Senator Feinstein to Offer Modified Amendment
To Regulate Energy, Metals Trading
March 18, 2002

Washington, DC - U.S. Senator Dianne Feinstein (D-Calif.) today announced that she will be introducing a modified amendment to the Energy Bill to regulate and provide transparency to all energy and metals transactions in derivatives.

The amendment is cosponsored by Senators Peter Fitzgerald (R-Il,), Maria Cantwell (D-Wash.), Jon Corzine (D-N.J.), Ron Wyden (D-Ore.), Patrick Leahy (D-Vt.), Barbara Boxer (D-Calif.), and Richard Durbin (D-Il.). Modifications were made to an earlier amendment introduced March 8 during negotiations with Senator Phil Gramm (R-Texas) to ensure that non-commodity financial derivatives would not be regulated under the terms of the amendment.

"The intent of both my original amendment and the new version ensures that electronic exchanges that trade energy derivatives be subject to similar requirements as other exchanges, like the Chicago Mercantile Exchange, the New York Mercantile Exchange and the Chicago Board of Trade," Senator Feinstein said. "Furthermore, those who trade energy derivatives off an exchange would be required to keep a record of their transactions. That way, if there is a complaint, the federal regulators would have a record to review."

The bill would give regulatory oversight to the Commodity Futures Trading Commission (CFTC) over all derivative transactions (transactions where there is generally no delivery) of energy and metals commodities and ensure that all these transactions are transparent.

"I was hopeful that we could reach an agreement with Senator Gramm to support the amendment, however in the end he asked for four additional major changes that we felt would gut the heart out of the amendment," Senator Feinstein said.

Following are the requests from Senator Gramm that were not acceptable as part of the amendment:

1) Exempting energy swaps from CFTC anti-fraud and anti-manipulation authority.

2) Deleting all public price-transparency requirements.

3) Exempting all electronic exchanges from requirements that they maintain sufficient capital to carry out their operations.

4) Eliminating metal derivatives from oversight.