The Commodity Futures Trading Commission’s Market Participants Division has established a pilot program designed to increase liquidity and hedging of risks in connection with Energy Commodity End User Swaps.
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The pilot program includes additional reporting requirements so CFTC staff can conduct enhanced monitoring of trading activity.
“Over the past 13 years, energy markets have seen sharply higher price volatility due in part to many dealers exiting CFTC markets to avoid punitive Dodd-Frank costs,” Acting CFTC Chairman Caroline Pham said. “This has resulted in less liquidity providers and higher costs per trade, which are passed down to commercial end users like U.S. energy producers, utilities, and ultimately, consumers. By recalibrating outdated regulatory requirements in our energy markets, we can restore opportunities to manage critical business risks involved in powering our cities, factories and homes across America.”
The pilot program will exclude certain Energy Commodity End User Swaps from the swap dealer de minimis calculation. Participants in the pilot program are required to submit monthly reports on energy commodity sub-category, aggregate notional value and number of counterparties for CFTC market oversight.
“The Department of Energy supports initiatives that reduce energy prices for Americans, cut unnecessary red tape, and drive forward the energy needed to achieve America’s global AI dominance,” Deputy Secretary of Energy James Danly said. “DOE commends the CFTC’s efforts to reduce regulatory barriers and costs and increase reliability of American energy.”