For Release: June 17, 2008
Washington, DC – Today, the Commodity Futures Trading Commission (CFTC or Commission) announced that Commission staff has amended the “no-action relief letter” under which ICE Futures Europe is permitted direct access to U.S. customers. The amended letter conditions direct access on ICE Futures Europe’s adoption of equivalent U.S. position limits and accountability levels on its West Texas Intermediary (WTI) crude oil contract, which is linked to the New York Mercantile Exchange crude oil contract.
In addition, pursuant to the amended letter, ICE Futures Europe will follow similar U.S. hedge exemption requirements and will report violations of any such provisions to the CFTC. This action also formalizes the recently-announced information-sharing arrangement between the CFTC and the U.K. Financial Services Authority by requiring ICE Futures Europe to provide the CFTC with detailed market information (equivalent to U.S. standards) for surveillance purposes, as a condition of direct access to U.S. customers. The CFTC will incorporate the foreign exchange’s data directly into the CFTC’s Commitments of Traders report, which is a weekly report categorizing traders and positions. Commission staff intends to apply these new foreign access conditions to any future requests for direct foreign access to U.S. customers for contracts that cash settle against those listed on any U.S. exchange. The revised Commission staff foreign access conditions must be satisfied by ICE Futures Europe within 120 days.
“These new conditions for foreign access will provide the CFTC with additional oversight tools to monitor linked contracts. This powerful combination of enhanced trading data and additional market controls will help the CFTC in its surveillance of regulated domestic exchanges, while preserving the important benefits of our international recognition program that has enabled proper global oversight during the last decade. This raises the bar for all future foreign access requests and will ensure uniform oversight of linked contracts,” said CFTC Acting Chairman Walt Lukken. “The Financial Services Authority, which has robust and appropriate requirements for the maintenance of market integrity and for the prevention of market abuse, has been and continues to be an invaluable partner as we work together to oversee our respective markets.”
In November 2006, the CFTC and the Financial Services Authority signed a ground-breaking Memorandum of Understanding (MOU) on market surveillance that provides for the sharing of large trader information with respect to linked contracts on a weekly basis and daily in the settlement week. In May 2008, the amount and quality of information under the earlier MOU was enhanced by, among other things, providing large trader information on a daily basis.
R. David Gary
Last Updated: June 17, 2008