OTC energy derivatives regulations to tighten

ICE chief executive Jeffrey Sprecher spoke out in favour of a stronger role for the Commodity Futures Trading Commission (CFTC) at a second hearing on excessive speculation in the natural gas market, led by a US senate permanent subcommittee on investigations.

“ICE strongly supports several of the recommendations of the permanent subcommittee report, particularly the proposed increase in the CFTC's budget and the enhancement of its access to trading information. We also support the advancement of regulatory certainty by eliminating the ‘Enron Loophole’, although that provision has nothing to do with ICE,” said Sprecher. However, he deemed a complete overhaul of the current regulatory structure to be “neither warranted nor advisable”.

The hearings were scheduled following a subcommittee investigation into Amaranth’s natural gas trading records for 2006 from the New York Mercantile Exchange (Nymex) and ICE. The investigation showed that, when CFTC-regulated Nymex told Amaranth to reduce its positions in certain Nymex natural gas contracts, Amaranth took advantage of ICE’s regulation and trading limit-exempt status by moving contracts there. Neither Nymex nor the CFTC was aware of Amaranth's true natural gas holdings and trades, the report finds.

The permanent subcommittee report recommends that congress should eliminate the ‘Enron Loophole’ and ensure that exempt commercial markets, such as ICE, should be required to comply with the same statutory obligations as designated contract markets such as Nymex, and should be regulated in the same manner by the CFTC.

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: