Thursday, May 29, 2008

CFTC Announces Multiple Energy Market Initiatives

Crude oil fell 7 USD from an intraday high of $133.12 to close at $126.25 in NYMEX trading today. This record drop despite a record decline in weekly crude inventory can be attributed to a timely CFTC announcement of "multiple energy market initiatives". The CFTC allert by record high oil prices and a Senate pannel hearing finally steps into action and is increasing oversight of energy futures markets.

CFTC Acting Chairman Walt Lukken and Commissioners Michael Dunn, Jill Sommers and Bart Chilton announced following agreements:

I. Expanded International Surveillance Information for Crude Oil Trading

  • Immediately implementing expanded information-sharing to provide the CFTC with daily large trader positions in the UK WTI crude oil contract;

  • Extending trader information sharing to provide crude oil large trader position data for all contract months in the WTI contract, not just the nearby months;

  • A near-term commitment to enhance trader information to permit more detailed identification of market end users;

  • A near-term commitment to provide improved data formatting so trading information can be seamlessly integrated into the CFTC’s surveillance system; and

  • ICE Futures Europe will notify the CFTC when traders exceed position accountability levels, as established by U.S. designated contract markets, for WTI crude oil contracts.
II. Increased Transparency of Trading in U.S. Energy Markets
  • Improve Transparency for Energy Markets Index Trading Activity: The Commission will begin to require traders in the energy markets to provide the agency with monthly reports of their index trading to help the CFTC further identify the amount and impact of this type of trading in the markets.

  • Review of Trader Reporting and Classification: The Commission will develop a proposal to routinely require more detailed information from index traders and swaps dealers in the futures markets, and to review whether classification of these types of traders can be improved for regulatory and reporting purposes.

  • Examine Trading Practices for Index Traders: The Commission will review the trading practices for index traders in the futures markets to ensure that this type of trading activity is not adversely impacting the price discovery process, and to determine whether different practices should be employed.
III. Continuation of Ongoing CFTC Nationwide Crude Oil Investigation


source: CFTC Announces Multiple Energy Market Initiatives
CFTC, May 29 2008

read also: The hunt is on - speculators beware!
Wednesday, May 21, 2008

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