CFTC may drop appeal on commodity trading limits, Wetjen says
WASHINGTON (Reuters) - The U.S. derivatives regulator is considering dropping its appeal to defend a rule that would severely limit Wall Street's ability to speculate with commodities, a senior official at the agency said.
The Commodity Futures Trading Commission is putting the final touches on a revised position limits rule even as its lawyers are preparing to defend the original rule that was knocked out by a U.S. court last year.
But with oral arguments in the U.S. District Court scheduled in November, the CFTC needs to decide quickly whether that dual strategy is still the best approach, Commissioner Mark Wetjen told journalists on the sidelines of a lunch event.
"If you're in favour of trying to get (position limits) in place as expeditiously as possible, it shouldn't be a given that you pursue an appeal and you pursue a rulemaking at the same time and that's the outcome you're going to get," Wetjen, a Democrat, said after holding a speech on Tuesday.
"That's not necessarily so. Everyone (at the CFTC) is talking about that very, very intensive right now," he said.
The CFTC's new rule will contain a better legal justification to conform with the court's ruling that the agency had failed to prove that the limits were needed, and will better weigh the costs and benefits of the rule.
"What's being discussed now is what's the best strategy to get position limits in place as quickly as possible. Is it one track, the appeals track, is it another track, the rule making track, or is it a combination of the two", Wetjen said.
The rule is one of the most controversial parts of the 2010 Dodd-Frank law that aims to prevent a repeat of the financial crisis, and would compound the regulatory troubles facing Wall Street's role in physical commodity markets.
(Reporting by Douwe Miedema; Editing by Leslie Gevirtz)
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