Treasury recommends that the CFTC complete its position limits rules, as contemplated by its statutory mandate, with a focus on detecting and deterring market manipulation and other fraudulent behavior. Among the issues to consider in completing a final position limits rule, the CFTC should:
- ensure the appropriate availability of bona fide hedging exemptions for end users and explore whether to provide a risk management exemption;
- consider calibrating limits based on the risk of manipulation, for example, by imposing limits only for spot months of physical delivery contracts where the risk of potential market manipulation is greatest; and
- consider the deliverable supply holistically when setting the limits (e.g., for gold, consider the global physical market, not just U.S. futures).