By Ayesha Rascoe
WASHINGTON, July 8 (Reuters) - The Commodity Futures Trading Commission should repeal a measure exempting the IntercontinentalExchange's London exchange, where West Texas Intermediate crude oil trades, from most U.S. regulation, lawmakers said on Wednesday.
Senators Maria Cantwell and Olympia Snowe said in a letter that the top U.S. futures market regulator must do more to increase transparency and oversight on foreign exchanges where U.S. oil contracts are traded.
The senators said they want ICE to justify why electronic trading of WTI oil contracts on its London exchange should not be subject to the same scrutiny as other U.S. futures transactions. While U.S. benchmark crude WTI is traded on ICE, the volumes are relatively small compared with trade on the New York Mercantile Exchange.
Lawmakers have complained repeatedly that the lack of oversight on the ICE exchange has created a 'London loophole' that allows oil traders to dodge U.S. regulations causing volatile oil price swings.
Facing intense pressure from Congress as oil prices skyrocketed to levels above $147 a barrel last summer, the CFTC and its British counterpart reached a deal with ICE to place more limits on trading of the U.S. benchmark WTI contract on the London exchange.
In their letter, the lawmakers said these actions were a step in the right direction, but they are not enough.
Oil prices more than doubled from below $33 a barrel last December to more than $70 a barrel last month, before easing recently to around $60 on concerns about the flagging economy.
Supply and demand fundamentals can not explain the rapid rise in oil prices this year, the lawmakers said.
'We remain concerned that the activities of traders on ICE Futures remain outside of the ambit of the Commission's enforcement authority, that traders may exceed U.S. position limits by adding to their positions on a foreign regulated exchange doing business in the U.S.,' the letter said.
The senators said they were also concerned that there is no weekly disclosure of large trader positions as there is with regulated exchanges.
Cantwell, a Democrat, and Snowe, a Republican, sent a similar letter to the CFTC last year. They have asked the commission to respond to their new request by July 21.
(Reporting by Ayesha Rascoe; Editing by Marguerita Choy)
((ayesha.rascoe@thomsonreuters.com; +1 202 310 5683; Reuters Messaging: ayesha.rascoe.reuters.com@reuters.net)) Keywords: USA OIL/CFTC (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WASHINGTON, July 8 (Reuters) - The Commodity Futures Trading Commission should repeal a measure exempting the IntercontinentalExchange's London exchange, where West Texas Intermediate crude oil trades, from most U.S. regulation, lawmakers said on Wednesday.
Senators Maria Cantwell and Olympia Snowe said in a letter that the top U.S. futures market regulator must do more to increase transparency and oversight on foreign exchanges where U.S. oil contracts are traded.
The senators said they want ICE to justify why electronic trading of WTI oil contracts on its London exchange should not be subject to the same scrutiny as other U.S. futures transactions. While U.S. benchmark crude WTI is traded on ICE, the volumes are relatively small compared with trade on the New York Mercantile Exchange.
Lawmakers have complained repeatedly that the lack of oversight on the ICE exchange has created a 'London loophole' that allows oil traders to dodge U.S. regulations causing volatile oil price swings.
Facing intense pressure from Congress as oil prices skyrocketed to levels above $147 a barrel last summer, the CFTC and its British counterpart reached a deal with ICE to place more limits on trading of the U.S. benchmark WTI contract on the London exchange.
In their letter, the lawmakers said these actions were a step in the right direction, but they are not enough.
Oil prices more than doubled from below $33 a barrel last December to more than $70 a barrel last month, before easing recently to around $60 on concerns about the flagging economy.
Supply and demand fundamentals can not explain the rapid rise in oil prices this year, the lawmakers said.
'We remain concerned that the activities of traders on ICE Futures remain outside of the ambit of the Commission's enforcement authority, that traders may exceed U.S. position limits by adding to their positions on a foreign regulated exchange doing business in the U.S.,' the letter said.
The senators said they were also concerned that there is no weekly disclosure of large trader positions as there is with regulated exchanges.
Cantwell, a Democrat, and Snowe, a Republican, sent a similar letter to the CFTC last year. They have asked the commission to respond to their new request by July 21.
(Reporting by Ayesha Rascoe; Editing by Marguerita Choy)
((ayesha.rascoe@thomsonreuters.com; +1 202 310 5683; Reuters Messaging: ayesha.rascoe.reuters.com@reuters.net)) Keywords: USA OIL/CFTC (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.