Cantwell to CFTC: Share Information for Energy Market Oversight Now
Cantwell, Senators call for the CFTC to share information with other agencies to better prevent market manipulation
U.S. Senator Maria Cantwell (D-WA), Dianne Feinstein (D-CA) and six other Senate colleagues have asked Mark Wetjen, Acting Chairman of the Commodity Futures Trading Commission (CFTC), to expeditiously implement the sharing of trading data on futures and swaps markets with the Federal Energy Regulatory Commission (FERC) by the end of this month. In January, the CFTC and FERC signed a Memorandum of Understanding that would increase the sharing of relevant trading information which will enable FERC to better provide rigorous oversight of U.S. energy markets.
“Information sharing between CFTC and FERC has been delayed for too long, putting our energy markets at risk of abuse unnecessarily,” the senators wrote in the letter sent to the CFTC last Friday. “During the Western energy crisis, Americans learned that energy markets that lack real-time market oversight and effective regulation allow traders to rob Americans, disrupt economic activity and darken cities.
“The crisis cost consumers an estimated $45 billion in higher electricity rates, lost business due to blackouts, and a slowdown in economic growth,” the senators continued. “FERC investigators have explained articulately and effectively that they need access to CFTC’s Large Trader Report in order to oversee trading in fully integrated energy markets and prevent future manipulation.”
The letter was led by Senator Feinstein and signed by Senators Cantwell, Elizabeth Warren (D-MA), Ed Markey (D-MA), Barbara Boxer (D-CA), Jeff Merkley (D-OR), Ron Wyden (D-OR) and Carl Levin (D-MI).
Cantwell has aggressively fought throughout her career to protect consumers from energy price manipulation. She successfully fought in 2007 to give the Federal Trade Commission oversight of the wholesale petroleum markets. In 2010 under the Dodd-Frank Consumer Protection Act, she worked to give the Commodity Futures Trading Commission oversight in the derivatives markets. . In the aftermath of Enron’s schemes that cost Washington ratepayers billions, Cantwell authored an amendment to the Energy Policy Act of 2005 that enabled FERC to better investigate and punish energy market manipulation in the electricity and natural gas markets.
The full letter to CFTC is below and available here:
February 7, 2014
The Honorable Mark P. Wetjen
Acting Chairman
Commodity Futures Trading Commission
1155 21st Street, NW
Washington, DC 20581
Dear Mr. Wetjen:
We are writing to request that you implement the recently signed Memorandum of Understanding between the Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission (FERC) on information sharing expeditiously. We are very pleased that the agreement will allow FERC investigators to monitor trading activity captured in CFTC’s Large Trader Report, and we urge you to facilitate this data sharing as soon as possible.
On January 15, 2014, Mr. Vince McGonagle, the CFTC’s market oversight director, testified before the Senate Banking Committee that the CFTC and FERC have agreed to share relevant trading information within the CFTC’s Large Trader Report under the Memorandum of Understanding required by Section 720 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. However, McGonagle informed Congress that information sharing has not begun because: “there are questions just around data transfer issues and the technical personnel need to work those things out.”
As you know, CFTC and other Federal agencies collect and share trading data on a regular basis. CFTC collects trading data from futures and swaps markets that it oversees in real time, and the CFTC has agreements in place to share trading data with foreign regulators. Considering the CFTC’s technical ability to share data with other nations and other regulators, we believe that technical barriers preventing the sharing of information with FERC – a fellow arm of the Federal government – could be addressed and solved in a matter of weeks under your direction and leadership.
If CFTC needs to upgrade its information technology systems in order to facilitate sharing the Large Trader Report with FERC investigators, we ask that CFTC lay out those investments in detail in its spending plan for Fiscal Year 2014 funding, which is due to Congress by February 17.
Information sharing between CFTC and FERC has been delayed for too long, putting our energy markets at risk of abuse unnecessarily. During the Western energy crisis, Americans learned that energy markets that lack real-time market oversight and effective regulation allow traders to rob Americans, disrupt economic activity and darken cities. The crisis cost consumers an estimated $45 billion in higher electricity rates, lost business due to blackouts, and a slowdown in economic growth. FERC investigators have explained articulately and effectively that they need access to CFTC’s Large Trader Report in order to oversee trading in fully integrated energy markets and prevent future manipulation.
We ask you to provide the leadership necessary to address technical issues and initiate information sharing no later than the end of February. If CFTC is unable to facilitate information sharing by that date, we trust that CFTC’s report to Congress will detail how it intends to overcome technical limitations as quickly as possible.
Thank you in advance for addressing this urgent and important matter. We look forward to hearing from you about CFTC’s progress on this matter. If you need any help or assistance, please do not hesitate to contact us.
Sincerely,
Dianne Feinstein
United States Senator
Elizabeth Warren
United States Senator
Maria Cantwell
United States Senator
Barbara Boxer
United States Senator
Jeff Merkley
United States Senator
Ed Markey
United States Senator
Ron Wyden
United States Senator
Carl Levin
United States Senator
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