WASHINGTON — Commodity Futures Trading Commission Acting Chairman Caroline D. Pham today announced that the Market Participants Division has established a pilot program designed to increase liquidity and hedging of risks in connection with Energy Commodity End User Swaps. The pilot program includes additional reporting requirements so CFTC staff can conduct enhanced monitoring of trading activity.

“Over the past 13 years, energy markets have seen sharply higher price volatility due in part to many dealers exiting CFTC markets to avoid punitive Dodd-Frank costs,” said Acting Chairman Pham. “This has resulted in less liquidity providers and higher costs per trade, which are passed down to commercial end users like U.S. energy producers, utilities, and ultimately, consumers. By recalibrating outdated regulatory requirements in our energy markets, we can restore opportunities to manage critical business risks involved in powering our cities, factories and homes across America.

“The CFTC’s new pilot program will expand access to energy markets, increase the ability to hedge risks and lower costs, which can unlock potentially billions of dollars of energy savings for U.S. consumers. This is a win for all Americans by unleashing U.S. energy production through less red tape and cutting costs for the entire value chain.” 

“The Department of Energy supports initiatives that reduce energy prices for Americans, cut unnecessary red tape, and drive forward the energy needed to achieve America’s global AI dominance,” Deputy Secretary of Energy James P. Danly said. “DOE commends the CFTC’s efforts to reduce regulatory barriers and costs and increase reliability of American energy.” 

The CFTC staff no-action letter provides for a pilot program that will exclude certain Energy Commodity End User Swaps from the swap dealer de minimis calculation. Participants in the pilot program are required to submit monthly reports on energy commodity sub-category, aggregate notional value and number of counterparties for CFTC market oversight.