S 3268 PCSCommentsClose CommentsPermalink

To amend the Commodity Exchange Act to prevent excessive price speculation with respect to energy commodities, and for other purposes.CommentsClose CommentsPermalink

July 15, 2008CommentsClose CommentsPermalink

Mr. REID (for himself, Mr. DURBIN, Mr. DORGAN, Mrs. MURRAY, Mr. SCHUMER, Mr. CASEY, Ms. MIKULSKI, Mr. CARPER, and Ms. KLOBUCHAR) introduced the following bill; which was ordered read the first timeCommentsClose CommentsPermalink

July 16, 2008CommentsClose CommentsPermalink

Read the second time and placed on the CalendarCommentsClose CommentsPermalink

To amend the Commodity Exchange Act to prevent excessive price speculation with respect to energy commodities, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the ‘Stop Excessive Energy Speculation Act of 2008’.CommentsClose CommentsPermalink





(b) Table of Contents- The table of contents of this Act is as follows:CommentsClose CommentsPermalink





Sec. 1. Short title; table of contents.CommentsClose CommentsPermalink





Sec. 2. Definition of energy commodity.CommentsClose CommentsPermalink





Sec. 3. Speculative limits and transparency of off-shore trading.CommentsClose CommentsPermalink





Sec. 4. Authority of Commodity Futures Trading Commission with respect to certain traders.CommentsClose CommentsPermalink





Sec. 5. Working group of international regulators.CommentsClose CommentsPermalink





Sec. 6. Elimination of manipulation and excessive speculation as cause of high oil, gas, and energy prices.CommentsClose CommentsPermalink





Sec. 7. Large over-the-counter transactions.CommentsClose CommentsPermalink





Sec. 8. Index traders and swap dealers.CommentsClose CommentsPermalink





Sec. 9. Disaggregation of index funds and other data in energy markets.CommentsClose CommentsPermalink





Sec. 10. Additional Commodity Futures Trading Commission employees for improved enforcement.CommentsClose CommentsPermalink





Sec. 11. Working Group on Energy Markets.CommentsClose CommentsPermalink





Sec. 12. Study of regulatory framework for energy markets.CommentsClose CommentsPermalink





Sec. 13. Collection and analysis of information on energy commodities.CommentsClose CommentsPermalink





Sec. 14. National natural gas market investigation.CommentsClose CommentsPermalink





Sec. 15. Studies; reports.CommentsClose CommentsPermalink





Sec. 16. Expedited procedures.CommentsClose CommentsPermalink

SEC. 2. DEFINITION OF ENERGY COMMODITY.

(a) Definition of Energy Commodity- Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--CommentsClose CommentsPermalink





(1) by redesignating paragraphs (13) through (34) as paragraphs (14) through (35), respectively; andCommentsClose CommentsPermalink





(2) by inserting after paragraph (12) the following:CommentsClose CommentsPermalink





‘(13) ENERGY COMMODITY- The term ‘energy commodity’ means--CommentsClose CommentsPermalink





‘(A) a petroleum product; andCommentsClose CommentsPermalink





‘(B) natural gas.’.CommentsClose CommentsPermalink





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) Section 2(c)(2)(B)(i)(II)(cc) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)(cc)) is amended--CommentsClose CommentsPermalink





(A) in subitem (AA), by striking ‘section 1a(20)’ and inserting ‘section 1a(21)’; andCommentsClose CommentsPermalink





(B) in subitem (BB), by striking ‘section 1a(20)’ and inserting ‘section 1a(21)’.CommentsClose CommentsPermalink





(2) Section 13106(b)(1) of the Food, Conservation, and Energy Act of 2008 is amended by striking ‘section 1a(32)’ and inserting ‘section 1a’.CommentsClose CommentsPermalink





(3) Section 402 of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27) is amended--CommentsClose CommentsPermalink





(A) in subsection (a)(7), by striking ‘section 1a(20)’ and inserting ‘section 1a’; andCommentsClose CommentsPermalink





(B) in subsection (d)--CommentsClose CommentsPermalink





(i) in paragraph (1)(B), by striking ‘section 1a(33)’ and inserting ‘section 1a’; andCommentsClose CommentsPermalink





(ii) in paragraph (2)(D), by striking ‘section 1a(13)’ and inserting ‘section 1a’.CommentsClose CommentsPermalink

SEC. 3. SPECULATIVE LIMITS AND TRANSPARENCY OF OFF-SHORE TRADING.

Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(e) Foreign Boards of Trade-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Commission may not permit a foreign board of trade to provide to the members of the foreign board of trade or other participants located in the United States, or otherwise subject to the jurisdiction of the Commission, direct access to the electronic trading and order matching system of the foreign board of trade with respect to an agreement, contract, or transaction in an energy commodity that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, unless--CommentsClose CommentsPermalink





‘(A) the foreign board of trade--CommentsClose CommentsPermalink





‘(i) makes public daily trading information regarding the agreement, contract, or transaction that is comparable to the daily trading information published by the registered entity for the 1 or more contracts against which the foreign board of trade settles; andCommentsClose CommentsPermalink





‘(ii) promptly notifies the Commission of any change regarding--CommentsClose CommentsPermalink





‘(I) the information that the foreign board of trade will make publicly available;CommentsClose CommentsPermalink





‘(II) the position limits, speculation limits, and position accountability provisions that the foreign board of trade will adopt and enforce;CommentsClose CommentsPermalink





‘(III) the position reductions required to prevent manipulation; andCommentsClose CommentsPermalink





‘(IV) any other area of interest expressed by the Commission to the foreign board of trade; andCommentsClose CommentsPermalink





‘(B) the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade)--CommentsClose CommentsPermalink





‘(i) adopts position limits (including related hedge exemption provisions), speculation limits, or position accountability provisions for speculators for the agreement, contract, or transaction that are comparable to the position limits (including related hedge exemption provisions), speculation limits, or position accountability provisions adopted by the registered entity for the 1 or more contracts against which the foreign board of trade settles;CommentsClose CommentsPermalink





‘(ii) has the authority to require or direct market participants to limit, reduce, or liquidate any position the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade) determines to be necessary to prevent or reduce the threat of price manipulation, excessive speculation, price distortion, or disruption of delivery or the cash settlement process; andCommentsClose CommentsPermalink





‘(iii) provides information to the Commission regarding the extent of legitimate and nonlegitimate hedge trading in the agreement, contract, or transaction that is comparable to the information that the Commission determines to be necessary to publish the commitments of traders report of the Commission for the 1 or more contracts against which the foreign board of trade settles.CommentsClose CommentsPermalink





‘(2) EXISTING FOREIGN BOARDS OF TRADE- Paragraph (1) shall not be effective with respect to any agreement, contract, or transaction in an energy commodity executed on a foreign board of trade to which the Commission had granted direct access permission prior to the date of enactment of this subsection until the date that is 180 days after the date of enactment of this subsection.’.CommentsClose CommentsPermalink

SEC. 4. AUTHORITY OF COMMODITY FUTURES TRADING COMMISSION WITH RESPECT TO CERTAIN TRADERS.

(a) In General-CommentsClose CommentsPermalink





(1) RESTRICTION OF FUTURES TRADING TO CONTRACT MARKETS OR DERIVATIVES TRANSACTION EXECUTION FACILITIES- Section 4(b) of the Commodity Exchange Act (7 U.S.C. 6(b)) is amended by inserting after the first sentence the following: ‘The Commission may adopt rules and regulations requiring the maintenance of books and records by any person that is located within the United States (including the territories and possessions of the United States) or that enters trades directly into the trade matching system of a foreign board of trade from the United States (including the territories and possessions of the United States).’CommentsClose CommentsPermalink





(2) EXCESSIVE SPECULATION AS A BURDEN ON INTERSTATE COMMERCE- Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) is amended--CommentsClose CommentsPermalink





(A) in subsection (e), in the second sentence--CommentsClose CommentsPermalink





(i) by striking ‘this Act for any person’ and inserting ‘this Act for (1) any person’; andCommentsClose CommentsPermalink





(ii) by inserting after ‘to section 5c(c)(1)’ the following: ‘, and (2) any person that is located within the United States (including the territories and possessions of the United States) or that enters trades directly into the trade matching system of a foreign board of trade from the United States (including the territories and possessions of the United States) to violate any bylaw, rule, regulation, or resolution of any foreign board of trade or foreign futures authority fixing limits on the amount of trading that may be carried out or positions that may be held under any contract of sale of an energy commodity for future delivery or under any option on such contract or energy commodity, that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity’; andCommentsClose CommentsPermalink





(B) by adding at the end the following:CommentsClose CommentsPermalink





‘(f) Consultation- Before taking any action under subsection (e), the Commission shall consult with the appropriate--CommentsClose CommentsPermalink





‘(1) foreign board of trade; andCommentsClose CommentsPermalink





‘(2) foreign futures authority.’.CommentsClose CommentsPermalink





(3) VIOLATIONS- Section 9(a) of the Commodity Exchange Act (7 U.S.C. 13(a)) is amended by inserting ‘(including any person trading on a foreign board of trade)’ after ‘Any person’ each place it appears.CommentsClose CommentsPermalink





(4) EFFECT- No amendment made by this subsection limits any of the otherwise applicable authorities of the Commodity Futures Trading Commission.CommentsClose CommentsPermalink

SEC. 5. WORKING GROUP OF INTERNATIONAL REGULATORS.

Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) (as amended by section 4(a)(2)(B)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(g) Working Group of International Regulators- Not later than 90 days after the date of enactment of this subsection, the Commission shall convene a working group of international regulators to develop uniform international reporting and regulatory standards to ensure the protection of the energy futures markets from nonlegitimate hedge trading, excessive speculation, manipulation, location shopping, and lowest common dominator regulation, each of which pose systemic risks to all energy futures markets, countries, and consumers.’.CommentsClose CommentsPermalink

SEC. 6. ELIMINATION OF MANIPULATION AND EXCESSIVE SPECULATION AS CAUSE OF HIGH OIL, GAS, AND ENERGY PRICES.

Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) (as amended by section 5) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(h) Elimination of Excessive Speculation and Nonlegitimate Hedge Trading as a Cause of High Oil, Gas, and Energy Prices-CommentsClose CommentsPermalink





‘(1) DEFINITION OF LEGITIMATE HEDGE TRADING-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘legitimate hedge trading’ means the conduct of trading that involves transactions by commercial producers and purchasers of actual physical petroleum and energy commodities for future delivery and the direct counterparties to such trades (regardless of whether the counterparties are commercial producers or purchasers).CommentsClose CommentsPermalink





‘(B) INCLUSION- To the extent a commercial producer or purchaser of an actual physical energy commodity for future delivery trades with an intermediary (referred to in this subparagraph as an ‘initial trade’), each subsequent trade by the intermediary arising solely due to the initial trade and that directly results from such initial trade (referred to in this subparagraph as a ‘follow-on trade’) shall be considered to be the conduct of ‘legitimate hedge trading’ if each follow-on trade executed by the intermediary is--CommentsClose CommentsPermalink





‘(i) done proximate to the initial trade; andCommentsClose CommentsPermalink





‘(ii) in the aggregate, economically the same in size and substance as the initial trade.CommentsClose CommentsPermalink





‘(2) IDENTIFICATION OF LEGITIMATE HEDGE TRADING- In carrying out this Act, the Commission shall distinguish between--CommentsClose CommentsPermalink





‘(A) legitimate hedge trading; andCommentsClose CommentsPermalink





‘(B) all other trading in energy commodities.CommentsClose CommentsPermalink





‘(3) TYPE OF TRADING- Notwithstanding any other provision of this Act, the Commission shall modify (or delegate any appropriate entity to modify) such definitions, classifications, and data collection under this Act as are necessary to ensure that all direct and indirect parties and counterparties to all trades in the energy commodities market are clearly identified for all purposes as engaging in--CommentsClose CommentsPermalink





‘(A) legitimate hedge trading; orCommentsClose CommentsPermalink





‘(B) any other type of trading.CommentsClose CommentsPermalink





‘(4) ELIMINATION OF EXCESSIVE SPECULATION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Notwithstanding any other provision of this Act, the Commission shall review all regulations, rules, exemptions, exclusions, guidance, no action letters, orders, and other actions taken by or on behalf of the Commission (including any action or inaction taken pursuant to delegated authority by an exchange, self-regulatory organization, or any other entity) regarding all energy futures market participants or market activity (referred to in this subsection individually as a ‘prior action’) to ensure that--CommentsClose CommentsPermalink





‘(i) legitimate hedge trading is protected and promoted; andCommentsClose CommentsPermalink





‘(ii) excessive speculation is eliminated.CommentsClose CommentsPermalink





‘(B) PRIOR ACTION-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The Commission shall consider modifying or revoking the application after the date of enactment of this subsection of any prior action taken by the Commission (including any prior action taken pursuant to delegated authority by any other entity) with respect to any trade on any market, exchange, foreign board of trade, swap or swap transaction, index or index market participant or trade, hedge fund, pension fund, and any other transaction, trade, trader, or petroleum or energy futures market activity unless the Commission affirmatively determines that such prior action will protect and promote legitimate hedge trading and does not permit or encourage excessive speculation.CommentsClose CommentsPermalink





‘(ii) REVOCATION- In carrying out this subparagraph, the Commission shall consider modifying or revoking the results of each prior action that, in whole or in part, has the direct or indirect affect of limiting, reducing, or eliminating the filing of any report or data regarding any direct or indirect trade or trader, including the filing of large trader reports.CommentsClose CommentsPermalink





‘(C) SPECULATIVE POSITION LIMITS APPLICABLE TO NONLEGITIMATE HEDGE TRADING IN ENERGY COMMODITIES AND DERIVATIVES-CommentsClose CommentsPermalink





‘(i) SPECULATIVE POSITION LIMITS-CommentsClose CommentsPermalink





‘(I) IN GENERAL- Not later than 30 days after the date of enactment of this subsection, the Commission shall impose, by rule, regulation, or order, speculative position limits on trading that is not legitimate hedge trading.CommentsClose CommentsPermalink





‘(II) APPLICATION- The Commission shall apply the limits imposed under subclause (I) to any person who executes accounts, agreements, or transactions involving an energy commodity for the own account of the person and to any person for whom an agent in fact or substance executes accounts, agreements, or transactions involving an energy commodity, on a registered entity or in covered over-the-counter trading.CommentsClose CommentsPermalink





‘(ii) ADVISORY GROUP-CommentsClose CommentsPermalink





‘(I) IN GENERAL- Not later than 30 days after the date of enactment of this subsection, the Commission shall convene an advisory group primarily consisting of commercial producers and purchasers of actual physical energy commodities for future delivery.CommentsClose CommentsPermalink





‘(II) RECOMMENDATIONS- Not later than 60 days after the date on which the advisory group is convened under subclause (I), and annually thereafter, the advisory group shall submit to the Commission recommendations regarding an appropriate level for position limits--CommentsClose CommentsPermalink

‘(aa) that are designed for traders or entities that are not legitimate hedge traders; andCommentsClose CommentsPermalink

‘(bb) to replace the position limits imposed by the Commission under clause (i)(I).CommentsClose CommentsPermalink

‘(III) APPLICABILITY OF FACA- The advisory group shall be subject to the Federal Advisory Committee Act (5 U.S.C. App.).CommentsClose CommentsPermalink





‘(iii) REVIEW OF RECOMMENDATIONS- Not later than 270 days after the date of enactment of this subsection, the Commission shall--CommentsClose CommentsPermalink





‘(I) analyze and review the recommendations submitted by the advisory group under clause (ii)(II); andCommentsClose CommentsPermalink





‘(II) submit to the appropriate committees of Congress a report describing each recommendation (including each modification to the statutory authority of the Commission that the Commission determines to be necessary to effectuate each recommendation).CommentsClose CommentsPermalink





‘(iv) RULEMAKING-CommentsClose CommentsPermalink





‘(I) IN GENERAL- Not later than 18 months after the date of enactment of this subsection, the Commission shall promulgate a final rule that establishes speculative position limits--CommentsClose CommentsPermalink

‘(aa) for any person engaged in nonlegitimate hedge trading of an energy commodity; andCommentsClose CommentsPermalink

‘(bb) that are consistent with this Act.CommentsClose CommentsPermalink

‘(II) EFFECTIVE DATE- The final rule described in subclause (I) shall take effect on the date that is 30 days after the date on which the Commission promulgates the final rule.CommentsClose CommentsPermalink





‘(v) DEVELOPMENT OF METHODOLOGY-CommentsClose CommentsPermalink





‘(I) IN GENERAL- Not later than 180 days after the date of enactment of this subsection, the Commission shall propose a methodology to determine and set aggregate speculative position limits at the control entity level for all nonlegitimate traders of energy commodities--CommentsClose CommentsPermalink

‘(aa) on designated contract markets;CommentsClose CommentsPermalink

‘(bb) on derivatives transaction execution facilities; andCommentsClose CommentsPermalink

‘(cc) in over-the-counter commodity derivatives.CommentsClose CommentsPermalink

‘(II) REPORT- Not later than 180 days after the date of enactment of this subsection, the Commission shall submit to the appropriate committees of Congress a report that contains--CommentsClose CommentsPermalink

‘(aa) any recommendations regarding any additional statutory authority that the Commission determines to be necessary for the imposition of the speculative position limits described in subclause (I); andCommentsClose CommentsPermalink

‘(bb) a description of the resources that the Commission considers to be necessary to implement the speculative position limits.CommentsClose CommentsPermalink

‘(D) MAXIMUM LEVEL OF SPECULATIVE POSITION LIMITS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- In establishing speculative position limits under this section (including subparagraph (C)(iv)), the Commission shall set the limits at the maximum level practicable--CommentsClose CommentsPermalink





‘(I) to ensure sufficient market liquidity for the conduct of legitimate hedging activities;CommentsClose CommentsPermalink





‘(II) to ensure that price discovery is not disrupted;CommentsClose CommentsPermalink





‘(III) to protect and promote legitimate hedge trading;CommentsClose CommentsPermalink





‘(IV) to minimize nonlegitimate hedge trading; andCommentsClose CommentsPermalink





‘(V) to eliminate excess speculation.CommentsClose CommentsPermalink





‘(ii) EFFECT-CommentsClose CommentsPermalink





‘(I) IN GENERAL- Nothing in this subparagraph modifies the spot month position limitation of 3,000 contracts that is designed to prevent a corner or squeeze at the delivery date.CommentsClose CommentsPermalink





‘(II) COMMISSION ACTION- If the Commission sets position limits under clause (i) that are different from the spot month position limit described in subclause (I), the Commission shall include in the report required under subparagraph (C)(v)(II) an analysis describing the reasons for the position limits.’.CommentsClose CommentsPermalink

SEC. 7. LARGE OVER-THE-COUNTER TRANSACTIONS.

Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(j) Over-the-Counter Transactions-CommentsClose CommentsPermalink





‘(1) DEFINITIONS- In this subsection:CommentsClose CommentsPermalink





‘(A) COVERED OVER-THE-COUNTER TRANSACTION- The term ‘covered over-the-counter transaction’ means an over-the-counter transaction the reporting of which is required by the Commission as the result of a determination made under paragraph (3)(C).CommentsClose CommentsPermalink





‘(B) COVERED PERSON- The term ‘covered person’ means a person that enters into a covered over-the-counter transaction.CommentsClose CommentsPermalink





‘(C) MAJOR MARKET DISTURBANCE- The term ‘major market disturbance’ means any disturbance in a commodity market that disrupts the liquidity and price discovery function of that market from accurately reflecting the forces of supply and demand for a commodity, including--CommentsClose CommentsPermalink





‘(i) a threatened or actual market manipulation or corner;CommentsClose CommentsPermalink





‘(ii) excessive speculation;CommentsClose CommentsPermalink





‘(iii) nonlegitimate hedge trading; andCommentsClose CommentsPermalink





‘(iv) any action of the United States or a foreign government that affects a commodity.CommentsClose CommentsPermalink





‘(D) MARKET DISTURBANCE- The term ‘market disturbance’ shall be interpreted in accordance with section 8a(9)).CommentsClose CommentsPermalink





‘(E) OVER-THE-COUNTER TRANSACTION- The term ‘over-the-counter transaction’ means a contract, agreement, or transaction in a petroleum or energy commodity that is--CommentsClose CommentsPermalink





‘(i) entered into only between persons that are eligible contract participants at the time the persons enter into the agreement, contract, or transaction;CommentsClose CommentsPermalink





‘(ii) not entered into on a trading facility; andCommentsClose CommentsPermalink





‘(iii) not a sale of any cash commodity for deferred shipment or delivery.CommentsClose CommentsPermalink





‘(2) COMMISSION OVERSIGHT AUTHORITY-CommentsClose CommentsPermalink





‘(A) IN GENERAL- In the case of a major market disturbance, as determined by the Commission, the Commission may require any trader subject to the reporting requirements described in paragraph (3) to take such action as the Commission considers to be necessary to maintain or restore orderly trading in any contract listed for trading on a registered entity, including--CommentsClose CommentsPermalink





‘(i) the liquidation of any over-the-counter transaction; andCommentsClose CommentsPermalink





‘(ii) the fixing of any limit that may apply to a market position involving any over-the-counter transaction acquired in good faith before the date of the determination of the Commission.CommentsClose CommentsPermalink





‘(B) JUDICIAL REVIEW- Any action taken by the Commission under subparagraph (A) shall be subject to judicial review carried out in accordance with section 8a(9).CommentsClose CommentsPermalink





‘(3) REPORTING; RECORDKEEPING-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Commission shall require each covered person to submit to the Commission a report--CommentsClose CommentsPermalink





‘(i) at such time and in such manner as the Commission determines to be appropriate; andCommentsClose CommentsPermalink





‘(ii) containing the information required under subparagraph (B) to assist the Commission in detecting and preventing potential price manipulation of, or excessive speculation in, any contract listed for trading on a registered entity.CommentsClose CommentsPermalink





‘(B) CONTENTS OF REPORT- A report required under subparagraph (A) shall contain--CommentsClose CommentsPermalink





‘(i) information describing large trading positions of the covered person obtained through 1 or more over-the-counter transactions that involve--CommentsClose CommentsPermalink





‘(I) substantial quantities of a commodity in the cash market; orCommentsClose CommentsPermalink





‘(II) substantial positions, investments, or trades in agreements or contracts relating to the commodity;CommentsClose CommentsPermalink





‘(ii) any other information relating to each covered over-the-counter transaction carried out by the covered person that the Commission determines to be necessary to accomplish the purposes described in subparagraph (A); andCommentsClose CommentsPermalink





‘(iii) information distinguishing legitimate hedge trading from nonlegitimate hedge trading.CommentsClose CommentsPermalink





‘(C) DETERMINATION OF COVERED OVER-THE-COUNTER TRANSACTIONS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The Commission shall identify each large over-the-counter transaction or class of large over-the-counter transactions the reporting of which the Commission determines to be appropriate to assist the Commission in detecting and preventing potential price manipulation of, or excessive speculation in, any contract listed for trading on a registered entity.CommentsClose CommentsPermalink





‘(ii) MANDATORY FACTORS FOR DETERMINATIONS-CommentsClose CommentsPermalink





‘(I) IN GENERAL- In carrying out a determination under clause (i), the Commission shall consider the extent to which each factor described in subclause (II) applies.CommentsClose CommentsPermalink





‘(II) FACTORS- The factors required for carrying out a determination under clause (i) include whether--CommentsClose CommentsPermalink

‘(aa) a standardized agreement is used to execute the over-the-counter transaction;CommentsClose CommentsPermalink

‘(bb) the over-the-counter transaction settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity;CommentsClose CommentsPermalink

‘(cc) the price of the over-the-counter transaction is reported to a third party, published, or otherwise disseminated;CommentsClose CommentsPermalink

‘(dd) the price of the over-the-counter transaction is referenced in any other transaction;CommentsClose CommentsPermalink

‘(ee) there is a significant volume of the over-the-counter transaction or class of over-the-counter transactions; andCommentsClose CommentsPermalink

‘(ff) there is any other factor that the Commission determines to be appropriate.CommentsClose CommentsPermalink

‘(D) RECORDKEEPING- The Commission, by rule, shall require each covered person--CommentsClose CommentsPermalink





‘(i) in accordance with section 4i, to maintain such records as directed by the Commission for a period of 5 years, or longer, if directed by the Commission; andCommentsClose CommentsPermalink





‘(ii) to provide such records upon request to the Commission or the Department of Justice.CommentsClose CommentsPermalink





‘(4) PROTECTION OF PROPRIETARY INFORMATION- In carrying out this subsection, the Commission may not--CommentsClose CommentsPermalink





‘(A) require the real-time publication of any proprietary information;CommentsClose CommentsPermalink





‘(B) prohibit the commercial sale or licensing of any real-time proprietary information; andCommentsClose CommentsPermalink





‘(C) except as provided in section 8, publicly disclose any information relating to any market position, business transaction, trade secret, or name of any customer of a covered person.CommentsClose CommentsPermalink





‘(5) APPLICABILITY- Notwithstanding subsections (g) and (h), and any exemption issued by the Commission for any energy commodity, each over-the-counter transaction shall be subject to this subsection.CommentsClose CommentsPermalink





‘(6) SAVINGS CLAUSE- Nothing in this subsection modifies or alters--CommentsClose CommentsPermalink





‘(A) the guidance of the Commission; orCommentsClose CommentsPermalink





‘(B) any applicable requirements with respect the disclosure of proprietary information.’.CommentsClose CommentsPermalink

SEC. 8. INDEX TRADERS AND SWAP DEALERS.

Section 4 of the Commodity Exchange Act (7 U.S.C. 6) (as amended by section 3) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(f) Index Traders and Swap Dealers- Not later than 60 days after the date of enactment of this subsection, the Commission shall--CommentsClose CommentsPermalink





‘(1) routinely require detailed reporting from index traders and swap dealers in markets under the jurisdiction of the Commission;CommentsClose CommentsPermalink





‘(2) reclassify the types of traders for regulatory and reporting purposes to distinguish between index traders and swaps dealers;CommentsClose CommentsPermalink





‘(3) review the trading practices for index traders in markets under the jurisdiction of the Commission--CommentsClose CommentsPermalink





‘(A) to ensure that index trading is not adversely impacting the price discovery process; andCommentsClose CommentsPermalink





‘(B) to determine whether different practices or regulations should be implemented; andCommentsClose CommentsPermalink





‘(4) ensure, to the maximum extent practicable, that the reports required under this subsection distinguish between legitimate and nonlegitimate hedge trading.’.CommentsClose CommentsPermalink

SEC. 9. DISAGGREGATION OF INDEX FUNDS AND OTHER DATA IN ENERGY MARKETS.

Section 4 of the Commodity Exchange Act (7 U.S.C. 6) (as amended by section 8) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(g) Disaggregation of Index Funds and Other Data in Energy Markets- The Commission shall disaggregate and make public monthly--CommentsClose CommentsPermalink





‘(1) the number of positions and total value of index funds and other passive, long-only positions in energy markets; andCommentsClose CommentsPermalink





‘(2) data on speculative positions relative to bona fide physical hedgers in those markets.’.CommentsClose CommentsPermalink

SEC. 10. ADDITIONAL COMMODITY FUTURES TRADING COMMISSION EMPLOYEES FOR IMPROVED ENFORCEMENT.

Section 2(a)(7) of the Commodity Exchange Act (7 U.S.C. 2(a)(7)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(D) ADDITIONAL EMPLOYEES- As soon as practicable after the date of enactment of this subparagraph, the Commission shall appoint at least 100 full-time employees (in addition to the employees employed by the Commission as of the date of enactment of this subparagraph)--CommentsClose CommentsPermalink





‘(i) to increase the public transparency of operations in energy futures markets;CommentsClose CommentsPermalink





‘(ii) to improve the enforcement of this Act in those markets; andCommentsClose CommentsPermalink





‘(iii) to carry out such other duties as are prescribed by the Commission.’.CommentsClose CommentsPermalink

SEC. 11. WORKING GROUP ON ENERGY MARKETS.

(a) Establishment- There is established a Working Group on Energy Markets.CommentsClose CommentsPermalink





(b) Composition- The Working Group shall be composed of--CommentsClose CommentsPermalink





(1) the Secretary of Energy (referred to in this section as the ‘Secretary’);CommentsClose CommentsPermalink





(2) the Secretary of the Treasury;CommentsClose CommentsPermalink





(3) the Chairman of the Federal Energy Regulatory Commission;CommentsClose CommentsPermalink





(4) the Chairman of Federal Trade Commission;CommentsClose CommentsPermalink





(5) the Chairman of the Securities and Exchange Commission;CommentsClose CommentsPermalink





(6) the Chairman of the Commodity Futures Trading Commission; andCommentsClose CommentsPermalink





(7) the Administrator of the Energy Information Administration.CommentsClose CommentsPermalink





(c) Chairperson-CommentsClose CommentsPermalink





(1) INITIAL CHAIRPERSON- The Secretary shall serve as the Chairperson of the Working Group for the 1-year period beginning on the date of enactment of this Act.CommentsClose CommentsPermalink





(2) ROTATION OF CHAIRPERSONS- For each 1-year period following the period described in paragraph (1), each individual described in subsection (b) shall serve as the Chairperson of the Working Group in the order corresponding to which the individual is described in that subsection.CommentsClose CommentsPermalink





(d) Purpose and Function- The Working Group shall--CommentsClose CommentsPermalink





(1) investigate the effect of speculation in energy commodities on energy prices and the energy security of the United States;CommentsClose CommentsPermalink





(2) recommend to the President and Congress laws (including regulations) that may be needed to prevent excessive speculation in energy commodities to prevent or minimize the adverse impact of high energy prices on consumers and the economy of the United States; andCommentsClose CommentsPermalink





(3) review energy security considerations posed by developments in international energy markets.CommentsClose CommentsPermalink





(e) Administration- The Secretary shall provide the Working Group with such administrative and support services as may be necessary for the performance of the functions of the Working Group.CommentsClose CommentsPermalink





(f) Cooperation of Other Agencies- The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group with such information as the Working Group requires to carry out this section.CommentsClose CommentsPermalink





(g) Consultation- The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, other major market participants, consumers, and the general public.CommentsClose CommentsPermalink

SEC. 12. STUDY OF REGULATORY FRAMEWORK FOR ENERGY MARKETS.

(a) Study- The Working Group established under section 11(a) shall conduct a study to--CommentsClose CommentsPermalink





(1) identify the factors that affect the pricing of crude oil and refined petroleum products, including an examination of the effects of market speculation on prices; andCommentsClose CommentsPermalink





(2) review and assess the roles, missions, and structures of relevant Federal agencies, examine interagency coordination, and identify and assess the gaps that need to be filled for the Federal Government to effectively oversee and regulate markets critical to the energy security of the United States.CommentsClose CommentsPermalink





(b) Elements of Study- The study shall include--CommentsClose CommentsPermalink





(1) an examination of price formation with respect to crude oil and refined petroleum products;CommentsClose CommentsPermalink





(2) an examination of relevant international regulatory regimes; andCommentsClose CommentsPermalink





(3) an examination of the degree to which changes in energy market transparency, liquidity, and structure have influenced or driven abuse, manipulation, excessive speculation, or inefficient price formation.CommentsClose CommentsPermalink





(c) Report and Recommendations- Not later than 1 year after the date of enactment of this Act, the Secretary of Energy shall submit to the appropriate committees of Congress a report that--CommentsClose CommentsPermalink





(1) describes the results of the study; andCommentsClose CommentsPermalink





(2) provides options and the recommendations of the Working Group for appropriate Federal coordination of oversight and regulatory actions to ensure transparency of crude oil and refined petroleum product pricing and the elimination of excessive speculation.CommentsClose CommentsPermalink





(d) Authorization of Appropriations- There are authorized to be appropriated such sums as are necessary to carry out this section.CommentsClose CommentsPermalink

SEC. 13. COLLECTION AND ANALYSIS OF INFORMATION ON ENERGY COMMODITIES.

(a) Accurate and Complete Information on Energy Producing Companies- Section 205(h)(1) of the Department of Energy Organization Act (42 U.S.C. 7135(h)(1)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(C) INFORMATION ON ENERGY-PRODUCING COMPANIES- Notwithstanding any other provision of law, the head of each Federal department or agency shall provide to the Administrator, on the request of the Administrator, such information as the Administrator may require to identify each energy-producing company.’.CommentsClose CommentsPermalink





(b) Enhanced Data on Ownership of Critical Energy Commodities- Section 205 of the Department of Energy Organization Act (42 U.S.C. 7135) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(n) Collection of Information on Ownership of Energy Commodities-CommentsClose CommentsPermalink





‘(1) IN GENERAL- To ensure transparency of information with respect to critical energy infrastructure and product ownership in the United States, the Administrator shall collect on a weekly basis information identifying the ownership of all commercially held oil and natural gas inventories in the United States.CommentsClose CommentsPermalink





‘(2) COMPANY-SPECIFIC DATA- The information shall include company-specific data, including--CommentsClose CommentsPermalink





‘(A) volumes of product under ownership; andCommentsClose CommentsPermalink





‘(B) storage and transportation capacity (including owned and leased capacity).CommentsClose CommentsPermalink





‘(3) PROTECTION OF PROPRIETARY INFORMATION- Section 11(d) of the Energy Supply and Environmental Coordination Act of 1974 (15 U.S.C. 796(d)) shall apply to information collected under this section.CommentsClose CommentsPermalink





‘(o) Monthly Reporting on Energy Commodity Transactions-CommentsClose CommentsPermalink





‘(1) IN GENERAL- In accordance with paragraph (2), to improve the ability to evaluate the energy security of the United States, any person holding or controlling energy futures contracts or energy commodity swaps (as defined in section 202 of the Energy Policy and Conservation Act) at a level to be determined by the Secretary for which the underlying energy commodity is physically delivered within the United States shall report on a monthly basis, with respect to the energy commodities and the byproducts of the energy commodities--CommentsClose CommentsPermalink





‘(A) the quantity of physical stocks owned;CommentsClose CommentsPermalink





‘(B) the quantity of fixed price purchase commitments open;CommentsClose CommentsPermalink





‘(C) the quantity of fixed price sales commitments open;CommentsClose CommentsPermalink





‘(D) the physical storage capacity owned or leased; andCommentsClose CommentsPermalink





‘(E) such other information as the Secretary determines is necessary to provide adequate transparency with respect to entities that control critical energy assets in the United States.CommentsClose CommentsPermalink





‘(2) USE OF DATA- Any data collected under paragraph (1) shall not be made public in a manner that is inconsistent with this Act.CommentsClose CommentsPermalink





‘(p) Financial Market Analysis Office-CommentsClose CommentsPermalink





‘(1) ESTABLISHMENT- There shall be within the Energy Information Administration a Financial Market Analysis Office, headed by a director, who shall report directly to the Administrator of the Energy Information Administration.CommentsClose CommentsPermalink





‘(2) DUTIES- The Office shall be responsible for analysis of the financial aspects of energy markets.CommentsClose CommentsPermalink





‘(3) ANALYSES- The Administrator of the Energy Information Administration shall take analyses by the Office into account in conducting analyses and forecasting of energy prices.’.CommentsClose CommentsPermalink





(c) Conforming Amendment- Section 645 of the Department of Energy Organization Act (42 U.S.C. 7255) is amended by inserting ‘(15 U.S.C. 3301 et seq.) and the Natural Gas Act (15 U.S.C. 717 et seq.)’ after ‘Natural Gas Policy Act of 1978’.CommentsClose CommentsPermalink

SEC. 14. NATIONAL NATURAL GAS MARKET INVESTIGATION.

(a) In General- Not later than 30 days after the date of enactment of this Act, in order to ensure the integrity of natural gas markets, the Federal Energy Regulatory Commission (referred to in this section as the ‘Commission’) shall commence an investigation into the role of financial institutions in natural gas markets, including--CommentsClose CommentsPermalink





(1) trends in investment in natural gas storage, transportation capacity, and pipeline infrastructure;CommentsClose CommentsPermalink





(2) factors contributing to potential effects on wholesale natural gas prices, including the mechanisms covered by physical natural gas supply contracts;CommentsClose CommentsPermalink





(3) the character and number of positions held in related financial markets; andCommentsClose CommentsPermalink





(4) any international considerations the Commission considers relevant.CommentsClose CommentsPermalink





(b) Assessment- The Commission may include in the investigation an assessment of real-time market dynamics during the 2008 winter heating season.CommentsClose CommentsPermalink





(c) Required Data- Each Federal department and agency shall comply with any request from the Commission for records, papers, and information in the possession of the department or agency relating to any agreement, contract, or transaction for the sale of an energy commodity for future delivery in interstate or foreign commerce, or any energy commodity swap.CommentsClose CommentsPermalink





(d) Reports- Not later than 270 days after the date of enactment of this Act, the Commission shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Energy and Commerce of the House of Representatives a report on the findings, conclusions, and recommendations of the investigation conducted under this section.CommentsClose CommentsPermalink





(e) Additional Investigations- On an annual basis and during any other period the Commission determines necessary, the Commission shall--CommentsClose CommentsPermalink





(1) conduct an investigation that is similar to the investigation required under subsections (a) through (c); andCommentsClose CommentsPermalink





(2) submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Energy and Commerce of the House of Representatives a report on the findings, conclusions, and recommendations of the investigation.CommentsClose CommentsPermalink





(f) Authorization of Appropriations- There are authorized to be appropriated such sums as are necessary to carry out this section.CommentsClose CommentsPermalink

SEC. 15. STUDIES; REPORTS.

(a) Study Relating to International Regulation of Energy Commodity Markets-CommentsClose CommentsPermalink





(1) IN GENERAL- The Comptroller General of the United States shall conduct a study of the international regime for regulating the trading of energy commodity futures and derivatives.CommentsClose CommentsPermalink





(2) ANALYSIS- The study shall include an analysis of, at a minimum--CommentsClose CommentsPermalink





(A) key common features and differences among countries in the regulation of energy commodity trading, including with respect to market oversight and enforcement standards and activities;CommentsClose CommentsPermalink





(B) variations among countries with respect to the use of position limits, accountability limits, or other thresholds to detect and prevent price manipulation, excessive speculation, or other unfair trading practices;CommentsClose CommentsPermalink





(C) variations in practices regarding the differentiation of commercial and noncommercial trading;CommentsClose CommentsPermalink





(D) agreements and practices for sharing market and trading data among regulatory bodies and among individual regulators and the entities that the bodies and regulators oversee; andCommentsClose CommentsPermalink





(E) agreements and practices for facilitating international cooperation on market oversight, compliance, and enforcement.CommentsClose CommentsPermalink





(3) REPORT- Not later than 1 year after the date of enactment of this Act, the Comptroller General shall submit to the appropriate committees of Congress a report that--CommentsClose CommentsPermalink





(A) describes the results of the study;CommentsClose CommentsPermalink





(B) addresses the effects of excessive speculation and energy price volatility on energy futures; andCommentsClose CommentsPermalink





(C) provides recommendations to improve openness, transparency, and other necessary elements of a properly functioning market in a manner that protects consumers in the United States.CommentsClose CommentsPermalink





(b) Study Relating to Effects of Noncommercial Speculators on Energy Futures Markets and Energy Prices-CommentsClose CommentsPermalink





(1) STUDY- The Comptroller General of the United States shall conduct a study of the effects of noncommercial speculators on energy futures markets and energy prices.CommentsClose CommentsPermalink





(2) ANALYSIS- The study shall include an analysis of, at a minimum--CommentsClose CommentsPermalink





(A) the effect of increased amounts of capital in energy futures markets;CommentsClose CommentsPermalink





(B) the impact of the roll-over of positions by index fund traders and swap dealers on energy futures markets and energy prices; andCommentsClose CommentsPermalink





(C) the extent to which each factor described in subparagraphs (A) and (B) and noncommercial speculators--CommentsClose CommentsPermalink





(i) affect--CommentsClose CommentsPermalink





(I) the pricing of energy commodities; andCommentsClose CommentsPermalink





(II) risk management functions; andCommentsClose CommentsPermalink





(ii) contribute to economically efficient price discovery.CommentsClose CommentsPermalink





(3) REPORT- Not later than 2 years after the date of enactment of this Act, the Comptroller General shall submit to the appropriate committees of Congress a report that describes the results of the study.CommentsClose CommentsPermalink





(c) Reports of Commodity Futures Trading Commission-CommentsClose CommentsPermalink





(1) IN GENERAL- The Commission shall submit to Congress--CommentsClose CommentsPermalink





(A) not later than 60 days after the date of enactment of this Act, a report that describes in detail the actions the Commission has taken, is taking, and intends to take to carry out this subsection (including any recommended legislative changes that are necessary to carry out this subsection); andCommentsClose CommentsPermalink





(B) not later than 45 days after the date described in subparagraph (A) and every 45 days thereafter until the date of implementation of this subsection, an update on the report required under subparagraph (A).CommentsClose CommentsPermalink





(2) ADDITIONAL EMPLOYEES OR RESOURCES- Not later than 60 days after the date of enactment of this Act, the Commission shall submit to Congress a report that describes the number of additional positions and resources that the Commission determines to be necessary to carry out this subsection (including the specific duty of each additional employee).CommentsClose CommentsPermalink

SEC. 16. EXPEDITED PROCEDURES.

(a) In General- Subject to subsection (b), the Commodity Futures Trading Commission (referred to in this section as the ‘Commission’) shall use emergency and expedited procedures (including any administrative or other procedure as appropriate) to carry out this Act (including the amendments made by this Act).CommentsClose CommentsPermalink





(b) Report- If the Commission decides not to use the procedures described in subsection (a) in a specific instance, not later than 30 days after the date of the decision, the Commission shall submit to Congress a detailed report that describes in each instance the reasons for not using the procedures.CommentsClose CommentsPermalink

Calendar No. 882CommentsClose CommentsPermalink

To amend the Commodity Exchange Act to prevent excessive price speculation with respect to energy commodities, and for other purposes.CommentsClose CommentsPermalink

July 16, 2008CommentsClose CommentsPermalink