For Release: October 7, 2009
CFTC Seeks Public Comment on its Notice of Intent to Determine Whether Seven 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 seven contracts offered for trading on the IntercontinentalExchange, Inc. (ICE) perform significant price discovery functions. The contracts include:
- SP-15 Financial Day-Ahead LMP Peak Contract
- SP-15 Financial Day-Ahead LMP Peak Daily Contract
- SP-15 Financial Day-Ahead LMP Off-Peak Daily Contract
- SP-15 Financial Swap Real Time LMP Peak Daily Contract
- SP-15 Financial Day-Ahead LMP Off-Peak Contract
- NP-15 Financial Day-Ahead LMP Peak Daily Contract and
- NP-15 Financial Day-Ahead LMP 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 and emergency authorities 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 October 21, 2009.
R. David Gary
Last Updated: October 7, 2009