Regulation of Energy Derivatives (CRS Report for Congress)
| Release Date |
Revised July 7, 2008 |
| Report Number |
RS21401 |
| Report Type |
Report |
| Authors |
Mark Jickling, Government and Finance Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
This [CRS] report summarizes energy derivatives regulation and proposed legislation." Further considerations include, "First, the absence of government oversight may facilitate abusive trading or price manipulation. A June 2007 report by the Senate Permanent Subcommittee on Investigations concluded that excessive speculation by the Amaranth hedge fund, which collapsed in August 2006, had distorted natural gas prices. Second, the failure of a large derivatives dealer could conceivably trigger disruptions of supplies and prices in physical energy markets (though the effect was minor in the Enron case). On the other hand, federal financial agencies have taken the position, in hearings and written statements, that market discipline and self-regulation are sufficient to deter price manipulation, and that new legislation is not required. A number of bills before the 110th Congress would give the Commodity Futures Trading Commission (CFTC) enhanced authority to regulate certain energy trades on markets other than the regulated futures exchanges. H.R. 2419 (the Farm Bill) would impose exchange-like regulations on electronic over-the-counter markets that play a significant role in setting energy prices. [...] It will be updated as developments warrant.
