A federal appeals court dismissed a challenge to a U.S. Commodity Futures Trading Commission rule on position limits on Friday, ruling that the case must first be considered by a trial court.
The judge panel dismissed the case, adding that current federal financial regulations do not specify whether the rule can be challenged directly in an appeals court, Bloomberg reports.
“Initial review occurs at the appellate level only when a direct-review statute specifically gives the court of appeal subject-matter jurisdiction to directly review agency action,” Judges Judith Rogers, Merrick Garland and Janice Rogers Brown said, according to Bloomberg. “There is no express congressional authorization of direct appellate review applicable to the petition for review in this case.”
The International Swaps and Derivatives Association, Inc., and the Securities Industry and Financial Markets Association filed an emergency request on Jan. 9 asking the appeals court to put the rule on hold while the court considered its legal challenge. The groups filed a lawsuit last month challenging the rule, part of an effort to weaken the provisions of the Dodd-Frank Act.
In October, the CFTC voted to put position limits on the number of commodity futures and swaps contracts a trader could hold. The position limits were intended to prevent commodities market speculation and to promote market integrity, according to the CFTC.