7.3.3.4. Speculative Position Limits
To protect futures markets from excessive speculation that can cause unreasonable price fluctuations, the CFTC and the exchanges impose limits on the size of speculative positions in futures markets. The CFTC does not allow speculators to hold or control any net long or short futures or options positions for the purchase or sale of any grains, soy products, or cotton in excess of the following contract amounts:
|
Futures Contract |
Exchange |
Limit by Number of Contracts |
||
|
Spot Month |
Single month |
All Months |
||
|
Corn |
CBOT |
600 |
33,000 |
33,000 |
|
Soybean Meal |
CBOT |
720 |
6,500 |
6,500 |
|
Cotton No. 2 |
ICE |
300 |
5,000 |
5,000 |
|
Hard Red Spring wheat |
MGE |
600 |
12,000 |
12,000 |
|
Hard Winter wheat |
KCBOT |
600 |
12,000 |
12,000 |
The exchanges set limits for many other commodities and some financial products. For products having highly liquid markets, such as major foreign currencies, the threat of market manipulation is low, and position limits are not set.
Where they are set, speculative position limits may be exceeded under two conditions. First, the exempted positions must be bona fide hedging transactions. Second, they must be certain spread positions between single month