By Ben Geman - 04/29/13 09:27 PM EDT
The letter urges the two commissions to craft new formal agreements, called “Memorandums of Understanding,” in order to “ensure comprehensive oversight of energy markets.”
Here’s more from the letter:
[W]e call on FERC and CFTC to execute MOUs that will ensure complete integration of data and other information used to monitor and investigate natural gas and electricity market trading. It is our understanding that currently, the Commissions share information only when a specific request is made – a process that often takes months. Furthermore, each Commission compiles investigation documents in a distinct manner, impeding the integration of data even in cases where a potential bad actor has been identified.
We have concerns that this approach does not allow either Commission to comprehensively monitor energy markets. Trading in futures contracts can affect prices in cash markets, and vice versa. For instance, FERC recently proposed a $435 million fine on Barclays Bank for manipulating electricity prices by entering into money-losing transactions in the cash electricity market, which allegedly moved the market and allowed the bank to profit greatly from its electricity swaps positions. The current separation of data impedes either regulator’s ability to identify this type of manipulative trading scheme, ignores the reality that traders will exploit this gap in oversight, and makes it more difficult for either Commission to identify market distorting misconduct.