shall report its findings and recommendations to the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture in its annual reports for at least two years following January 11, 1983.
(2)
For the purposes of implementation of subsection (a)(2) for contracts of sale for future delivery or options on the contracts or commodities, the Commission shall define what constitutes a bona fide hedging transaction or position as a transaction or position that—
(A)
(i)
represents a substitute for transactions made or to be made or positions taken or to be taken at a later time in a physical marketing channel;
(ii)
is economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise; and
(iii)
arises from the potential change in the value of—
(I)
assets that a person owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising;
(II)
liabilities that a person owns or anticipates incurring; or
(III)
services that a person provides, purchases, or anticipates providing or purchasing; or
(B)
reduces risks attendant to a position resulting from a swap that—
(i)
was executed opposite a counterparty for which the transaction would qualify as a bona fide hedging transaction pursuant to subparagraph (A); or
(ii)
meets the requirements of subparagraph (A).
([Sept. 21, 1922, ch. 369, § 4a], as added [June 15, 1936, ch. 545, § 5], [49 Stat. 1492]; amended [July 24, 1956, ch. 690, § 1], [70 Stat. 630]; [Pub. L. 90–258], §§ 2–4, Feb. 19, 1968, [82 Stat. 26], 27; [Pub. L. 93–463, title IV], §§ 403, 404, Oct. 23, 1974, [88 Stat. 1413]; [Pub. L. 94–16, § 4], Apr. 16, 1975, [89 Stat. 78]; [Pub. L. 97–444, title II, § 205], Jan. 11, 1983, [96 Stat. 2299]; [Pub. L. 102–546, title IV, § 402(1)(A)], (2), Oct. 28, 1992, [106 Stat. 3624]; [Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(4)]], Dec. 21, 2000, [114 Stat. 2763], 2763A–407; [Pub. L. 110–234, title XIII], §§ 13105(a), 13203(g), May 22, 2008, [122 Stat. 1434], 1439; [Pub. L. 110–246, § 4(a)], title XIII, §§ 13105(a), 13203(g), June 18, 2008, [122 Stat. 1664], 2196, 2201; [Pub. L. 111–203, title VII, § 737(a)]–(c), July 21, 2010, [124 Stat. 1722], 1725.)