• Limits On Holdings of Registered and Outstanding Shipping Certificates and Warehouse Receipts for Non-Commercial Purposes

      • To
      • Members, Member Firms and Market Users
      • From
      • Market Regulation Department
      • #
      • CBOT-RA0901-1
      • Notice Date
      • 05 January 2009
      • Effective Date
      • 17 February 2009
    • The CBOT has requested CFTC approval to implement rule amendments that will limit holdings, for non-commercial purposes, of the delivery instruments underlying the Exchange’s Corn, Wheat, Oat, Rough Rice, Soybean, Soybean Oil and Soybean Meal contracts.  The amendments are intended to reduce the potential for the significant accumulation of delivery instruments by participants employing strategies that are not directly related to commercial activities and which might otherwise negatively impact contract performance.   


      Limits on Holdings of Certificates/Receipts



      Effective on February 17, 2009, and subject to certain exemptions described below, CBOT will limit the quantity of registered shipping certificates or warehouse receipts that any person may own or control, at any time, for non-commercial purposes.  Persons owning or controlling more than the specified limit of certificates or receipts as of February 17, 2009, will have until May 31, 2009, to come into full compliance with the limits, but may not increase their holdings during that period.


      The following limits, set at levels equivalent to the corresponding spot month speculative position limits, will apply:


                                                      Commodity                             Limit

      Corn certificates                                   600*

      Soybean certificates                             600*

      Wheat certificates                                 600*

      Soybean Oil receipts                            540

      Soybean Meal certificates                    720

      Oat certificates                                     600

      Rough Rice receipts                             600


      *The limits in corn, wheat and soybeans include mini-sized certificates such that each mini-sized certificate represents the equivalent of one-fifth of a full-sized certificate.



      The limits on certificate/receipt holdings are separate from position limits.  However, if a person holding a long position is assigned delivery of certificates/receipts in a quantity that would cause the person to exceed the designated limit, the person must cancel, retender or sell the quantity of certificates/receipts in excess of the limit by the end of the following business day.


      Exemptions from Limits



      An entity may seek an exemption from these limits for bona fide commercial purposes by submitting an application to the Market Regulation Department.  The Market Regulation Department, in its sole discretion, may grant qualified exemptions.


      In addition, entities that offer financing to participants who employ cash and carry strategies and hold certificates or receipts as collateral may qualify for an exemption; however, no single participant will be permitted to employ the cash and carry strategy in quantities above the designated limits.  Certain financing arrangements are structured such that the party obtaining the financing sells the certificates to the financing entity with the right, but not the obligation, to buy back the certificates.  Certificates that are financed in this manner will be considered under the control of the person with the option to buy back the certificates and will be aggregated with any additional certificates the person may hold.


      Some delivery facilities also enter into financing arrangements to finance their own inventory, and exemptions for entities financing their inventory with their own certificates/receipts will be permitted.


      The new rule language is included on the following pages and, as noted above, is subject to CFTC approval.


      Questions regarding this advisory may be directed to the following individuals in the Market Regulation Department:


                                   Joe Hawrysz, Director, Market Surveillance, 312.341.7750


           William Lange, Manager, Market Surveillance, 312.341.7757