The rules would have set limits on the amount of positions a particular trader could hold in 28 different commodities. The CFTC maintains such limits would curb excessive speculation, but has faced fierce pushback against the financial industry. Two industry trade groups, the Securities Industry and Financial Markets Association (SIFMA) and International Swaps And Derivatives Association (ISDA), filed the legal challenge that led to the rules being vacated.
Judge Robert Wilkins said the CFTC failed to determine if the new regulations were necessary and appropriate before going forward, and punted the rulemaking back to the regulator. The decision marked a last-minute victory for the financial industry, as the limits were set to begin on Oct. 12.
Chilton took issue with the court's ruling, arguing regulators followed clear instructions from Congress.
"Why our Congress wanted us to implement them soon was to ensure that they did take effect. In fact, many of the members of Congress who wrote the position limits section of Dodd-Frank made their views clear to the court," he said.
Chilton said the CFTC should push back against the ruling, but at the same time get to work tweaking the existing rule so it can meet the court's muster. Furthermore, the regulator should continue to advance the issue on the international scene by pressuring other countries to consider similar crackdowns on excessive speculation.
CFTC Chairman Gary Gensler indicated after the ruling that the regulator would be looking at reworking the existing rules to address the court's concerns.
"I believe it is critically important that these position limits be established as Congress required," Gensler said. "I am disappointed by today’s ruling, and we are considering ways to proceed.”