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Monday March 18, 7:03 pm Eastern Time
Feinstein rejects changes to energy derivatives bill
WASHINGTON, March 18 (Reuters) - California Sen. Dianne Feinstein said Monday she would push ahead with legislation to regulate energy and metals derivatives like those traded by Enron Corp (Other OTC:ENRNQ.PK - news) in the multi-billion dollar over-the-counter market.
Feinstein, a Democrat, said she rejected a request from Texas Sen. Phil Gramm, the top Republican on the Senate Banking Committee, to exempt metals derivatives and to drop price-transparency requirements from the measure.
The proposed legislation would give the U.S. Commodity Futures Trading Commission regulatory oversight of all energy and metals derivatives to better track large trades in the highly secret over-the-counter market and to respond faster to any illegal activity in the market.
The measure, which Feinstein will try to add to a broad energy policy bill before the Senate, was delayed for several days while she unsuccessfully negotiated with Republicans.
Gramm's wife, Wendy, is the former chairman of the CFTC and a member of Enron's board of directors.
Under Feinstein's plan, the Senate would repeal a Congressional exemption that allows firms to buy and sell electricity, natural gas, oil, gasoline and metals in the OTC market without disclosing information on such deals to the Commodity Futures Trading Commission.
The energy OTC market is traded privately among companies and other institutional investors, not on regulated exchanges such as the New York Mercantile Exchange.
The trades that Enron carried out in the OTC market have been blamed for pushing up electricity and natural gas prices in the West last year.
The Feinstein proposal is opposed by Federal Reserve Chairman Alan Greenspan and U.S. Treasury Secretary Paul O'Neill, who have expressed ``serious concerns'' about it.
Greenspan and O'Neill said putting the OTC market under government oversight would cause legal uncertainties over the transactions entered into by the market participants.
Feinstein said she rejected Gramm's request to exempt energy swaps from CFTC anti-fraud authority, to delete all public price transparency requirements, and to drop metals derivatives from the bill. She also refused to exempt all electronic exchanges from requirements that they maintain sufficient capital to carry out their operations. |
