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Enron Mail |
Cc: dave.samuels@enron.com, amita.gosalia@enron.com, angela.connelly@enron.com,
rahil.jafry@enron.com, michael.bridges@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: dave.samuels@enron.com, amita.gosalia@enron.com, angela.connelly@enron.com, rahil.jafry@enron.com, michael.bridges@enron.com X-From: Paul Goddard X-To: Justin Boyd, Mark Taylor X-cc: Dave Samuels, Amita Gosalia, Angela Connelly, Rahil Jafry, Michael Bridges X-bcc: X-Folder: \Mark_Taylor_Jun2001\Notes Folders\Notes inbox X-Origin: Taylor-M X-FileName: mtaylor.nsf Justin/Mark - FYI re: CFTC developments + mentions the following co's: - OnExchange - EnergyClear - TrueQuote (& EOL) ---------------------- Forwarded by Paul Goddard/EU/Enron on 19/01/2001 11:10 --------------------------- djcustomclips@djinteractive.com on 19/01/2001 10:32:09 Please respond to nobody@mail1.djnr.com To: 158586@mailman.enron.com cc: Subject: EnronOnline: Online Energy Exchanges Spring Into Action Under New Regulations.(Commodity ... Online Energy Exchanges Spring Into Action Under New Regulations.(Commodity Futures Modernization Act, OnExchange Inc., True Quote L.L.C.)(Brief Article) 01/04/2001 The Oil Daily ITEM01004008 Copyright 2001 Gale Group. All rights reserved. COPYRIGHT 2001 Energy Intelligence Group Online Energy Exchanges Spring Into Action Under New Regulations Electronic energy exchanges are moving quickly to take advantage of new US legislation that clarified rules for regulating futures and over-the-counter (OTC) markets. The reforms took effect late last month after the legislation was squeezed through Congress and signed by outgoing President Clinton. One start-up company, Massachusetts-based OnExchange, says it was the first exchange to be registered under the new legislation, having applied to the regulatory Commodity Futures Trading Commission (CFTC) several months before. OnExchange will start by trading futures on financial markets, but also plans to act as a clearinghouse for energy transactions. True Quote, an electronic energy exchange, has also received CFTC clarification of its status under the new rules. The legislation comes at the end of a two-year drive to reform derivatives markets. But this long and twisted process is not quite over: The CFTC has withdrawn its own set of similar reforms in order to bring them into full compliance with the new law. The CFTC reforms had been due to take effect in mid-February; the agency said they will be revised "promptly." The legislation, the Commodity Futures Modernization Act, was pushed through Congress as part of an appropriations bill, and signed into law Dec. 21. It loosens the rules for futures exchanges, gives OTC contracts greater legal standing, and encourages the development of electronic trading platforms. As a result, energy traders should enjoy a greater choice of products and venues, while new exchanges will face lower barriers of entry and less regulation. But the changes also point to a more complex energy market, in the near term at least, as well as greater challenges for price discovery. The CFTC's revised proposals will include more detail, for example, on how exactly to apply for registration. They also will adopt the legislation's terminology, such as the names of three new tiers of futures exchanges. A top tier, called "designated contract markets," will match current futures markets such as the New York Mercantile Exchange (Nymex), which allow retail participation. A second rank, of "registered derivatives transaction execution facilities," will be largely limited to institutional trade, and will require looser regulation. The third tier, which escapes most regulation, will be known as "exempt boards of trade." Energy platforms will not qualify for this last category. The CFTC also encourages the establishment of independent clearinghouses - which act as a central counterparty to reduce financial risk - but these must register with the agency. The legislation encourages online activity by limiting CFTC jurisdiction over derivatives contracts for so-called "exempt commodities" - essentially, energy, and metals - when traded on electronic platforms. This clause, Section 106, applies when contracts are traded between experienced, institutional traders. It effectively limits oversight to requirements preventing fraud and manipulation. Exchanges may be required to disseminate data on prices and trading volumes, if they have a significant influence on the wider market. The reforms cover bilaterally traded instruments, with multilateral activities still in something of a gray area. Basically, an electronic exchange handling multilateral trades of energy derivatives can apply to the CFTC for official status, if it thinks this will bring credibility and legal standing. However, a derivatives exchange that does not register with the CFTC will not be pursued. OnExchange has been classified by the CFTC as both a designated contract market and a recognized clearing organization. The firm specializes in technology for trading and clearing commodity and financial derivatives. It will start by trading futures contracts in US treasuries, but plans to expand. The firm recently agreed with another start-up, EnergyClear, to develop electronic clearing services for the energy industry. EnergyClear is a joint venture of the Bank of New York and energy brokers Amerex and Prebon Yamane. True Quote, a Kentucky-based electronic platform specializing in physical and financial energy trade, recently completed development of its online platform. It is now signing up users and plans to start trading North American contracts for natural gas, electricity, and coal in the first quarter. True Quote will also activate an agreement with Enron, connecting its system to the EnronOnline platform. True Quote is looking to expand into European gas and power this year. Other products under review include carbon emissions, weather derivatives, and bandwidth. It is not considering oil at the moment, a spokeswoman said. David Pike Folder Name: EnronOnline Relevance Score on Scale of 100: 79 ______________________________________________________________________ To review or revise your folder, visit http://www.djinteractive.com or contact Dow Jones Customer Service by e-mail at custom.news@bis.dowjones.com or by phone at 800-369-7466. (Outside the U.S. and Canada, call 609-452-1511 or contact your local sales representative.) ______________________________________________________________________ Copyright © 2001 Dow Jones & Company, Inc. 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