CFTC May Heighten Oversight Of 13 ICE Natural Gas Contracts

Thirteen natural gas financial basis contracts listed by IntercontinentalExchange Inc. (ICE) are being scrutinized for possible heightened federal oversight, the U.S. Commodity Futures Trading Commission said Wednesday.

Wednesday's announcement marks the second time this week the CFTC has said it is thinking about expanding its oversight of various contracts listed by ICE because they may play a significant role in setting market prices.

In Tuesday's Federal Register, the CFTC also revealed it may impose additional regulations on 11 of ICE's cash-settled electricity contracts as well. An announcement detailing the CFTC's plans to look at the natural gas contracts has not yet been officially published, but the CFTC said it was looking at them in a press release.

The ICE natural gas and electricity contracts are the latest ones that the CFTC has said it will look at as part of its new authority from the 2008 farm bill.

That bill gave the CFTC the power to impose additional oversight, including reporting and position limits, on contracts traded on exempt commercial markets such as ICE if they serve a price-discovery function. The bill was passed in an effort to close the so-called Enron loophole, which allowed electronic energy markets to evade the same stringent oversight as regulated exchanges.

Earlier this year, the CFTC announced it would impose oversight on ICE's Henry Hub natural gas swap after deciding it served a significant price discovery function.

It is also considering new regulations for the carbon spot contract listed by the exempt commercial market arm of the Chicago Climate Exchange.

The ICE natural gas financial basis contracts now under consideration for heightened oversight are: PB&E Citygate, Waha, Malin, HSC, Dominion-South, AECO, Permian, TCO, San Juan, TETCO-M3, Zone 6-NY, Chicago and NGPL TxOk.

In addition, the CFTC is looking at the following electricity contracts: Mid-C Financial Peak, Mid-C Financial Peak Daily, Mid-C Financial Off-Peak, Mid-C Financial Off-Peak Daily, SP-15 Financial Day-Ahead LMP Peak, SP-15 Financial Day-Ahead LMP Peak Daily, SP-15 Financial Day-Ahead LMP Off-Peak Daily, SP-15 Financial Swap Real Time LMP-Peak Daily, SP-15 Financial Day-Ahead LMP Off-Peak, NP-15 Financial Day-Ahead LMP Peak Daily and NP-15 Financial Day-Ahead LMP Off-Peak Daily.

-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; [e-mail]