FERC Acting Chairman Cheryl LaFleur said Monday that the sharing of information between the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission (CFTC) will help in speeding up fraud and manipulation investigations, allowing quicker resolutions that will keep market participants better informed.
However, cooperation between the two commissions is still a work in progress following the early January memoranda of understanding (MOU), she told a roundtable of reporters at FERC. She said Commission staff is still working with their CFTC counterparts to get all of the "final mechanics" worked out that will give the Commission access to the CFTC's databases.
"I think it will help in our investigations of the cases because a number of our cases have related to [the activity between the markets] where someone is doing something in the physical energy markets to benefit a position in the financial markets. Having the more real-time information on the financial markets might help us spot trends or investigate the cases. I don't...think it will change the direction or necessarily the volume of our cases.
"If it helps us get at the information much more quickly, we can get on cases of manipulation quicker and resolve them quicker so other market participants get the signal. I think that's quite valuable.”
The two regulators have butted heads over jurisdictional issues for several years (see Daily GPI, Nov. 5, 2008). Last March, a federal appeals court in Washington, DC, granted the plea of former natural gas trader Brian Hunter of failed hedge fund Amaranth Advisors LLC to overturn an FERC order imposing a $30 million penalty for allegedly manipulating natural gas futures. The controversial decision held that FERC lacked jurisdiction in the natural gas futures market, and that its jurisdiction was confined to the physical gas market (see Daily GPI, March 18, 2013).
FERC and the CFTC on Jan. 2 signed two MOUs to address overlapping jurisdiction and information sharing in connection with market surveillance and investigations into potential market manipulation, fraud or abuse (see Daily GPI, Jan. 3).
The MOUs set out a process that FERC and the CFTC would use to try to determine how their authority would be divided in cases where there might be overlapping or unclear authority. "I certainly believe that implies to both enforcement as well as other type of matters before the Commission," LaFleur said Monday. "It is a process that is basically escalating up in both commissions to try to determine who has what authority."
LaFleur added that there could be more legislation in terms of how the boundaries are defined, "but in the meantime we are focused on maximizing the effectiveness of the authority we have.
"I'm not actively on the hill lobbying for legislation to clarify the CFTC jurisdiction. I think immediately after the U.S. Court of Appeals for the District of Columbia Circuit rule in the Hunter case there were some ideas for maybe a legislative fix to clarify that, but to my knowledge that is not actively under legislative consideration. I think it would be useful."
The chairman said she doesn't see any major change in the Commission's enforcement direction. "Really our enforcement has been around two areas that are both really high on my priority list. Markets and keeping the markets fair, and reliability."