Washington, DC - R-CALF USA joined with other members of the Commodity Markets Oversight Coalition (CMOC), a broad coalition of associations representing Main Street businesses and agriculture to file an amicus curiae brief with the U.S. Court of Appeals of the District of Columbia in support of a Commodity Futures Trading Commission's (CFTC) rule that would limit speculative trading in commodities.
The 2010 Dodd-Frank Act required the CFTC to quickly adopt speculative position limits for all energy futures and swaps and report back to lawmakers on their impact after the limits had been imposed for one year.
On Feb. 15, 2011, R-CALF USA CEO Bill Bullard testified before the U.S. House of Representatives Committee on Agriculture, Subcommittee on General Farm Commodities and Risk Management, regarding the need to limit excessive speculation in the cattle futures market to prevent market manipulation by speculators with a vested interest in the price of cattle and from distortions caused by excessive speculation.
On March 18, 2011, R-CALF USA submitted comments on the CFTC ruleexpressing its concern for the ever-decreasing share of physical hedger interests in the Live Cattle and Feeder Cattle markets. R-CALF USA urged the CFTC to set "meaningful position limits to prevent excessive speculation, market manipulation, and ensure market liquidity for bona fide hedgers and preserve the price discovery function of the futures market."
The CFTC approved a final rule on Oct. 18, 2011 that would have imposed speculative position limits on futures and swaps for 28 listed commodities, including cattle.
Last September, a District Court judge, responding to a legal challenge by Wall Street groups, vacated the rule citing an "ambiguous" Congressional mandate and CFTC's failure to determine if it should have made a finding of necessity before promulgating the final rule.
In its amicus brief, the CMOC supports the CFTC's position that Congress mandated a rule setting speculative position limits, citing nearly a decade of Congressional investigations and dozens of hearings into the matter. During that time, lawmakers received expert testimony from CMOC members on the harm that excessive speculation was causing their industries and constituent businesses.
"Congress had been gathering evidence for nearly a decade about excessive speculation and had already concluded that [excessive speculation] constituted an undue burden on interstate commerce" the coalition said in the brief. "Congress had studied and identified a serious crisis that it wanted remedied quickly, and therefore mandated position limits."
The coalition also pointed to the requirement by Congress that regulators conduct an expedited rulemaking process. Lawmakers also required a study into the effect of position limits one year after they had been imposed.