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Senate Democrats Push CFTC to Share Trading Data with FERC

Senate Energy and Natural Resources Committee Chairman Ron Wyden (D-OR) and seven leading Senate Democrats have asked the Commodity Futures Trading Commission (CFTC) to follow through before the end of February on its agreement last month to share trading data with FERC.

The senators' letter, addressed to Mark Wetjen, CFTC acting chairman, noted the two agencies' recent agreements to settle their long-standing dispute and share information and jurisdiction (see Daily GPI, Jan. 3). The CFTC has lagged in carrying out those agreements, the senators said, advising the CFTC should "expeditiously implement the sharing of trading data on futures and swaps markets" with the Federal Energy Regulatory Commission (FERC), and set an end of the month deadline.

FERC, which has jurisdiction over physical gas markets, said it needs the futures market data to determine if traders are attempting to manipulate the physical and paper markets by playing one off against the other.

“Information sharing between CFTC and FERC has been delayed for too long, putting our energy markets at risk of abuse unnecessarily. During the Western energy crisis, Americans learned that energy markets that lack real-time market oversight and effective regulation allow traders to rob Americans, disrupt economic activity and darken cities. The crisis cost consumers an estimated $45 billion in higher electricity rates, lost business due to blackouts, and a slowdown in economic growth.

"FERC investigators have explained articulately and effectively that they need access to CFTC’s Large Trader Report in order to oversee trading in fully integrated energy markets and prevent future manipulation,” the senators continued.

The letter noted that a CFTC staffer told a Senate committee last month that technical personnel needed to work out data transfer issues before sharing could begin.

Not good enough, the senators said. "As you know, CFTC and other federal agencies collect and share trading data on a regular basis. CFTC collects trading data from futures and swaps markets that it oversees in real time, and the CFTC has agreements in place to share trading data with foreign regulators.

“Considering the CFTC’s technical ability to share data with other nations and other regulators, we believe that technical barriers preventing the sharing of information with FERC -- a fellow arm of the federal government -- could be addressed and solved in a matter of weeks under your direction and leadership."

Acting FERC Chairman Cheryl LaFleur recently told reporters that cooperation between the two commissions is still a work in progress. She said Commission staff is still working with their CFTC counterparts to get all of the "final mechanics" worked out that would 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,” she said. “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" (see Daily GPI, Jan. 28).

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