The Commodity Futures Trading Commission (CFTC) said Thursday it will hold a hearing on Sept. 18 at its headquarters in Washington, DC, to examine the oversight of energy trading on regulated exchanges and exempt commercial markets (ECMs).
The agency said it intends to present findings and make recommendations based on the public proceeding to help inform the debate when Congress takes up CFTC reauthorization.
“The evolution of these energy markets in recent years requires our agency to address whether the level of regulatory oversight is proper given the importance of energy prices to all Americans,” said CFTC Acting Chairman Walter L. Lukken. “Through our regulatory and enforcement efforts, the Commission must continue its zero tolerance policy toward manipulative behavior” in energy markets.
The announcement of the CFTC hearing comes less than a month after the Senate Permanent Subcommittee on Investigations took the agency to task for not properly overseeing the activities of failed hedge fund Amaranth Advisors LLC in 2006 (see Daily GPI, July 10). And it comes on the heels of major enforcement actions by the CFTC and Federal Energy Regulatory Commission against Amaranth and transporter Energy Transfer Partners last week for manipulation and attempted manipulation of natural gas prices (see Daily GPI, July 27, July 27, July 26).
The CFTC said the September hearing will focus on a number of issues, including the:
On Monday, Sen. Carl Levin (D-MI) said he and several other senators were drafting legislation to be debated in the fall that would subject all currently unregulated electronic energy trading platforms, such as Atlanta-based IntercontinentalExchange (ICE), to CFTC oversight (see Daily GPI, July 31).
The legislation would eliminate the so-called Enron loophole to the Commodity Exchange Act, which excludes electronic energy trading platforms from CFTC regulation, said Levin, chairman of the Subcommittee on Investigations, which has spent the last year investigating “excessive speculation” in the natural gas futures markets. The bill would bring ICE and others under the same regulation as the New York Mercantile Exchange, he said.
Witnesses at the planned CFTC hearing will include members of the energy trading community, financial services trade associations and energy consumer groups, the agency said. It noted that more details on the hearing will be made available in early September.
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