House Passes Bill Directing CFTC to End Speculation in Energy Futures Markets

The House has passed a bi-partisan measure directing the CFTC to immediately curb the role of excessive speculation in the energy and swaps futures market within its jurisdiction and eliminate unlawful activity preventing the markets from accurately reflecting the forces of supply and demand of energy commodities. Passed by a vote of 402-19, the Energy Markets Emergency Act (HR 6377) directs the CFTC to use all of its authority, including its emergency authority, to eliminate excessive speculation, price distortion, sudden or unreasonable fluctuations or unwarranted changes in prices in the energy futures markets.

House Agriculture Committee Chair Colin Peterson, the sponsor of HR 6377, promised that in July the committee will examine legislative proposals that would affect the CFTC’s authority over energy futures and swaps markets. The committee will produce a bipartisan bill strengthening the CFTC’s ability to identify fraud and manipulation in the energy futures markets.

Under current law, U.S. traders can execute energy transactions on NYMEX, a CFTC-regulated exchange, and on London's ICE exchange that is regulated by the United Kingdom's FSA. The CFTC, however, has information on the positions of traders on the NYMEX that they don't have on the traders on ICE, and this is part of the issue that has caused Congress to be concerned because US regulators do not have complete information on exactly what is going on in all of these markets.

Against the backdrop of the legislation, the CFTC is taking steps to gain more information. They have executed an agreement with the FSA to expand trader data and obtain more transparency. The House believes that more should be done. Thus, the bill orders the CFTC to immediately take these steps to utilize their authority to make sure that there is not excessive speculation in these markets.