United States: CFTC Finalizes Aggregation Of Positions Rule

Last Updated: December 12 2016
Article by Athena Y. Eastwood, Neal E. Kumar and Paul J. Pantano, Jr.

Most Read Contributor in United States, August 2018

On December 5, 2016, the Commodity Futures Trading Commission ("CFTC") unanimously approved a final rule amending the requirements to aggregate positions subject to a CFTC-set speculative position limit ("Final Aggregation Rule").1  At present, the CFTC imposes federal position limits on nine agricultural futures contracts.  Accordingly, the Final Aggregation Rule applies initially only to the aggregation of positions subject to the CFTC-set position limits for those nine futures contracts.2  The Final Aggregation Rule takes effect 60 days after publication in the Federal Register, which should occur within the next two or three weeks. 

Separate from the Final Aggregation Rule, the CFTC unanimously re-proposed establishing position limits on 25 futures contracts and economically equivalent swaps ("CFTC Position Limits Re-proposal").3  The CFTC Position Limits Re-proposal includes a 60-day public comment period upon publication in the Federal Register.  If and when the CFTC adopts a final position limits rule, the Final Aggregation Rule sets the requirements for aggregating positions subject to any final federal position limits.  Below is a summary of the key aspects of the Final Aggregation Rule. 

General Aggregation Requirement

The Final Aggregation Rule continues to require market participants to aggregate positions if (1) the positions are commonly controlled;4 or (2) a person holds a 10 percent or greater ownership interest in an account or another person who holds a position.  Although market participants must aggregate based on common control or ownership, the Final Aggregation Rule establishes various exemptions from aggregation based upon ownership in order to make common control of trading the primary driver of the requirement to aggregate positions. 

Owned Entity Exemption

The Final Aggregation Rule provides an exemption from aggregation if a market participant holds a 10 percent or greater interest in an owned entity, and the two entities meet certain conditions demonstrating independence of trading ("Owned Entity Exemption"). 

To qualify for the Owned Entity Exemption, the owner, and the owned entity:

(1) cannot have knowledge of the trading decisions of the other;

(2) must trade pursuant to separately developed and independent trading systems;

(3) must have and enforce written procedures to preclude each from having knowledge of, gaining access to, or receiving data about the trades of the other;

(4) cannot share employees that control trading decisions; and

(5) cannot have risk management systems that permit the sharing of its trades or trading strategy with employees that control trading. 

In order to rely on the Owned Entity Exemption, a market participant must make a notice filing with the CFTC.  The exemption from aggregation is effective upon filing the notice. 

The Final Aggregation Rule also incorporates additional flexibility for the Owned Entity Exemption that was not available under the proposed version of the same exemption.5  First, a market participant only needs to demonstrate compliance with the relevant indicia of independence if the owner and owned entity are aware of, or should be aware of, the activities and practices of the other.  The CFTC incorporated this provision to address passive investments where the owner and the owned entity may not know about the derivative activities of the other.  Second, if a market participant acquires a new entity, the Final Aggregation Rule provides a 60-day grace period after the acquisition to submit a notice filing for the Owned Entity Exemption.  Third, failure to submit a timely notice does not constitute a violation of the CFTC's position limit rules if the market participant submits the notice within five business days after the person is aware, or should have been aware, that such notice has not been timely filed. 

Exemption for Certain FCM Accounts

The Final Aggregation Rule retains the CFTC's existing exemption from aggregation for futures commission merchants ("FCM"), or a separately organized affiliate of an FCM, who hold discretionary accounts or manage customer trading programs, provided the FCM meets certain indicia of independence ("FCM Exemption").  Although the indicia of independence remain unchanged from prior CFTC rules, the Final Aggregation Rule requires that FCMs (or separately organized affiliates) file a notice to rely on this exemption.  Therefore, FCMs (or affiliates) who currently rely on this exemption must submit a notice filing to continue to rely on the exemption before the effective date of the Final Aggregation Rule, i.e., within 60 days after it is published in the Federal Register. 

Independent Account Controller Exemption

The Final Aggregation Rule retains the CFTC's existing exemption from aggregation for an eligible entity who delegates the control of a client account to an independent account controller ("IAC Exemption").  Similar to the FCM exemption discussed above, the Final Aggregation Rule now includes a notice filing requirement.  Accordingly, eligible entities who currently rely on the IAC Exemption must submit a notice filing to continue to rely on the exemption before the effective date of the Final Aggregation Rule. 

Broker Dealer and Underwriter Exemptions

The Final Aggregation Rule incorporates a new exemption for a broker-dealer registered with the Securities and Exchange Commission (or similar foreign regulatory authority) for ownership interests acquired in the normal course of business as a dealer ("Broker-Dealer Exemption").  In addition, the Final Aggregation Rule includes a new exemption for entities that have an ownership interest in securities constituting an unsold allotment ("Underwriter Exemption").  Neither the Broker-Dealer Exemption nor the Underwriter Exemption require a notice filing to rely on the exemption. 

Law Information Sharing Restrictions

The Final Aggregation Rule incorporates a new exemption to address scenarios where aggregation of an owned entity creates a reasonable risk that either person could violate state or federal law, or the law of a foreign jurisdiction ("Law Information Sharing Restriction Exemption").  To rely on the Law Information Sharing Restriction Exemption, a market participant must file a notice with CFTC, and include within the notice, a written memorandum of law explaining the basis for the conclusion that sharing information would create a reasonable risk of violating state, federal, or foreign law. 

Pool Participant Exemption

The Final Aggregation Rule retains an exemption for limited partners, limited members, shareholders, or other similar pool participants ("Pool Participants") from aggregating the positions of a pooled account ("Pool Participant Exemption").  However, if any Pool Participants are principals or affiliates of the commodity pool operator managing the pooled account, the pool operator must file a notice on behalf of the principal/affiliate Pool Participants prior to the principal/affiliate Pool Participants relying on the Pool Participant Exemption.  Similar to the FCM Exemption and IAC Exemption, in light of the new notice filing requirement, principals and affiliates of a pool operator who currently rely on the Pool Participant exemption must ensure that the pool operator submits a notice filing on behalf of the principal/affiliate in order to continue to rely on the exemption before the effective date of the Final Aggregation Rule.


The Final Aggregation Rule modifies the aggregation rules for the CFTC-set limits on nine agricultural futures contracts.  For other contracts currently subject to exchange-set limits, market participants should consult the applicable exchange aggregation rules.  The Final Aggregation Rule is substantially similar to the CFTC's proposed aggregation rule.  The main difference is the added flexibility regarding the filing of a notice to rely on certain exemptions from aggregation.  Moreover, to the extent that a market participant relies on previously existing exemptions that, under the Final Aggregation Rule, now require a notice filing (e.g., FCM Exemption and IAC Exemption), the participant immediately should begin the process of compiling the information necessary to make a notice filing to the CFTC. 


1  A copy of the Final Aggregation Rule is available here http://www.cftc.gov/idc/groups/public/@newsroom/documents/file/federalregister120516a.pdf.

2  The nine agricultural futures contracts include (1) Chicago Board of Trade ("CBOT") Corn; (2) CBOT Oats; (3) CBOT Soybeans; (4) CBOT Soybean Oil; (5) CBOT Soybean Meal; (6) CBOT Wheat; (7) Minneapolis Grain Exchange Hard Red Spring Wheat; (8) ICE Futures US Cotton No. 2; and (9) Kansas City Board of Trade Hard Winter Wheat. 

3  A copy of the CFTC Position Limits Re-proposal is available here http://www.cftc.gov/idc/groups/public/@newsroom/documents/file/federalregister120516.pdf.

4  Common control also includes market participants who coordinate trading through an express or implied agreement. 

5  Compare Aggregation of Positions, 80 Fed. Reg. 58365 (Sept. 29, 2015) (supplemental proposal); and Aggregation, Position Limits for Futures and Swaps, 78 Fed. Reg. 68946 (Nov. 15, 2013) (collectively "CFTC Aggregation Proposals").

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Akin Gump Strauss Hauer & Feld LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Akin Gump Strauss Hauer & Feld LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions