“Last week, the price of natural gas rose to its highest level in more than two years... [and] last week CFTC regulators announced they had found no evidence that market manipulation was behind soaring prices for natural gas and other energy products traded at the New York Mercantile Exchange,” Feinstein wrote in a letter to CFTC chairman James Newsome. “However, I am concerned about the trading of natural gas, electricity, heating oil, crude oil, and gasoline futures and forward contracts that occurs on unregulated exchanges. While cold weather, stronger heating demand, and below-average petroleum and natural gas inventories affect market developments, I believe the CFTC has an obligation to examine trading on over-the-counter platforms and other bilateral trades that play a role in price discovery.”
The letter is being taken by many as an indication that Feinstein intends to resurrect her attempts to pass legislation to regulate OTC energy derivatives. In February last year, Feinstein introduced legislation that sought to expand regulatory oversight of the OTC commodity derivatives market in response to Enron’s collapse. But Feinstein had her plans defeated in a routine procedural vote in April that required 60 affirmative senate votes for her proposed amendment to advance.
International Swaps and Derivatives Association chief executive Robert Pickel told RiskNews last week that he was aware that Feinstein was making fresh attempts to push for OTC energy derivatives oversight. He said Isda would move to counter such efforts.