CFTC Approves CME Proposal Increasing The Maximum Daily Price Limits For Its Live Cattle And Feeder Cattle Futures Contracts

The Commodity Futures Trading Commission (CFTC) approved on February 13, 2004, a proposal by the Chicago Mercantile Exchange (CME) to increase the maximum daily price limits for its live cattle and feeder cattle futures contracts. The CME's proposal, which was submitted for CFTC approval on November 24, 2003, will increase the daily price limits to 3 cents per pound from 1.5 cents per pound. The CME proposal will also eliminate the futures contracts' existing price limit expansion procedures that allow price limits to be expanded up to 5 cents per lb. under specified conditions.

The CFTC's approval of the proposal was based on the conclusion of its staff that the proposal does not violate the Commodity Exchange Act. In the course of its review, the CFTC considered its long-standing policy that price limits should be set by exchanges at levels that will not impair the ability of the futures market's prices to reflect movements in cash prices for the underlying commodities. The CFTC also considered the views of persons who submitted letters commenting on the proposal in response to CFTC requests for public comment posted on the CFTC's website and in the Federal Register.