Commissioner Bart Chilton of the Commodity Futures Trading Commission (CFTC) said Thursday he won’t settle for a watered-down final rule restricting the positions a trader can hold in the derivatives market to prevent concentration.

“I won’t settle for a weak position limits plan for the sake of getting ‘something’ done. For those that think I may buckle to any plan because I’ve been the strongest advocate for limits and will settle, you don’t know me well enough,” he said at the Cadwalader Energy and Commodities Conference in Houston.

“I’m sure the plan that is ultimately approved won’t be as robust as I would like. I understand compromise, but I will only support something that Congress instructed us to do. I won’t dance on the head of a legal pin and agree that when Congress told us to implement ‘appropriate position limits’ that they really meant that ‘appropriate’ could mean no limits whatsoever,” Chilton said.

“I won’t support special exemptions for some contracts. Congress said limits, not limits where you think they are convenient. I won’t support giving the exchanges autonomous authority to approve exemptions to limits for the largest of the large traders that nobody in the public will ever find out about. And I won’t delay this process now under the guise of being thoughtful in order to try and gather more time to actually kill position limits.”

As an interim measure until the position limit rule is finalized, Chilton in January recommended that the CFTC impose spot month limits for on-exchange trades and for over-the-counter trades for which the agency already has data (see Daily GPI, Jan. 14). “I have continued to say that we should do those. Instead, we have been trying to get a larger position limits proposal completed.

“What has occurred, however, is that there remain issues around which there is still disagreement. I can’t go into any of the specifics, but I can say that if we don’t come to some agreement on a full meal deal position limits plan, what we should do is what I have been saying all year and do spot months limits.”

Chilton said he was accused of holding up the final position limits rule, which would seek to prevent excessive speculation in the market. “After I stopped laughing, I explained that I’ve been calling for position limits since 2008…We need them in the energy, metals and in ag [agriculture] complexes,” he said. The Commission needs three votes to pass a final rule. Chairman Gary Gensler and Chilton are on board, but the three other commissioners have opposed various parts of the rule (see Daily GPI, Sept. 29).

To break a potential vote logjam, the CFTC could wait to hold the vote on the position limit rule until Mark P. Wetjen, who has been nominated to succeed departing Commissioner Michael Dunn, joins the five-member Commission. The CFTC’s next meeting is scheduled for Oct. 18.

Claims that the agency’s cost-benefit analyses of its Dodd-Frank rules are inadequate, are a stalking-horse to thwart the rules, Chilton said. “We’ve got some…who would like to delay, de-fund, de-fang or just plain demolish Dodd-Frank rules by any means possible, and they’ve hit on this odd little means — cost-benefit analyses — as yet another tactic to achieve those ends.”

Chilton acknowledged that cost-benefit analyses of Dodd-Frank rules are important. But “to use this good requirement of doing a cost-benefit analysis as a bludgeon to impede the promulgation of necessary financial market regulatory reform is, at best, shortsighted and, at worst, inimical to the future safety and soundness of our financial system,” he said.

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