I support the Commission’s Order instituting proceedings, making findings, and imposing remedial sanctions against Challenger Life Company Limited, for exceeding the CFTC’s established Federal spot-month speculative position limit for the New York Mercantile Exchange’s (NYMEX) April 2022 Platinum futures contract, and for exceeding the NYMEX delivery limit for the April 2022 and May 2022 Platinum futures contracts.  It is the first CFTC enforcement action under the CFTC’s 2021 final rule that implemented new Dodd-Frank Act authority to establish Federal speculative position limits for 16 additional agricultural, metals, and energy commodities and certain derivatives contracts related thereto (“2021 Final Rule”).[1]

The Commission has long established and enforced Federal speculative position limits for futures contracts and options on futures contracts on nine agricultural commodities as authorized by the Commodity Exchange Act (CEA).[2]  These nine agricultural commodity contracts, often referred to as the ‘‘nine legacy agricultural contracts,” have been subject to Federal position limits for decades.  In the 1920s, the Federal Trade Commission released seven volumes of its Report on the Grain Trade, including discussion of the grain futures markets (referred to at that time as “future markets”) and made recommendations regarding the regulation of grain futures contracts, including the establishment of speculative position limits.[3]  And in the following decade, the Commodity Exchange Act of 1936 provided the statutory mandate to establish position limits.[4]

In 2021, the Commission established Federal speculative position limits for certain commodity derivatives contracts associated with 16 additional agricultural, metals, and energy commodities, referred to as “non-legacy” contracts since they became subject to Federal position limits for the first time under the 2021 Final Rule.[5]  The 2021 Final Rule became effective after 10 years of deliberation, proposals, hearings, litigation against the CFTC, thousands of comments from the public, and considerable time and effort on the part of CFTC staff, in what then-Chairman Heath Tarbert described as “one of the most difficult undertakings in CFTC history.”[6] The CFTC’s Final Rule was the result of careful consideration and a steadfast commitment to ensuring that our regulations are robust, effective, and reflect the evolving dynamics and fundamentals of our markets.  In total, certain commodity derivatives contracts associated with 25 commodities are subject to Federal position limits, such as futures, options, and economically equivalent swaps.[7]

I support this action, the first CFTC enforcement action under the 2021 Final Rule and the first as applied to a non-legacy contract, because it is important that we enforce our rules and establish precedents for our authorities under the CEA.  It not only ensures market integrity, but it demonstrates our commitment to upholding our rules, and sends a clear message to all market participants that if you break the rules you will face the consequences.  This principle is fundamental to maintaining market integrity and confidence in our markets so they can continue to serve their intended purpose of hedging and price formation.  No individual or entity is above our regulations.

I thank the Division of Enforcement and in particular the Division of Enforcement’s Surveillance group for all their efforts in this important milestone under the CEA and CFTC rules.