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ICE Completes Energy Swaps to Futures Migration

Even as a number of Dodd-Frank Wall Street Reform Act regulatory rules remain in limbo, IntercontinentalExchange (ICE) said early last week that it has completed the transition on its exchange of cleared over-the-counter (OTC) energy swaps to futures.

ICE initiated the transition it announced in July (see NGI, Sept. 17), based upon feedback from customers seeking the regulatory certainty of futures markets amid the continued evolution of new swap rules. At the 11th hour last Friday, the Commodity Futures Trading Commission granted ICE, and CME Group, owner of the New York Mercantile Exchange (Nymex), limited relief until Dec. 31 from the Oct. 12 deadline to register as swap dealers (see NGI, Oct. 15). The CFTC said its action was based on recent actions of ICE and Nymex to transition cleared swap activities to cleared futures contracts.

The CFTC said earlier this month that the limited transition relief "is warranted in order to provide participants in the market for cleared swaps and swaps exchanged for futures referencing exempt commodities and agricultural commodities sufficient time to determine whether and in what manner to transition those swap activities to similar products in the futures markets that will become available in the near future, and to enable any such transition to proceed in an orderly manner."

"This relief will allow market participants in the CME market to transition their trading activity to futures markets under a more reasonable time line. The fact that market participants are fleeing the Commission's swap regulations is proof that the Commission has not developed clear and cost-effective rules," said CFTC Commissioner Scott O'Malia.

While CME availed itself of the delay, saying earlier this month that its customers could continue to do "business as usual," ICE said it had completed the transition and was ready to operate in the new mode.

ICE COO Chuck Vice said last Tuesday that he was "proud of the coordinated effort of our employees, trading participants, brokers, clearing members and vendors to successfully complete this complicated transition under a tight deadline with no market disruption."

Open interest in ICE's cleared OTC energy contracts was transitioned to identical futures contracts over the Oct. 13-14 weekend. As of Oct. 15, all cleared North American natural gas, electric power, and environmental products are listed futures on ICE Futures U.S. while all cleared oil, freight, iron ore, and natural gas liquid products are listed futures on ICE Futures Europe. All products remain cleared at ICE Clear Europe.

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