If you trade an energy product over the counter rather than on an exchange, you probably need to get yourself a CICI number by Wednesday (April 10). That’s the deadline the Commodity Futures Trading Commission has set up for firms that haven’t been exempted from reporting information on their “swaps” activity to the government as part of the lengthy and complex implementation of the Dodd Frank financial sector reform.
Because the government just loves a good acronym, CICI stands for “CTFC Interim Compliant Identifier” that results in an “LEI” or a “legal entity identifier” for the purposed of reporting details of energy swaps trade and counterparties. The CFTC, concerned that some would miss the deadline, issued an advisory with much more information here. Keep reading →
The Commodity Futures Trading Commission has come under fire for the nuanced lists of exemptions it has offered to various firms and groups as it implements some portions of Dodd Frank legislation that require greater transparency and tighter limits on hedging and trading of the derivatives it oversees.
Included in this group have been certain “natural” players perceived as having an inherent physical position in a relevant commodity and therefore less likely to game the market without regard for fundamental supply and demand or to hold dangerously large positions. Also included as of this week are public power companies and cooperative utilities, which have been exempted from all but the anti-fraud, anti-manipulation and record inspection provisions of the Commodity Exchange Act when it comes to energy transactions. Keep reading →
Renewable energy developers, financiers and utilities breathed a collective sigh of relief last week when the Commodity Futures Trading Commission issued its long-awaited final rule on a crucial exemption from the Dodd Frank Act.
The Dodd Frank Act was enacted in 2010 after the financial crisis to restrict the trading of derivatives, a $700 trillion industry which was blamed for triggering the 2008 crisis. Keep reading →
What trading technology used to look like at the Hong Kong Stock Exchange in 1986.
Energy trading has long been divided between the headline prices everyone can see on the news and the much longer list of prices that exist in the traditionally more freewheeling over the counter markets. Keep reading →
Firms and traders found guilty of oil market manipulation could be fined a minimum of $10 million a day under a proposal announced yesterday by President Obama.
“At a time when instability in the Middle East is contributing to rising global oil prices that impact consumers at the pump, it is important to give American families confidence that illegal manipulation, fraud and market rigging are not contributing to gas price increases,” said a White House statement. Keep reading →
It all started earlier this year when presidential hopeful Newt Gingrich promised voters that if elected to the White House, he would make sure gas prices dropped to $2.50 a gallon. OK, so maybe it happened before the former speaker of the House made his bold promise. In fact, it happens every year around this time: speculators — both illegal and legal — get blamed for rising oil prices, which are then passed onto consumers at the gas pump. Speculators, either single individuals or companies, are looking to gain from price fluctuations in commodities markets without an intent to actually purchase a physical product. Buying and selling by these market participants, critics say, has exacerbated volatility in the commodities markets. “The traditional role of speculators has been to allow a transfer of risk to those who want to get rid of the financial risk to those who will accept it,” explained Branko Terzic, executive director of Deloitte Center for Energy Solutions. “They need to do that because the producers in the market — whether a farmer or oil company — have to make large capital investments, and they like the certainty of the price where they can lock in the price today for a future sell.” He added that speculators accept that price risk to facilitate the producers being able to fund their operations and their continuing developments. Read more: http://www.foxbusiness.com/markets/2012/04/05/higher-gas-prices-blame-speculators/#ixzz1rY0Wa5Pu
Position limits on energy futures could be here sooner than Wall Street thinks. Legislators are pushing regulators to cap the speculative fervor in crude oil futures as gasoline prices in the U.S. climb higher. While regulators have dragged their heels in pushing this issue forward, election year politics could pressure them to speed up their timetable if gasoline prices continue to rise, catching the big speculators — namely the large U.S. banks — by surprise. The much-maligned Dodd-Frank financial reform act called on regulators, in this case, the Commodity Futures Trading Commission, to impose and enforce position limits to calm volatility in the commodity markets. This would limit the amount of options or futures contracts speculators could hold in a commodity. Many in the industry believe that too much speculation by certain large entities, mainly the big investment firms, have pushed prices up and distorted the market for a whole host of commodities — most importantly, the crude oil market.
Will financial system regulatory reforms make energy price hedging costly – or impossible?
That was the question experts grappled with – and disagreed over – at the National Association of Regulatory Utility Commissioners (NARUC) meeting in Washington, DC this week. Keep reading →