Release: 5728-09
For Release: October 7, 2009

CFTC Seeks Public Comment on Notice of Intent to Determine Whether 17 Contracts Offered for Trading on the IntercontinentalExchange, Inc., Perform Significant Price Discovery Functions

Washington, DC – On October 5, 2009, the U.S. Commodity Futures Trading Commission (CFTC) issued a Notice of Intent, pursuant to the authority in Section 2(h)(7) of the Commodity Exchange Act (Act) and Commission Rule 36.3(c)(3), to undertake a determination whether 17 contracts offered for trading on the IntercontinentalExchange, Inc. (ICE) perform significant price discovery functions. The contracts include:

  • PG&E Citygate Financial Basis Contract
  • Waha Financial Basis Contract
  • Malin Financial Basis Contract
  • HSC Financial Basis Contract
  • Dominion-South Financial Basis Contract
  • AECO Financial Basis contract
  • Permian Financial Basis Contract
  • TCO Financial Basis Contract
  • San Juan Financial Basis Contract
  • TETCO-M3 Financial Basis Contract
  • Zone 6-NY Financial Basis Contract
  • Chicago Financial Basis Contract
  • NGPL TxOk Financial Basis Contract
  • Mid-C Financial Peak Contract
  • Mid-C Financial Peak Daily Contract
  • Mid-C Financial Off-Peak Contract and
  • Mid-C Financial Off-Peak Daily Contract

The Commission is undertaking this review based upon its initial evaluation of information provided by ICE, which indicates that each of these contracts appears to satisfy several of the statutory criteria for a significant price discovery determination specified in Section 2(h)(7) of the Act. Following issuance of an order determining that a contract traded on an exempt commercial market (ECM) such as ICE performs a significant price discovery function, the ECM must, with respect to that contract, come into compliance with core principles mandated by Section 2(h)(7) of the Act and with other statutory provisions applicable to registered entities. These provisions would subject the ECM’s contract or contracts and market participants to the Commission’s position limit authority, emergency authority and large trader reporting requirements, among others.

Commission Rule 36.3(c)(3) became effective on April 22, 2009, and establishes the procedures under which the Commission will make and issue its determination whether a specific transaction, contract or agreement traded on an ECM serves a significant price discovery function. Those procedures specify that the Commission will publish notice in the Federal Register that it intends to undertake a determination whether a particular contract serves a significant price discovery function and to receive written data, views and arguments relevant to its determination from the ECM and other interested persons. After prompt consideration of all relevant information, the Commission will issue an order announcing and explaining its determination.

Comments are due no later than 15 day from the date of publication of the Commission’s Notice of Intent in the Federal Register.

Media Contacts
Scott Schneider

R. David Gary

Last Updated: October 7, 2009