DC Circuit Refuses Review of CFTC Position Limits Before Trial

The D.C. Circuit Court of Appeal refused to review a direct appeal of a U.S. Commodity Futures Trading Commission rule on position limits on Friday.

Holding that neither the Commodity Exchange Act nor the Dodd-Frank law gave it the jurisdiction to consider a direct appeal, the court ruled that the petitioners must take the position limits rule to a trial court first.

"Initial review occurs at the appellate level only when a direct-review statute specifically gives the court of appeals subject-matter jurisdiction to directly review agency action," the D.C. Circuit wrote. "There is no express congressional authorization of direct appellate review applicable to the petition for review in this case."

The case is but one of many attempts to overturn the controversial provisions of last year's Dodd-Frank law that cracks down on speculation in commodities markets. The specific rule in this case set "position limits" on the number of commodity futures and swaps contracts that a trader could hold.

The petitioners, Wall Street's International Swaps and Derivatives Association Inc. and Securities Industry and Financial Markets Associated, wanted the appellate court to put the rule on hold while the case goes through the trial level.

Despite the D.C. Circuit's rejection of that request, the legality of the rule still remains in question.

"The court's ruling is entirely procedural, and was not a decision about the merits our of challenge or of our request for a stay," said Ira Hammerman, general counsel for the Securities Industry and Financial Markets Association.

Since the rule survived its most recent legal challenge, however, it will go into effect this year.

Related Resources:

• CFTC Ruling on the Motion for a Stay of the Effective Date of the Position Limits Rule (CFTC)
• CFTC Fights Position Limits Lawsuit in DC Court (CFTC Law)
• SEC Will Not Appeal Proxy Access Rule Decision (FindLaw's D.C. Circuit blog)