International bankers have “temporarily prevailed” on the lawsuit challenging the Commodity Futures Trading Commission’s (CFTC) rule limiting speculative trading in commodity derivatives, but the “struggle isn’t over,” said CFTC Commissioner Bart Chilton Tuesday.

“I, for one, will continue to push hard for what Congress mandated: a position limits rule. I think the court opinion is deeply flawed,” he said in a speech to the G-20’s Agricultural Market Information System Roundtable on Public-Private Dialogue in Rome, Italy.

Chairman Gary Gensler, who also was traveling in Europe, told a Reuters reporter that the agency would press forward with a new rule to curb excessive speculation in the swaps markets, and would seek advice from CFTC attorneys on whether to appeal the court’s decision.

On Friday the U.S. Court of Appeals for the District Circuit vacated and remanded the CFTC’s rule aimed at limiting speculative trading in the swaps market (see Daily GPI, Oct. 1). Judge Robert Wilkins ruled that “the precise question…is whether the language of Section 6a(a)(1) [of Dodd-Frank] clearly and unambiguously requires the Commission to make a finding of necessity [whether excessive speculation exists] prior to imposing position limits. The answer is yes.”

In the wake of the court ruling, “I’m publicly suggesting (right here and now) that we do a few things to help remedy the circumstances,” Chilton said. “Position limits are simply too important…The agency should immediately appeal the court decision and seek a stay in order to allow us to go forward.

“Second, we should start drafting yet another rule proposal to address any concerns the court had, drafted in a way that satisfies the objections raised by the court. I am confident we can do so. Any additional proposal should be done on an expedited time frame. We already know what most folks think. So I suggest we do what is called an interim final rule with a short comment period, perhaps 15 days. This would allow us to quickly do what we had planned, and the exchanges and market participants had already planned to do in 10 days.”

The rule, which the CFTC passed last October, established limits to curb “excessive speculation” in 28 core physical commodity contracts, four of which are energy contracts: Nymex Henry Hub Natural Gas, Nymex Light Sweet Crude Oil, Nymex New York Harbor Gasoline Blendstock and Nymex New York Harbor Heating Oil (see Daily GPI, Oct. 19, 2011).

The International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association challenged the CFTC’s position limit rule in court in December, arguing that the agency adopted the rule without first determining that there was excessive speculation in commodity and swaps markets and failed to conduct a meaningful cost-benefit analysis of the rule (see Daily GPI, Dec. 6, 2011). The arguments echoed those of the two Republicans on the CFTC: Commissioners Scott O’Malia and Jill Sommers.

©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.