IntercontinentalExchange (NYSE: ICE), a leading operator of global derivatives exchanges and over-the-counter (OTC) markets, today announced that the Commodity Futures Trading Commission (CFTC) staff has proposed conditions amending the "no-action relief letter" granted to its U.K. subsidiary, ICE Futures Europe(TM).
ICE plans to comply with the amended no-action letter, detailed below, within 120 days, subject to acceptance by the U.K. Financial Services Authority (FSA), the regulator of ICE Futures Europe. In 2006 the CFTC and the FSA entered into a memorandum of understanding (MOU) regarding information sharing for U.S. oil contracts listed by ICE Futures Europe. On May 29, 2008, ICE, the FSA and the CFTC expanded the information to be disclosed to the CFTC under the existing MOU and added U.S.-style accountability limits. The planned amendments to the no-action letter announced today seek to codify this agreement and add further requirements related to contracts that settle against any price of a contract listed on a designated contract market (DCM) or derivatives transaction execution facility (DTEF), or a contract listed on an exempt commercial market (ECM) that serves a significant price discovery function (collectively, "IFE Linked Contracts"), as described below.
"ICE’s diligent work with the CFTC, the FSA, Congress and industry participants demonstrates our continued dedication to promoting transparency in our markets," said ICE Chairman and CEO Jeffrey C. Sprecher. "While compliance with the amended no-action letter is predicated upon FSA acceptance, we believe we can effectively demonstrate to U.K. officials that the requirements will not have an adverse impact on the proper operation of our markets as a regulated body. We are pleased to have reached this agreement with the CFTC and will continue to meet the obligations required to continue our growth in the global marketplace."
ICE Futures Europe President and Chief Operating Office, David J. Peniket, added: "ICE Futures Europe has sought to work constructively with regulators in both the U.K. and the U.S. in support of an unprecedented, yet practical and effective, market solution to cross-border regulation. We believe the CFTC’s proposal to amend the no-action letter ensures that ICE Futures Europe is undoubtedly subject to equivalent regulation as that applied to U.S. exchanges. Based on our review of recent historical expiration information and discussions with market participants, it appears that the impact on our customers and on our business will be immaterial."
The specific conditions that have been added to ICE Futures Europe’s no-action letter are:
1. ICE Futures Europe will impose on IFE Linked Contracts, by rule or
otherwise, position limits or position accountability levels
(including related hedge exemption provisions) that are comparable to
the existing position limits or position accountability levels
(including related hedge exemption provisions) as adopted by: (i) the
DCM, DTEF or ECM for the contract against which the IFE Linked
Contract settles or (ii) the DCM, DTEF or ECM for a
financially-settled equivalent of such contract;
2. ICE Futures Europe will inform the Commission in a quarterly report of
any member that had positions in an IFE Linked Contract above the
applicable ICE Futures Europe position limit, whether a hedge
exemption was granted, and if not, whether a disciplinary action was
3. ICE Futures Europe will publish daily trading information (e.g.,
settlement prices, volume, open interest, and opening and closing
ranges) that is comparable to the daily trading information published
by the DCM, DTEF or ECM for the contract against which the ICE Futures
Europe contract settles; and
4. ICE Futures Europe will provide to the CFTC, through the Financial
Services Authority (FSA), a daily report of large trader positions in
each IFE Linked Contract for all contract months in a form and manner
* can be fully integrated into the CFTC’s market surveillance
systems, including full identification of each position’s
beneficial owner comparable to the reporting that is provided by
the DCM, DTEF, or ECM;
* can, subject to the Memorandum of Understanding between the CFTC
and FSA, be fully integrated into the CFTC’s Commitments of Traders
Report, including appropriate categorization of traders and their
ICE plans to review these conditions with the FSA imminently and seek acceptance for the amended no-action letter. ICE Futures Europe has been operating under the experienced jurisdiction of the FSA since 2001 and its own market-surveillance staff for over 27 years.