US Senators Defend CFTC In Court Case
First Published Friday, 13th April 2012 08:14 pm - © 2012 Dow Jones
By Jessica Holzer and Jamila Trindle
Of Dow Jones NEWSWIRES
WASHINGTON (Dow Jones) -- In papers filed in U.S. federal court Friday, 19 senators defended a new rule designed to limit speculation in the commodity markets.
Two Wall Street trade groups sued the Commodity Futures Trading Commission in December to overturn the rule on the grounds the regulator didn't show that the limits were necessary and underestimated the costs to the industry.
In arguments before the D.C. Circuit Court earlier this year, the CFTC said it didn't need to prove the limits were necessary because it was acting on a mandate from Congress.
The 19 senators, in a friend of the court brief filed Friday, said Congress made clear in the 2010 Dodd-Frank financial law that it wanted the CFTC to require the limits.
"Congress repeatedly referred to the limits as 'required' because it intended to make them so," the senators, led by Sen. Carl Levin (D., Mich.), said.
The CFTC passed the so-called position-limits rule in October in a 3-2 vote along party lines. The new limits have long been a target of trade groups and the futures industry, and the agency's proposed rule prompted about 15,000 comment letters.
The rule aims to cap the positions firms can take in certain commodity contracts in order to curb sharp price increases. It gained traction in Congress during an oil-price spike in 2008, which some attributed to excessive speculation by short-term traders.
-By Jessica Holzer and Jamila Trindle, Dow Jones Newswires; 202-862-9228; email@example.com