Friday, May 22, 2009

U.S. panel OKs CFTC to regulate carbon derivatives

There was a method to yesterday's posting madness! I sometimes use the blog as a bookmarker, what with Google's fancy 'Search Blog' feature, it is a simple way to file information. The posts:
Carbon Trading: Senate Confirms Goldman Alum to Head CFTC and Meet The Energy and Environmental Markets Advisory Committee (EEMAC) are backround for what's coming.
Here's another piece of the puzzle, from Reuters:
A U.S. House committee on Thursday agreed to give the U.S. regulator that oversees futures markets, such as the New York Mercantile, jurisdiction over the trading of new derivative contracts based on carbon emissions.

The proposal was included in legislation to cap and reduce U.S. greenhouse gas emissions that is expected to clear the House Energy and Commerce Committee. Utilities, oil refineries and other companies would have to buy and sell permits issued by the government to spew their emissions.

The proposal would also close loopholes in federal regulations that have allowed speculators to manipulate energy markets and inflate fuel prices, said Representative Bart Stupak, who sponsored the plan.

Democratic leaders want to bring the bill up for a full House vote by August. It would then be sent to the U.S. Senate, where there is much stronger opposition.

"Tight regulation of not only the existing energy markets but also the carbon derivatives market created by (the climate change bill) is a vital consumer protection," Stupak said.

Under his plan, the Commodity Futures Trading Commission would have the authority to regulate carbon derivatives as an energy commodity....

...Stupak's carbon and energy market protections included in the climate change bill would:

* Give CFTC the authority to regulate all over-the-counter (OTC) trades that are currently not regulated.

* Regulate foreign boards of trades with energy transactions traded for delivery in the United States or on a computer terminal located in the United States.

* Close the swaps loophole, no longer allowing energy transactions to be excluded from the requirements of the Commodity Exchange Act.

* Ban naked credit default swaps....MORE