Update: Financial Industry Coalition Urges Federal Appeals Court to Preserve CFTC Exclusive Jurisdiction
December 10 2007 - 5:23PM
PR Newswire (US)
NEW YORK and WASHINGTON D.C. and CHICAGO, Dec. 10
/PRNewswire-FirstCall/ -- Today, a broad coalition of exchanges,
brokers and market participants in the United States financial
industry filed a "friend of the court" brief in federal appeals
court challenging the legal authority of the Federal Energy
Regulatory Commission (FERC) to prosecute claims that Amaranth
Advisors manipulated the price of natural gas futures traded on a
futures exchange. The coalition, which is composed of the Futures
Industry Association (FIA), Managed Funds Association (MFA), CME
Group Inc. (CME), New York Mercantile Exchange (NYMEX) and The
International Swaps and Derivatives Association, Inc. (ISDA),
argues in its brief that FERC's proceeding against Amaranth would
harm the futures industry by creating two separate legal standards
for determining when trading on futures exchanges should be
construed as market manipulation. The brief also stresses the
importance of preserving the exclusive jurisdiction of the
Commodity Futures Trading Commission (CFTC) over U.S. futures
markets and urges the court to support Amaranth's request for a
stay of the FERC proceeding until this important jurisdictional
issue is resolved. The coalition has complete confidence in the
CFTC's experience and expertise to deal with any attempts to
manipulate futures prices and believes that any effort to diminish
the CFTC's exclusive jurisdiction will be inimical to the health of
the $5 trillion a day futures industry. The coalition neither
supports nor tolerates any form of price manipulation and the brief
takes no position on the substance of the FERC's allegations.
Congress determined in the 1974 Commodity Exchange Act that it was
in the public interest that the CFTC "shall have exclusive
jurisdiction" over commodity futures trading in the United States.
The CFTC has in fact exercised that jurisdiction in this matter. On
July 25, 2007, the CFTC sued Amaranth for attempted price
manipulation of natural gas futures contracts traded on the NYMEX.
That same week, FERC filed its own administrative proceeding
against Amaranth based upon the same alleged misconduct but
applying a different legal standard, a standard never before
applied to the futures industry. Staying FERC's enforcement
proceeding for the short time it will take to review the purely
legal question of FERC's claimed jurisdiction will cause no harm.
The public interest and the interest of market participants will be
damaged if both enforcement actions are allowed to continue in
parallel, creating uncertainty as to the legal standard governing
trading on futures exchanges. Congress vested "exclusive
jurisdiction" in the CFTC to make certain that a single, expert
legal standard, based upon the Commodity Exchange Act and CFTC
regulations, applied to the U.S. futures industry. The FERC's
proceeding for futures price manipulation creates costly
uncertainty as to the standards by which trading on U.S. futures
exchanges will be measured, which is contrary to both law and the
public interest. The FERC proceeding should be stayed. About FIA
FIA is a principal spokesman for the commodity futures and options
industry in the U.S. Our regular membership is comprised of
approximately 35 of the largest U.S. futures commission merchants.
Among the approximately 175 firms that make up our associate
membership are representatives of virtually all segments of the
futures industry, including both national and international
exchanges, banks, law firms, accounting firms, introducing brokers,
commodity trading advisors, commodity pool operators and other
market participants. FIA estimates that our members are responsible
for more than 80 percent of all customer transactions executed on
U.S. contract markets. About MFA MFA is the voice of the global
alternative investment industry. Its members include professionals
in hedge funds, funds of funds and managed futures funds.
Established in 1991, MFA is the primary source of information for
policymakers and the media and the leading advocate for sound
business practices and industry growth. MFA Members represent the
vast majority of the largest hedge fund groups in the world who
manage a substantial portion of the approximately $2 trillion
invested in absolute return strategies. MFA is headquartered in
Washington, D.C., with an office in New York. About CME Group CME
Group (http://www.cmegroup.com/) is the world's largest and most
diverse exchange. Formed by the 2007 merger of the Chicago
Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT),
CME Group serves the risk management needs of customers around the
globe. As an international marketplace, CME Group brings buyers and
sellers together on the CME Globex electronic trading platform and
on its trading floors. CME Group offers the widest range of
benchmark products available across all major asset classes,
including futures and options based on interest rates, equity
indexes, foreign exchange, agricultural commodities, energy, and
alternative investment products such as weather and real estate.
CME Group is traded on the New York Stock Exchange and NASDAQ under
the symbol "CME." About the New York Mercantile Exchange, Inc. The
New York Mercantile Exchange, a subsidiary of NYMEX Holdings, Inc.
(NYSE:NMX), is the world's largest physical commodities exchange,
offering futures and options trading in energy and metals contracts
and clearing services for more than 320 off-exchange energy
contracts. Through a hybrid model of open outcry floor trading and
electronic trading on CME Globex(R) and NYMEX ClearPort(R), NYMEX
offers crude oil, petroleum products, natural gas, coal,
electricity, gold, silver, copper, aluminum, platinum group metals,
emissions, and soft commodities contracts for trading and clearing
virtually 24 hours each day. For more information, visit the NYMEX
website at http://www.nymex.com/. About ISDA ISDA, which represents
participants in the privately negotiated derivatives industry, is
among the world's largest global financial trade associations as
measured by number of member firms. ISDA was chartered in 1985, and
today has approximately 825 member institutions from 56 countries
on six continents. These members include most of the world's major
institutions that deal in privately negotiated derivatives, as well
as many of the businesses, governmental entities and other end
users that rely on over-the-counter derivatives to manage
efficiently the financial market risks inherent in their core
economic activities. Information about ISDA and its activities is
available on the Association's web site: http://www.isda.org/.
DATASOURCE: CME Group CONTACT: Will Acworth of Futures Industry
Association, +1-202-466-5460, ; or Meg Bode of Managed Funds
Association, +1-516-869-6610, ; or Anita Liskey of CME Group Inc.,
+1-312-466-4613, ; or Anu Ahluwalia of the New York Mercantile
Exchange, +1-212-299-2439, ; or Louise Marshall of International
Swaps and Derivatives Association, +1-212-901-6014, Web site:
http://www.cme.com/ http://www.isda.org/ http://www.nymex.com/
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