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CFTC Adds ICE Henry Hub Data to Traders' Reports

Continuing its regulatory crackdown on energy contracts that it deems act as "significant price discovery contracts" (SPDC), the Commodity Futures Trading Commission (CFTC) said it will include positions in the IntercontinentalExchange (ICE) Henry Hub natural gas contract in its weekly Commitments of Traders (COT) reports.

The ICE contract is a cash-settled "look-alike" contract to the CME Group's New York Mercantile Exchange Henry Hub contract, which already is under CFTC regulation. Last summer the Commission moved to bring ICE's Henry Hub contract under its regulatory authority (see NGI, Aug. 3, 2009).

By including the ICE contract in the COT reports, the CFTC hopes to provide a better idea of who's doing what within the natural gas market. Last fall the Commission "improved" the COT reports in a number of ways aimed at providing more detailed information on the different categories of market participants and their actions. The old COT reports separated traders into two broad categories: commercial and noncommercial. The new reports break the data into four categories of traders -- Producer/Merchant/Processor/User and Swap Dealers on the commercial side, and Managed Money and Other Reportables on the noncommercial end (http://intelligencepress.com/data/cot/).

"The announcement is in keeping with the Commission's efforts to improve the transparency of the markets it oversees by providing additional data to the public," the CFTC said earlier this month. "In July 2009 the Commission determined that the ICE contract was a significant price discovery contract, or SPDC. It was the first ECM [exempt commercial markets] contract to be recognized as an SPDC and is the first SPDC to be included in the COT report."

Over the summer when the CFTC determined the contract was a SPDC, CFTC Chairman Gary Gensler said, "To protect the American public, it is essential that we bring transparency and accountability to the marketplace. Bringing this natural gas contract under the CFTC's regulatory authority is a critical step toward ensuring a fair and orderly marketplace. We will continue to use this authority and our other existing authorities, as well as work with Congress to secure additional authorities, to police energy markets for fraud, manipulation and other abuses."

ICE responded to the summer finding by announcing that it would begin submitting enhanced market statistics for its cash-settled Henry Hub natural gas swap market to the CFTC immediately.

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