Trading on the Intercontinental Exchange, the over-the-counter energy platform, should be brought under the oversight of the futures regulator as part of efforts by Congress to safeguard energy markets against “excessive speculation”, a Senate committee was told on Monday.
The call came at a hearing into hedge fund Amaranth, whose spectacular collapse last year has become a lightning rod for congressional scrutiny of the light touch with which the vast OTC markets are overseen.
Senator Carl Levin, chairman of the Senate’s permanent subcommittee on investigations, said Amaranth had exploited a loophole in US regulation by switching massive positions in natural gas futures on the New York Mercantile Exchange, which monitors large trader positions and is subject to full regulatory scrutiny, to ICE, which is not.
Mr Levin said he would work on legislation to close the “Enron Loophole”, a reference to 2000 legislation exempting OTC markets from full oversight by the Commodity Futures Trading Commission.
Asked if he believed ICE should be regulated the same way as Nymex, Shane Lee, a former Amaranth trader, said: “From a reporting and accountability standpoint they should absolutely be the same.”
The CFTC said it already had the authority to collect trader information from ICE under “special call” rule.