OTC Derivatives and Energy Commodities

Van Ness Feldman is well-versed in the Congressional developments relating to reform of the over-the-counter (“OTC”) derivatives markets, and is actively engaged in providing strategic counsel and regulatory and legislative advocacy to clients.  The firm is also knowledgeable about the regulatory developments at the Commodity Futures Trading Commission (“CFTC”), including the proposal to increase regulation of the energy commodity futures and options contracts.

Compared to legal advisors that work on securities/commodities law, Van Ness Feldman’s practice predominantly focuses on the energy industry.  Our experience with energy and environmental commodities trading matters and related legislative/regulatory issues uniquely position us to advise affected clients.

In the Congress

As policy experts, Van Ness Feldman monitors and interprets Congressional developments, provides strategic counsel on company-specific impacts and potential responses, and designs and advances legislative advocacy campaigns (e.g., facilitate Hill meetings, explore industry coalitions, etc.).

Before the CFTC

Van Ness Feldman monitors and interprets CFTC developments, provides strategic counsel on company-specific impacts and potential responses, drafts and submits comments to proposed CFTC rulemakings, and arranges meetings with CFTC officials.

Background

In the wake of the recent financial crisis, the U.S. Treasury Department and the Congress have advanced various proposals over the past several months to regulate the over-the-counter derivatives market.  These proposals, aimed at addressing excess risk in the U.S. financial markets, have the potential to significantly impact regulation of energy markets.  At the end of 2009, the House of Representatives passed comprehensive financial reform legislation that included over-the-counter derivatives reform.  The Senate is expected to try to pass a related bill soon.  Energy companies that use OTC derivatives instruments for legitimate risk management need to pay close attention to these legislative developments, as the proposed legislation will likely impact any entity that utilizes over-the-counter derivative instruments for purposes of hedging business risk (or speculating).

On a separate regulatory front, the CFTC has proposed certain measures to address excessive speculation in CFTC-regulated markets, including a proposal to impose federal position limits for specified energy commodity futures and options contracts that are traded on regulated exchanges. 

Van Ness Feldman VNF is closely following these events and is positioned to provide strategic counsel as well as regulatory and legislative services to clients impacted by these financial reform developments.