[ by Melanie Gretchen ]

CME Group and ICE Futures U.S. have thrown out their plans to conform to changes mandated by the CFTC.  The rules, which would have taken effect on 10/12/12, were thrown out by the U.S. District Court of Columbia on Friday following a successful challenge by Wall Street banks.

U.S. District Judge Robert Wilkins, who was appointed by President Barack Obama, said the CFTC had failed to make its case.  The 2 exchanges had argued that it was necessary to impose new caps on speculative bets in 28 U.S. markets, including copper, corn, and crude oil, to reduce price spikes and volatility.

CME Group said that "in light of the action by the District Court" they were withdrawing plans to revise the exchange's' "Rule 559," and will stick with their existing position limits regimes.  The regulation governs the number of commodity contracts an individual can hold on the New York Mercantile Exchange, Chicago Board of Trade, and the Chicago Mercantile Exchange.

"The Exchanges will not be adopting any revisions to Rule 559 at this time, and will continue to consider all requests for exemptions subject to the existing provisions of Rule 559," CME Group said in an e-mailed notice, similar to the statement issued by ICE, a subsidiary of IntercontinentalExchange Inc.

Nevertheless, CFTC Chairman said he will continue efforts to reinstate the rule.  He contended it was mandated by the Dodd-Frank financial reform law and did not rule out an appeal to a higher court.  Going forward, Bart Chilton, 1 of 5 CFTC commissioners, said on Tuesday that the CFTC should "immediately" appeal the court decision and seek a stay so that it could go forward.

In addition, he said the commission should also start drafting yet another rule to address the concerns of the court.

For further details, go to [Reuters, 10/3/12].