CFTC, FSA Join Forces In Energy-Market Regulation

Aug 25 2009 | 11:06am ET

American and British regulators are teaming up to tamp down on volatility in the energy markets.

Britain’s Financial Services Authority and the U.S. Commodity Futures Trading Commission have reached accord to grant the latter oversight over the IntercontinentalExchange’s London market, while the former gets a peek at the New York Mercantile Exchange. The cooperation agreement covers U.S.-linked energy futures contracts, and also called for coordination of “emergency action.”

The move follows a meeting earlier this month between the FSA and U.K. Treasury and players in the oil-trading market, including hedge funds. Those discussions dealt with “market efficiency and transparency as part of our regular process of engagement with market participants.” It also comes on the heels of the CFTC’s decision last year to force ICE to impose limits on trading of its NYMEX-linked oil contract.

“We must effectively utilize all existing powers to ensure that futures markets remain free of manipulation, fraud or other market abuses,” CFTC Chairman Gary Gensler said. “Achieving this goal requires a coordinated international response.”

Right away, the CFTC has put the new cooperation in place, imposing U.S.-linked contracts on ICE Futures Europe to new restrictions.

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