The Commodity Futures Trading Commission (CFTC) reported Thursday that it is reviewing another over-the-counter (OTC) natural gas contract to determine whether it performs a significant price-discovery function (SPDF), which would subject it to agency position limits and other restrictions.
The CFTC has asked for comments to be submitted by Nov. 6 to determine whether the NWP (Northwest Pipeline) Rockies Financial Basis contract offered for trading on IntercontinentalExchange (ICE) Inc. serves a SPDF. If the agency finds that the contract satisfies several statutory criteria for SPDF, it would subject the ICE contract and market participants to the CFTC’s position limits and emergency authorities and large-trader reporting requirements, among other things.
The CFTC said is is undertaking the review based on information provided by ICE.
This action comes only days after the CFTC said it was investigating five natural gas OTC contracts on the Canadian Natural Gas Exchange (NGX) to determine whether they perform SPDF (see Daily GPI, Oct. 19). They join 13 other natural gas and electric contracts trading on ICE, which the agency singled out for investigation earlier in the month (see Daily GPI, Oct. 8).
The five NGX contracts are:
The CFTC already has designated ICE’s Henry Hub contract as having a SPDF, thereby coming under agency rules regarding position limits, emergency authorities and large-trader reporting rules (see Daily GPI, July 28).
It also has named 13 ICE natural gas financial basis contracts at heavily traded points for study, including the PG&E Citygate; Waha; Malin; HSC; Dominion-South; AECO; Permian; TCO; San Juan; TETCO-M3; Zone 6-NY; Chicago; and NGPL TxOk. The agency said the points were chosen based on trading data provided by the exchanges. It allowed 15 days from the date the notices appear in the Federal Register for comments and is expected to pull the named contracts under its wing in the near future.
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