New conditions strengthen oversight of energy markets
The U.S. Commodity Futures Trading Commission (CFTC) today announced further amendments to the terms under which ICE Futures Europe is permitted to make its electronic trading and order matching system available to exchange members in the United States.
The new conditions are designed to enhance the CFTC’s ability to carry out its market surveillance responsibilities and maintain integrity of markets. ICE Futures Europe lists for trading cash-settled contracts that settle based upon the prices of contracts traded on the New York Mercantile Exchange (NYMEX), a CFTC-regulated designated contract market. The conditions will apply to any ICE Futures Europe contracts currently linked to a CFTC-regulated exchange contract and those listed in the future.
“The CFTC must ensure that U.S. commodity markets operate fairly and efficiently and are free from fraud, manipulation and other market abuses,” CFTC Chairman Gary Gensler said. “Today’s action further ensures that the CFTC has the tools necessary to carry out its surveillance and enforcement mission while promoting market integrity in the energy markets.”
Specifically, the new conditions require ICE Futures Europe to do the following within 120 days:
• Provide CFTC staff with trade execution and audit trail data for the CFTC’s Trade Surveillance System for all of ICE Futures Europe’s linked contracts;
• Provide for CFTC staff on-site visits for the purpose of overseeing ICE Futures Europe’s ongoing compliance with its no-action relief;
• Provide to CFTC staff advance copies of all rules, rule amendments, circulars and other notices published by the exchange;
• Provide to CFTC staff copies of all Disciplinary Notices involving ICE Futures Europe’s linked contracts upon closure of the action; and
• In the event that the CFTC, pursuant to its Commodity Exchange Act Section 8a(9) emergency powers authority, directs the NYMEX to take emergency action with respect to a linked contract, ICE Futures Europe will promptly take similar action with respect to the linked contract at ICE Futures Europe.
Additionally, the CFTC also announced on July 30, 2009, that the agency is now integrating the ICE Futures Europe large trader data into the Commitment of Traders Report.
The new conditions, embodied in a revised “no-action letter,” build upon the existing cooperative efforts by the CFTC and FSA to address cross-border oversight of the U.S. and U.K. energy markets. The amendment supplements the June 17, 2008, amendment to ICE Futures Europe’s no-action relief that added several additional conditions, including requirements relating to the reporting of large trader positions, the publication of daily trading information in the linked contracts and the establishment of position limits or accountability levels that are comparable to the position limits or accountability levels for the counterpart linked contracts at NYMEX. Today’s action also builds upon the CFTC-FSA November, 2006, Memorandum of Understanding (MOU) concerning consultation, cooperation and the exchange of information related to market oversight and the detection of potential abusive or manipulative trading practices that involve trading in related contracts on U.K. and U.S. derivatives exchanges.
