UK ready to comply with US oil rules
The chairman of Europe’s top oil exchange said yesterday he is ready to provide American regulators with “whatever they want” to close the industry’s governance gap dubbed ‘the London loophole.’
Sir Bob Reid, who leads ICE Futures Europe, the owner of the old International Petroleum Exchange, was responding to the call from US regulator the Commodity Futures Trading Commission (CFTC). The US wants the European market to impose the same trader “position limits” that it applies in America.
Position limits are designed to ensure that traders do not corner a section of the market. Also, publishing the positions of large trades adds to the transparency of the market, said the CFTC.
Reid said: “Whatever they want, they get. We are happy to put in position limits.” Reid was talking to the Treasury Select Committee yesterday, which is examining the role of speculators in record oil prices.
Some observers claim speculators have added up to 60 per cent to rising oil prices, while other say tight supply is to blame.
Alexander Justham, director of market supervision at the City watchdog the Financial Services Authority (FSA), also appeared before the MPs. The FSA has the power to veto the changes the CFTC is pressing ICE for.
Justham told the MPs: “The ‘London loophole is a pejorative term for a difference of approach. We operate a more flexible standard.”
He added: “We will consult with market participants to see if they feel these moves are excessive or not.”