Judge strikes down rule capping speculative trades

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Associated Press

Posted on September 28, 2012 at 4:07 PM

Updated Friday, Sep 28 at 5:01 PM

WASHINGTON (AP) — A federal judge has struck down a rule required under the 2010 financial overhaul that seeks to limit speculative trading of commodities futures.

U.S. District Judge Robert Wilkins said the Commodity Future Trading Commission failed to show that trading caps were necessary and therefore violated federal law. He sent the rule back to the regulatory agency to be redrafted.

The rule, which was adopted on a divided vote last year, restricted the volume of futures contracts that financial investors can trade for 28 commodities. It was challenged by the International Swaps and Derivatives Association, a group representing banks and other financial firms.

Investors trade futures to profit from swings in market prices. Hundreds of millions of dollars in profits for Wall Street banks are at stake.

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