Tuesday, April 1, 2014 10:33 am by George Fatula
With most of its rules implementing the swap regulatory provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) in place, the Commodity Futures Trading Commission (“CFTC”) is seeking new public input on several aspects of its Dodd-Frank rules that directly affect energy markets participants who use swaps to hedge risk or who transact physical agreements containing options that are subject to the swap regulations. Entities that utilize swaps and options in this manner, but are not otherwise required to register with the CFTC as “swap dealers” or other regulated entities, are referred to as “end-users.”
In the first such initiative, on April 3, 2014 the CFTC’s staff will host a public roundtable to discuss issues concerning end-users with respect to Dodd-Frank regulations that have raised questions and requests for clarification with the CFTC and its staff. In particular, this roundtable will cover the scope of the CFTC’s definition of the term “swap,” which was defined in a lengthy interpretation issued in August 2012. (more…)
Category: CFTC, Natural Gas/LNG, Organized Markets, Power
Wednesday, February 19, 2014 4:32 pm by David Perlman and Kaleb Lockwood
As the Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealer and Intermediary Oversight recently reminded market participants in a Staff Advisory, entities that meet the definition of a commodity trading advisor (“CTA”) are subject to various regulatory requirements and may be required to register as a CTA with the National Futures Association (“NFA”). The Staff Advisory is an indication that the CFTC is turning to compliance with its regulatory and registration requirements now that the rulemaking process of the Dodd-Frank Act is finishing. Given this transition, as well as the recently expanded scope of the CFTC’s regulatory oversight over CTAs and commodity pool operators (“CPOs”), entities that advise others or are pooled investment vehicles for futures, options, or swaps should consider whether they might be subject to the CFTC’s CTA and CPO regulatory requirements. (more…)
Category: CFTC, Enforcement
Monday, January 6, 2014 8:00 am by Robert E. Pease, David Perlman and Jennifer Lias
After an investigation of actions in the western electricity markets by Barclays Bank PLC (“Barclays”), Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith (collectively, the “Traders” and together with Barclays, “Defendants”), the Federal Energy Regulatory Commission (“FERC”) issued an order finding the Defendants in violation of FERC’s anti-manipulation regulations and assessing Barclays a $435 million civil penalty, assessing each Trader an individual civil penalty, and requiring disgorgement of $34.9 million plus interest in unjust profits.[i] In accordance with the Defendants’ election of a trial de novo in federal district court, on October 9, 2013 FERC filed a petition in the United States District Court for the Eastern District of California requesting an order affirming its assessment of penalties.
In response to FERC’s petition, on December 16, 2013, the Defendants filed a motion to dismiss the complaint.[ii] The Defendants moved to dismiss the complaint, as a matter of law, on the grounds that venue is not proper and that FERC has failed to state a claim upon which relief can be granted. (more…)
Category: CFTC, Courts, Electric, Enforcement, FERC, Natural Gas/LNG, Organized Markets, Power, Transmission
Thursday, July 25, 2013 9:33 am by Robert E. Pease and David Perlman
By order dated July 22, 2013, the Commodity Futures Trading Commission (“CFTC” or “Commission”) settled charges against Panther Energy Trading LLC and its principal Michael Coscia for engaging in the disruptive trading practice known as “spoofing.” The CFTC charged that Panther and Coscia used a computer algorithm that was designed to illegally place and quickly cancel bids and offers in futures contracts. The CFTC ordered Panther and Coscia to pay civil penalties of $1.4 million and to disgorge an additional $1.4 million in illegal profits. Coscia was also given a one year ban on trading in any CFTC regulated markets. This case is significant because it is the first action the CFTC has brought using its new Dodd-Frank disruptive trading authority.
Panther and Coscia used a computer algorithm that was designed to place a small order which was then followed with several large buy orders. The large orders were intended to give the market the impression that there was buy side pressure. The small order would then be executed at the manipulated price and Panther’s algorithm would then immediately cancel the large orders. These transactions occurred in milliseconds. Panther and Coscia profited on the executions of the small orders many times over the time period under review. The order stated that “although Coscia and Panther wanted to give the impression of buy-side interest, they entered the large buy orders with the intent that they be cancelled before these orders were actually executed.” (more…)
Category: CFTC, Enforcement, Natural Gas/LNG, Renewable Energy/Cleantech
Wednesday, April 17, 2013 8:26 am by Bracewell & Giuliani
On April 23, 2013, Partner Chuck Shoneman will speak on a panel at Law Seminars International telebriefing on the topic of “New Ruling on FERC’s Anti-Manipulation Authority,” discussing the impact of the D.C. Circuit’s recent decision in FERC v. Brian Hunter. Call in from anywhere! 10-11 am Pacific/1-2 pm Eastern.
For more information please click here.
Category: CFTC, FERC, National Energy Law, Natural Gas/LNG
Monday, October 22, 2012 2:23 pm by George Fatula
On Friday October 12, the Commodity Futures Trading Commission’s (CFTC) regulations defining the term “swap” took effect, triggering a cascade of new regulatory requirements pursuant to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) for entities holding swap positions. Between October 10 and October 12, the CFTC’s staff issued a flurry of no-action letters and guidance documents intended to give market participants more time to prepare for the new regulatory requirements, and to give staff more time to iron out various issues and points of confusion that have been raised by market participants, including those involved in energy trading businesses. For energy industry participants who transact in the organized power markets, trade swaps with municipal utilities, or enter into cleared swaps, the relief was welcome if not entirely complete. (more…)
Category: CFTC, Courts, Enforcement, National Energy Law, Natural Gas/LNG, Organized Markets, Transmission