Senators Submit Letter to CFTC Demanding More Regulation in the Energy Swap Markets

Senators Dianne Feinstein (D-CA, Energy and Water Development Appropriations Subcommittee Chairman), Barbara Boxer (D-CA), Ron Wyden and Jeff Merkley (both D-OR), and Patty Murray and Maria Cantwell (both D-WA), submitted a letter to the CFTC expressing concern that the $8 billion threshold of "de minimis quantity of swap dealing" fails to encompass the vast majority of energy-swap-dealing activity and, therefore, may prevent oversight of energy markets. The following recommendations were made in the letter:

  • To assess how many energy swap dealers have registered with the CFTC and how many are claiming an exemption from the CFTC's registration requirement.
  • To estimate what portion of energy swaps trading is being executed currently by registered swap dealers, and what percentage of energy swaps trading will come under CFTC oversight if the "de minimis" exemption threshold is lowered to $3 billion.
  • To analyze how the failure of major swap dealers to register with the CFTC affects the Commission's ability to prevent manipulation, fraud, and excessive speculation in energy swap markets.
  • If these assessments show that the CFTC's definition of "swap dealer" exempts a statistically significant portion of energy swaps traders or energy swaps trading from oversight, then the Senators request that the CFTC modify its interpretation of the Dodd-Frank Act's "swap dealer" definition in order to ensure that the vast majority of energy swaps trading is under the oversight of the Commission.

See: U.S. Senate Joint Letter.

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