US Senate rejects energy derivatives legislation
The US Senate yesterday voted down proposed legislation that sought to impose tighter controls over energy derivatives trading.
The International Swaps and Derivatives Association, which represents participants in the privately negotiated derivatives industry, immediately applauded the Senate’s decision.
Robert Pickel, Isda’s chief executive officer and executive director, said: "Isda welcomes the Senate's vote against the proposed amendment and thanks those Senators who voted in favour of continued legal certainty for these markets … [The senators’ actions] preserve the ability of American companies to use these valuable tools to manage risk and thereby aid economic recovery."
Feinstein argued that the US was vulnerable to the kind of market manipulation that led to a crippling increase in electricity prices in her state several years ago.
Her amendment was intended to close the “Enron loophole” that allowed traders to buy and sell energy holdings largely in secret and free from regulation. It would have improved price transparency in wholesale electricity markets, prohibited manipulation in electricity markets, and provided the Commodity Futures Trading Commission with greater powers to monitor over-the-counter energy markets.
However, Thad Cochran, chairman of the Senate Agriculture Committee, said current cases against Enron and other energy companies accused of manipulating markets make clear that the government has the powers of enforcement it needs to punish those defrauding consumers.
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