Legislation that could see OTC energy markets falling under
Commodities Futures Trading Commission (CFTC) oversight has
been introduced into the US Senate. The introduction follows a
CFTC hearing into the necessity of removing exempt markets to
CFTC supervision, as many of the major energy exchanges classed
over the need for such a change.
Despite a lack of consensus among exchange leaders over the
proposal, CFTC may end up regulating the OTC energy markets.
Senator Carl Levin, chairman of the Senate Permanent
Subcommittee on Investigations, introduced the legislation on
18 September, which he stressed will prevent price manipulation
and excessive speculation that are leading to high energy
prices for US consumers.
The bill will target energy markets that are currently exempt
from government oversight under the Enron loophole,
a provision inserted at the behest of Enron and other large
energy traders, without debate, into the Commodity Futures
Modernization Act of 2000. The Close the Enron Loophole
Act would subject those energy markets to CFTC oversight
in an attempt to prevent price manipulation and excessive
However, the regulator was unwilling to comment on this
legislation and the prospect of regulating the OTC energy
Right now, the Enron loophole makes it impossible for
regulators to prevent major price distortions in U.S. energy
markets, said Levin on his personal website. The
result has been higher energy prices for millions of Americans.
Stable and affordable energy prices are vital to our national
and economic security.... We need to put the cop back on the
beat in all US energy markets with effective tools to stop
price manipulation, excessive speculation, and trading abuses.
The legislation I am introducing today is critical to ensuring
fair energy prices that reflect the fundamentals of supply and
The heads of three of the largest energy exchanges to be
affected by the decision aired differing opinions at a
conference on 18 September.
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