CFTC May Heighten Oversight Of 13 ICE Natural Gas Contracts
October 07 2009 - 5:47PM
Dow Jones News
Thirteen natural gas financial basis contracts listed by
IntercontinentalExchange Inc. (ICE) are being scrutinized for
possible heightened federal oversight, the U.S. Commodity Futures
Trading Commission said Wednesday.
Wednesday's announcement marks the second time this week the
CFTC has said it is thinking about expanding its oversight of
various contracts listed by ICE because they may play a significant
role in setting market prices.
In Tuesday's Federal Register, the CFTC also revealed it may
impose additional regulations on 11 of ICE's cash-settled
electricity contracts as well. An announcement detailing the CFTC's
plans to look at the natural gas contracts has not yet been
officially published, but the CFTC said it was looking at them in a
press release.
The ICE natural gas and electricity contracts are the latest
ones that the CFTC has said it will look at as part of its new
authority from the 2008 farm bill.
That bill gave the CFTC the power to impose additional
oversight, including reporting and position limits, on contracts
traded on exempt commercial markets such as ICE if they serve a
price-discovery function. The bill was passed in an effort to close
the so-called Enron loophole, which allowed electronic energy
markets to evade the same stringent oversight as regulated
exchanges.
Earlier this year, the CFTC announced it would impose oversight
on ICE's Henry Hub natural gas swap after deciding it served a
significant price discovery function.
It is also considering new regulations for the carbon spot
contract listed by the exempt commercial market arm of the Chicago
Climate Exchange.
The ICE natural gas financial basis contracts now under
consideration for heightened oversight are: PB&E Citygate,
Waha, Malin, HSC, Dominion-South, AECO, Permian, TCO, San Juan,
TETCO-M3, Zone 6-NY, Chicago and NGPL TxOk.
In addition, the CFTC is looking at the following electricity
contracts: Mid-C Financial Peak, Mid-C Financial Peak Daily, Mid-C
Financial Off-Peak, Mid-C Financial Off-Peak Daily, SP-15 Financial
Day-Ahead LMP Peak, SP-15 Financial Day-Ahead LMP Peak Daily, SP-15
Financial Day-Ahead LMP Off-Peak Daily, SP-15 Financial Swap Real
Time LMP-Peak Daily, SP-15 Financial Day-Ahead LMP Off-Peak, NP-15
Financial Day-Ahead LMP Peak Daily and NP-15 Financial Day-Ahead
LMP Off-Peak Daily.
-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634;
sarah.lynch@dowjones.com