Intercontinental Exchange may be forced to limit the size of U.S. oil trades on its London energy market, U.S. Commodity Futures Trading Commissioner Bart Chilton said Friday.
Intercontinental, known as ICE, controls about one-fourth of the trading of U.S. West Texas Intermediate oil futures, with the New York Mercantile Exchange handling the remainder. ICE's London market operates without trading limits and is allowed to offer U.S. investors access to its U.K. exchange under a no-action letter from the CFTC. The letter may be revised to have ICE adopt trade limits imposed by Nymex, Chilton said.
"The issue is manipulation of oil prices," Chilton said. "It's critical we have as comprehensive as possible a view of all trading position in WTI."
The energy exchange's regulator, the U.K.'s Financial Services Authority, does not set limits on contracts held by investors on its London exchange, meaning those traders can build larger trades in U.S. oil than rivals on the Nymex, which sets limits. The position limits are aimed at reducing the ability of traders to influence prices near the expiration of futures contracts.
Intercontinental, known as ICE, controls about one-fourth of the trading of U.S. West Texas Intermediate oil futures, with the New York Mercantile Exchange handling the remainder. ICE's London market operates without trading limits and is allowed to offer U.S. investors access to its U.K. exchange under a no-action letter from the CFTC. The letter may be revised to have ICE adopt trade limits imposed by Nymex, Chilton said.
"The issue is manipulation of oil prices," Chilton said. "It's critical we have as comprehensive as possible a view of all trading position in WTI."
The energy exchange's regulator, the U.K.'s Financial Services Authority, does not set limits on contracts held by investors on its London exchange, meaning those traders can build larger trades in U.S. oil than rivals on the Nymex, which sets limits. The position limits are aimed at reducing the ability of traders to influence prices near the expiration of futures contracts.
Source: Bloomberg
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