The Commodity Futures Trading Commissionhas published a concept release relating to its review of hedge exemptions for swap dealers. The concept release arises from a September 2008 CFTC staff report summarizing a review of the market activities of swap dealers and index traders. In that report, the staff recommended that the CFTC examine whether swap dealers’ “bona fide hedge” exemptions from speculative position limits should be eliminated and replaced by more limited “risk management” exemptions, the availability of which would be further conditioned upon certain reporting and certification requirements. The concept release outlines the regulatory history of the hedge exemption and marketplace events leading up to the 2008 staff report. The concept release concludes with a request for comments on a series of questions relating to the advisability of eliminating the hedge exemption and the appropriate parameters for any new risk management exemptions.
The comment period for the concept release closes on May 26.