The Futures Industry Association strongly supports the recent efforts of the Commodity Futures Trading Commission to bolster price transparency and enhance market surveillance in commodity and energy futures markets. Commodity and energy markets present an ever increasing regulatory challenge for the Commission, as trading platforms become more global and inter-linked through modern technology. As part of its ongoing leadership in this area, the Commission is conducting its first meeting on its Energy Markets Advisory Committee on June 10, 2008. FIA is submitting this short statement for the record of that meeting.
FIA and its members have long believed that futures market price integrity is a paramount regulatory concern. We do not support higher prices or lower prices on any market. We do support prices discovered in what the Commodity Exchange Act calls, “liquid, fair and financially secure trading facilities.”
The Commission aggressively and regularly analyzes a wealth of market data to determine whether futures prices are reflecting market fundamentals. That vital market surveillance function requires the Commission to accumulate all relevant data to make informed and accurate market assessments.
Beginning last year with its expansion of its position reporting system in Rule 18.05, and continuing through measures involving foreign trading platforms announced last week, the Commission has shown an impressive ability to secure additional trading data when appropriate to make sure its market surveillance judgments are as informed as possible. These actions demonstrate the Commission’s willingness to take advantage of the flexibility of its existing reporting system by adapting to new market realities. As a result, today, the Commission should be in a position to obtain on a timely basis via its reporting network and its agreements with foreign entities, any data on any CFTC-regulated trader that participates in any recognized market world-wide.
FIA applauds and supports the Commission’s efforts. If the Commission determines that it needs additional data or resources to conduct market surveillance of any form at any time, FIA understands the Commission will not hesitate to take action to make sure it has what it needs. In accomplishing that end, FIA would be pleased to provide whatever assistance it may offer.
While FIA would support any Commission efforts to strengthen its market surveillance capacity, FIA would not support any proposal or legislation that could handicap the Commission’s market surveillance ability by pushing trading overseas or walling off foreign markets from U.S. market participants. We are confident that if trading by U.S. entities on foreign markets endangers the price integrity of U.S. markets, the Commission has all the statutory power it needs to take appropriate action.