On December 5, 2016, the U.S. Commodity Futures Trading Commission (“CFTC”) reproposed regulations implementing limits on speculative futures and swaps positions (“Reproposal”). Notably, in the Reproposal, the CFTC: (1) proposes limits on speculative positions in 25 physical commodity futures contracts and their “economically equivalent” futures, options, and swaps; (2) proposes numerous adjustments to the bona fide hedging position definition; and (3) proposes to allow exchanges to recognize non-enumerated bona fide hedging positions and certain enumerated anticipatory hedge positions, and to grant spread exemptions.
Continue Reading CFTC Reproposes Position Limits Rule

On October 17, 2016, the U.S. Commodity Futures Trading Commission (the “CFTC”) clarified that certain transactions in Regional Transmission Organization (“RTO”) and Independent System Operator (“ISO”) markets are exempted from the Commodity Exchange Act (the “CEA”) provisions governing private rights of action, marking a reversal of the CFTC’s proposal in May 2016 which sought to subject the transactions to private rights of action. In addition, the CFTC granted Southwest Power Pool, Inc.’s (“SPP”) request to exempt certain transactions in its markets from most CEA provisions and CFTC regulations, excluding those relating to the CFTC’s anti-fraud and anti-manipulation authority.
Continue Reading CFTC Exempts Certain Wholesale Power Market Transactions from CFTC Regulation, Private Rights of Action

On May 10, 2016, the U.S. Commodity Futures Trading Commission (“CFTC”) proposed to amend (“Proposed Amendment”) its own 2013 order that generally exempted certain electricity transactions from the CFTC’s regulation (“RTO/ISO Exemption Order”). Specifically, the Proposed Amendment would clarify that the exemptions contained in the RTO/ISO Exemption Order would not include the private right of action under Commodity Exchange Act (“CEA”) section 22.
Continue Reading CFTC Proposes Amendment to 2013 Order Exempting Certain RTO/ISO Transactions from General CFTC Regulation

On February 25, 2016, the U.S. Commodity Futures Trading Commission’s (“CFTC”) Energy and Environmental Markets Advisory Committee (“EEMAC”) released its Report on EEMAC’s 2015 Review and Consideration of the CFTC’s Proposed Rule on Position Limits (“Report”). The Report summarizes the EEMAC’s formal recommendations to the CFTC on the CFTC’s proposed rule on position limits. The Report included observations that (1) there is insufficient evidence that the CFTC’s proposed rule is sufficiently “necessary” to satisfy the finding of necessity mandated by the Commodity Exchange Act (“CEA”); (2) the proposed rule would reduce liquidity in physical and derivative power and gas markets, adversely affecting the ability of end users to hedge; and (3) implementing the proposed rule would create practical challenges.
Continue Reading CFTC Energy and Environmental Markets Advisory Committee Issues Report on 2015 Review and Consideration of the CFTC’s Position Limits Rule

On February 11, 2016, the U.S. Commodity Futures Trading Commission (“CFTC”) announced that the Energy and Environmental Markets Advisory Committee (“EEMAC”) will hold a public meeting at the CFTC’s headquarters in Washington, D.C. on February 25, 2016 from 10:00 AM to 1:30 PM. The CFTC further announced that, at the meeting, EEMAC will (1) present a report summarizing its 2015 proceedings; (2) examine the CFTC’s Proposed Order exempting certain Transmission Congestion Rights, Day-Ahead and Real-Time Balancing Market, and Operating Reserve Transactions in the Southwest Power Pool from the CFTC’s fraud and manipulation jurisdiction and scienter-based prohibitions; and (3) consider the CFTC Staff Preliminary Report regarding the Swap Dealer De Minimis Exception (see November 18, 2015 edition of the WER).
Continue Reading CFTC’s Energy and Environmental Markets Advisory Committee Will Meet on February 25, 2016

On December 7, 2015, the U.S. Commodity Futures Trading Commission (“CFTC”) issued an order accepting an Offer of Settlement from Total Gas & Power North America, Inc. (“TGPNA”) and Therese Tran (“Tran”) (together “Respondents”) for their alleged violation of the CFTC’s regulations prohibiting manipulation or attempted manipulation. The CFTC found that TGPNA, through Tran and other traders under Tran’s direction, attempted to manipulate natural gas monthly index settlement prices through physical fixed-price trading during bid-week.
Continue Reading CFTC Settles Charges of Attempted Manipulation of Gas Index Prices against Total Gas & Power

On November 18, 2015, U.S. Commodity Futures Trading Commission (“CFTC”) Staff issued its Swap Dealer general de minimis exception preliminary report, which provides data analyzing swap dealing activity and seeks comments and additional information on the exception. While the preliminary report does not offer alternatives to the general de minimis exception, CFTC Staff is seeking public comment on issues that include the methodology for calculating dealing activity, the threshold for the de minimis exception, and alternative approaches to the de minimis exception.
Continue Reading CFTC Staff Releases Preliminary Report Seeking Comment on Swap Dealer De Minimis Exception

On September 17, 2014, the Commodities Futures Trading Commission (“CFTC”) issued a final rule, amending its regulations to permit a person to exclude utility operations-related swaps entered into with “utility special entities” when calculating the aggregate gross notional amount of that person’s swap positions.  This exclusion is solely for purposes of the de minimis exception applicable to swaps with “special entities.”
Continue Reading CFTC Approves Rule Allowing Certain Swaps with Utilities to be Excluded from Special Entity De Minimis Threshold

On September 15, 2014, the Commodity Futures Trading Commission (“CFTC”) filed a consent order signed by Brian Hunter, previously a natural gas trader for trading firm Amaranth Advisors LLC (“Amaranth”), pursuant to which Hunter will pay a civil penalty of $750,000, plus post-judgment interest, to resolve allegations that he manipulated the natural gas futures market in 2006.  Additionally, Hunter agreed to be “permanently restrained, enjoined and prohibited from directly or indirectly trading any futures contracts, options on futures contracts, or any other product or financial instrument regulated by the [CFTC].” 
Continue Reading Brian Hunter Settles Natural Gas Trade Manipulation Case with CFTC

On May 30, 2014, the Commodity Futures Trading Commission (“CFTC”) issued a proposed rule to exclude utility operations-related swaps with utility special entities in calculating the aggregate amount of an entity’s swap positions for the purposes of the special entity de minimis threshold.  The proposed rule follows CFTC Letter No. 14-34, which provided temporary enforcement relief for parties failing to register as a swap dealer with respect to utility business-related swaps with public power utilities.
Continue Reading CFTC Proposes Rule Allowing Certain Swaps with Utilities to be Excluded from Special Entity De Minimis Threshold