The New York Mercantile Exchange expressed outrage Friday overpassage of H.R. 4541 by the House of Representatives on Thursday.The Commodity Futures Modernization Act of 2000 would exemptelectronic energy derivatives trading from regulatory oversight.

New York Mercantile Exchange Chairman Daniel Rappaport said theexchange “finds it particularly egregious that, by approvingsubsection (g) (3) of Section 106, the House would not only removethe energy and metals marketplaces from public scrutiny andregulatory oversight, but also [would] do this in a fashion thatdiscriminates between established markets versus start-upelectronic forums.”

The legislation could lead to a significant migration of energyderivatives trading away from Nymex to the multiple unregulatedenergy trading platforms being developed.

“It is particularly outrageous,” Rappaport added, “at a timewhen every U.S. consumer is feeling the impact of high energyprices, to allow lobbying by a small group of vested interests toinfluence Congress to take these markets out of the public eye andcreate an advantage for people to trade on private, proprietarysystems lacking the protections of a neutral self-regulatoryorganization. Policymakers, regulators, and the American publicwill be deprived of currently available information on marketparticipation, concentration, and financial performance.”

Rappaport said Nymex intends to “fight adamantly at the Senatelevel to demand that this subsection either be eliminated or beamended to create a consistent regulatory policy for electronic andopen outcry markets.”

Rocco Canonica

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