Number: RS22912
Title: The Enron Loophole
Authors: Mark Jickling, Government and Finance Division 
Abstract: The Commodity Exchange Act exempts certain energy derivatives contracts from regulation by the Commodity Futures Trading Commission (CFTC). These exemptions are popularly known as the "Enron loophole." Soaring energy prices have raised concerns about whether the CFTC has enough information about these unregulated markets to monitor energy trading in a comprehensive manner. The Farm Bill (P.L. 110-234) established a more stringent regulatory regime for electronic trading facilities that offer contracts that play a significant role in setting energy prices. A number of other bills in the 110th Congress would impose new reporting or regulatory requirements on the bilateral energy swaps market, which was not addressed by the Farm Bill.
Pages: 6
Date: July 7, 2008