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.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Future of Private Equity: New Opportunities, New Challenges

Feb 3 2017 | 6:41pm ET

The private equity industry’s astonishing rebound since the financial crisis has...

 

From the current issue of