For Release: October 20, 2009
CFTC Seeks Public Comment on its Notice of Intent to Determine Whether Five Contracts Offered for Trading on the IntercontinentalExchange, Inc., Perform Significant Price Discovery Functions
Washington, DC – On October 20, 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 five contracts offered for trading on the IntercontinentalExchange, Inc. (ICE) perform significant price discovery functions. The contracts include:
- Henry Financial Swing Contract
- Henry Financial Basis Contract
- Henry Financial Index Contract
- Socal Border Financial Basis Contract
- Fuel Oil-180 Singapore Swap 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 November 4, 2009.
R. David Gary
Last Updated: October 20, 2009