CFTC Moves To Prevent Future Amaranths

Apr 28 2010 | 7:56am ET

The futures-trading loophole that allowed hedge fund Amaranth Advisors to gorge itself on the natural gas contracts that killed it is no more.

The Commodity Futures Trading Commission has imposed new trading limits on seven contracts traded on the electronic Intercontinental Exchange.

In September of 2006, Amaranth, facing limits on trading at the New York Mercantile Exchange, turned to the ICE to buy lookalike natural gas futures. The hedge fund then proceeded to lose more than $6 billion on those contracts—making it one of the largest trading losses in history.

Exemptions from some electronically-traded contracts were adopted in 2000, pushed for by Enron Corp., the failed energy company for which the provision is known.

The ICE-trading contract used by Amaranth was the first to see limits imposed in February under new authority granted the regulator two years ago. Six other ICE-traded natural gas contracts have also had holding limits put into place.


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Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

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