13-06-08 Five US senators introduced a bill that would empower the Commodity Futures Trading Commission to regulate oil and other energy commodity trades carried out in the US on international exchanges, much as CFTC now oversees trades on US exchanges.
Senators Carl Levin of Michigan, Dianne Feinstein of California, Dick Durbin of Illinois, Byron Dorgan of North Dakota and Jeff Bingaman of New Mexico, all Democrats, called the bill the "Close the London Loophole Act." They said it would complement a measure enacted by Congress earlier this year that authorized the CFTC to police US electronic exchanges for price manipulation and excessive speculation.

"Closing the London loophole would ensure that our government has what it needs to protect American markets from manipulation and excessive speculation, no matter where US energy commodities are traded," Levin said.
"There is a frenzy of speculation in the energy futures market," Dorgan said. "While American consumers are paying sky-high gas prices, speculators are raking in money hand over fist."

The bill targets contracts traded in London, and elsewhere around the world, such as ICE Futures Europe's West Texas Intermediate oil contract, which is regulated by the UK's Financial Services Authority. Currently, the CFTC obtains information on US energy trades on international exchanges only through voluntary data-sharing agreements with other regulators. In many instances, the senators said, the commission can take action on such trades only with the cooperation of another regulator.
The bill would give the CFTC legal authority to obtain trading data from international exchanges operating in the US through direct trading terminals, the senators said.

In addition, the bill would require the agency to obtain agreements from international exchanges before allowing them to establish direct trading terminals in the US. Those agreements would require the exchanges to impose speculative limits and reporting requirements on traders of US energy commodities comparable to those imposed by the commission on US exchanges.
That provision is also the subject of a narrower bill introduced earlier this year by Levin and Feinstein.

The five senators' bill is the latest in a flurry of measures introduced or proposed by lawmakers targeting speculation in oil and other energy commodities markets.
Among the others was one introduced earlier by Senators Maria Cantwell, Democrat-Washington, and Olympia Snowe, Republican-Maine, that would require ICE Futures Europe to register with CFTC as a "designated contract market" and allow the commission to regulate all US oil futures markets.