CFTC industry panel to air Dodd-Frank concerns

A newly re-formed Commodity Futures Trading Commission (CFTC) panel will give the industry another chance to voice concerns about the agency's ongoing Dodd-Frank reforms.

The CFTC's Energy and Environmental Markets Advisory committee meeting on 26 February will focus on the agency's proposed position limits rule, which has drawn harsh oppositon from industry. The new committee will be led by CFTC commissioner Christopher Giancarlo, who has criticized the agency's proposed position limits as hastily considered.

The 2010 Dodd-Frank Act mandated that US regulators set position limits on 28 commodities, including crude, natural gas and refined products, to avoid the risk of excessive speculation. However, the agency's proposed rules were drafted amid "a complete paucity of real Commission-generated research or data to justify a sweeping new position limits regime," Giancarlo told a commodities conference in Miami last month.

Giancarlo issued a white paper on 29 January arguing that the CFTC's regulations to implement Dodd-Frank would fragment swaps trading into artificial market segments, making it unnecessarily expensive and burdensome to operate swaps trading platforms known as swaps execution facilities.

Buried in the 2010 law granting US regulators broad new authority to regulate the swaps market is a requirement that the nine-member advisory committee meet at least twice a year. But the sitting committee members were only formally approved on 26 January, and the last meeting of the previous iteration of the advisory committee took place before the Dodd-Frank Act became law.

The advisory committee originally was tasked with debating the Dodd-Frank legislation. The first version of the committee met three times under the leadership of then-commissioner Bart Chilton. Before the first formalized committee was established in 2008 an informal energy markets group met for about five years. In 2008 the CFTC decided to formalize the panel, Chilton said.

While the advisory committee did not meet after 2009, the commission still got feedback from the energy sector. "It is not like they were totally out of the picture, they just did not have this particular forum," Chilton said.

The new committee should be different from the first iteration of the committee, said Tyson Slocum, director of energy programs for advocacy group Public Citizen. Slocum is the only member of new committee who also served on the original panel formed in 2008.

Among the organizations represented are US independent ConocoPhillips, the Natural Gas Supply Association (NGSA), electric utility trade group the Edison Electric Institute and power producer Luminant. Also represented on the main committee are exchange operators Ice and CME, the Futures Industry Association, trading company Vectra Capital and Public Citizen.

Ice Futures US president Benjamin Jackson said he was pleased to see the advisory committee re-launched "based on the importance of energy products to commodity markets and the broader economy." Jackson said the exchange between market participants and policymakers is "crucial" and helps improve policy-making by keeping the focus on end users and how regulations affect them.

NGSA chief executive Dena Wiggins said serving on the advisory panel is a way for energy end users to have their perspectives heard by the CFTC staff and commissioners.

"Hopefully that will enable them and help them form regulations that are workable for the stakeholders in the marketplace," Wiggins said.

kp/dcb

Send comments to feedback@argusmedia.com

Request more information about Argus' energy and commodity news, data and analysis services.

Related News