Sunday, January 22, 2012

Commodity Traders’ Complaint:After a Legal Setback, Commodity Traders’ Complaint Is to Be Heard by a Lower Court

Wall Street’s legal challenge to a regulatory crackdown met a procedural obstacle last week, when a federal appeals court dismissed the case.

The lawsuit, directed at the Commodity Futures Trading Commission’s new restrictions on speculative trading, can currently move to a lower-level court, delaying a choice on the legitimacy of the regulatory overhaul.

At issue may be a rule supposed to curb speculative commodities trading, that some shopper advocates have blamed for inflating costs at the gas pump and also the food market.

But Wall Street says the rule can crimp legitimate trading whereas doing very little to subdue volatile energy prices.

In December, the Securities business and money Markets Association and also the International Swaps and Derivatives Association filed a lawsuit difficult the so-called position limits rule, which might cap the quantity of contracts a trader will hold on twenty eight commodities, together with oil and wheat. The influential Wall Street trade teams filed the lawsuits in 2 federal courts — the us Court of Appeals for the District of Columbia Circuit and a lower-level district court in Washington.

But the appeals court late Friday said it lacked authority to listen to the case.

“There isn't any specific Congressional authorization of direct appellate review applicable to the petition for review during this case,” 3 appellate court judges said during a two-page order.

The court additionally rejected a bid by the trade teams to halt the enforcement of the position limits rule whereas the case winds through the courts. This month, the Commodity Futures Trading Commission additionally rebuffed an invitation to remain the rule.

While the appellate court ruling amounts to a symbolic setback for the trade teams, it'll not essentially have an effect on the success of their legal challenge. The appellate court, typically seen as friendly turf for company America and Wall Street after they skirmish with regulators, could hear the case when the lower court has dominated.

“The court’s ruling is entirely procedural, and wasn't a choice concerning the deserves of our challenge or of our request for a keep,” Ira Hammerman, the securities association’s general counsel, said during a statement.

But Bart Chilton, a commissioner, said of the case, “The agency took plenty of your time and care developing with a wise rule that I don’t believe may be successfully challenged.”

The agency’s position limits rule has emerged united of the foremost contentious new policies stemming from the Dodd-Frank regulatory overhaul law, passed in response to the money crisis. The agency was split, 3-2, when it approved the rule in October.

In the suit, the 2 teams accused the Commodity Futures Trading Commission of failing to adequately assess the economic effects of the rule. They additionally argued that the agency “grossly misinterpreted” its authority beneath Dodd-Frank.
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