CFTC Pitches Cap-and-Trade Regulation Authority
Gensler proposes that should law be passed, CFTC be given regulatory oversight.
Compiled by staff
Published: Sep 11, 2009
The Commodity Futures Trading Commission wants to regulate greenhouse gas credit markets, should they become law. CFTC Chairman Gary Gensler told the Senate Ag Committee on Wednesday that in the event Congress passes cap-and-trade legislation, the CFTC has the necessary expertise to regulate trading in the expanded carbon markets. The CFTC wants to regulate the futures and spot, or cash, markets, an area traditionally overseen by the Federal Energy Regulatory Commission.
Gensler called for a comprehensive regulatory framework over the expanded carbon markets, without exception. He said there are five regulatory components of carbon markets that should be considered. They are: 1/ Standard setting and allocation; 2/ Recordkeeping; 3/ Overseeing the trade execution system; 4/ Overseeing clearing of trades; and 5/ Protecting against fraud, manipulation and other abuses.
The CFTS already oversees trading and clearing of futures and options contracts based on sulfur dioxide, nitrogen oxide and carbon dioxide allowances and offsets listed on the New York Mercantile Exchange and the Chicago Climate Future Exchange. Gensler says, regulating cap-and-trade would give the CFTC full oversight authority over the contract, giving us additional experience regulating cash emissions contracts.
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