Senators lambast CFTC for opposing OTC market regulation

US senators Dianne Feinstein (Democrat, California) and Maria Cantwell (Democrat, Washington) have attacked the US Commodity Futures Trading Commission (CFTC) for opposing their legislation that seeks to increase the regulatory oversight of the over-the-counter energy market.

"The CFTC has continuously opposed legislation that we have introduced to close the Enron loophole in order to provide the Commission with authority to regulate over-the-counter trading in energy markets," the senators said in a letter to CFTC chairman James Newsome. "We urge the CFTC to take immediate action to put in place mechanisms that would prevent fraud and manipulation... and to work with us if you do not have the adequate authority to prevent additional gaming of the energy markets."

The senators cited new audio tape evidence of conversations at Enron during the 2000-01 power crisis in the western US in which Enron traders allegedly discuss ways to gouge California customers.

But the CFTC maintains that further regulatory oversight of the trading market is unwarranted. In an exclusive interview with Energy Risk last month, CFTC commissioner Sharon Brown-Hruska said: "Prescriptive regulation cannot address the problems being experienced by the energy sector, but it may exacerbate a liquidity shortage by unnecessarily imposing costs on industry participants and create regulatory and legal uncertainty."