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Keynote Address Of CFTC Commissioner Dan M. Berkovitz At Energy Risk 2019, Houston, Texas, Improving Energy Derivatives Markets For A Changing Energy Industry

Date 14/05/2019

Good morning and thank you for the warm welcome.  I would like to thank Ruta Gnedeviciute and Energy Risk for inviting me to speak today.

Before I begin, I am obligated to remind you that the views I express today are my own and do not represent the views of the Commission, its staff, or any of my fellow Commissioners.

I’m very pleased to be here at Energy Risk in my capacity as a CFTC Commissioner.  I first attended this conference in May 2008, when I was working on energy issues as a staffer in the United States Senate.  We have seen some remarkable changes in the energy sector since then.  Today I will talk about how our derivatives markets have responded to these changes.  I’ll also talk about the improvements that we have made in the regulation of our financial and commodity derivative markets.  These developments in our physical and financial markets demonstrate that a vibrant energy sector and strong market regulation go hand-in-hand to benefit American businesses and consumers.  However, our work is not done.  I will also outline for you the policies I believe the Commission should adopt to increase competition in, and access to, the energy derivative markets.

The importance of the energy markets was drilled into me nearly twenty years ago in the Senate, when I was investigating spikes in the price of gasoline in the Midwest.  I was questioning an oil company executive about the effect of mergers amongst the oil majors, and increasing vertical integration in the industry.  Exasperated, the executive said to me, “Your focus on antitrust is all wrong.  The majors can’t control the prices any more.  Those days are long gone.  Energy is now a commodity.  If you want to understand energy prices, you need to understand the energy markets.”  He then said, “Go study the energy markets.  There will be plenty to keep you busy.”

How right he was.  After leaving the Hill several years—and several energy market investigations—later, I became General Counsel of the CFTC, and in August 2018, returned as a Commissioner.  I’ve had the privilege of a front-row seat to observe many of the changes I’ll be talking about today.

A New Age in Energy Supply and Technology

A lot has changed since Energy Risk in 2008.  Back then, crude oil prices had climbed over $130 a barrel, and peak at $147 per barrel about a month later.  Wall Street analysts were predicting they would soon reach $200 per barrel.  Natural gas prices were also volatile and high.  Natural gas spot prices averaged $8.86 per million Btus that same year, and topped out over $13 per million Btu in June.[1]  During the first decade of this century, the energy derivative markets were largely unregulated and scandal-plagued—recall Enron, the Western Power Crisis, and the Amaranth hedge fund.  At that conference, we debated whether the oil price spike was due to a speculative bubble or was a harbinger of “peak oil.”

The financial crisis of 2008 was brewing that spring as well.  The mortgage and housing markets were in turmoil and the collapse of Lehman Brothers—which ignited the financial crisis —was just a few months away.

We have come a long way in the past decade.   Our domestic energy industry has been transformed and we have created a new framework for the regulation of our financial markets.

From traditional fossil fuels to clean, renewable technologies that can help us reduce our carbon footprint, we have witnessed a revolution in our ability to produce affordable energy.  Technological innovations such as horizontal drilling and hydraulic fracturing have enabled the United States to increase its oil production from less than 6 million barrels per day in 2009 to nearly 12 million barrels per day by January 2019.[2]  Shale oil production now accounts for over 60% of total U.S. production,[3] and the U.S. is now the world’s leading oil producer.[4] 

These new technologies have also led the U.S. to become the world’s largest producer of natural gas.[5]  Since 2008, natural gas production has increased by nearly 60%.[6]  Costs to liquefy and regasify liquefied natural gas (“LNG”), as well as to store and ship LNG, are declining.[7]  In 2017, U.S. LNG exports quadrupled,[8] making it a net natural gas exporter for the first time in almost 60 years.[9]  Developments in all segments of the LNG value chain have made LNG more economic and will only further propel demand.    

We have also seen tremendous growth in renewable energy sources.  The generation of energy from solar, wind, and geothermal resources has doubled in the last ten years,[10] while costs have fallen to more competitive levels.  For example, U.S. wind costs have fallen by more than 50% and solar costs by 70%, drawing prices closer to that of traditional fossil fuels.[11]  In the aggregate, renewables account for around a quarter of global electricity generation.[12]  Last month, for the first time, renewables generated more electricity in the United States than coal-fired power plants.[13]

These developments are good news for American consumers and businesses.  They are a testament to the ingenuity and determination of companies like yours that make up our country’s energy industry.  And they demonstrate the potential fruits of a market-based, competitive economy that is founded on property rights and the rule of law.

No industry is more familiar than the energy industry, however, with the boom-and-bust cycles inherent in commodity markets and the need to find ways to manage the price risks posed by changing conditions of supply and demand in these markets.  Derivative instruments such as futures, swaps, and options enable firms to manage these price risks.

It is the responsibility of the market regulators like the CFTC to ensure that the markets for these products are fair, transparent, and competitive, and free from fraud and manipulation.  And the CFTC must be vigilant to ensure that its regulations keep pace with the changes in the underlying markets.

Derivative Markets’ Response to Physical Changes in the Energy Industry

I am the proud sponsor of the CFTC’s Energy and Environmental Markets Advisory Committee (“EEMAC”).  The objective of this Committee is to “advise the Commission on important new developments in energy and environmental derivatives markets that may raise new regulatory issues, and the appropriate regulatory response to ensure market integrity and competition, and protect consumers.”[14]  The Advisory Committee members include a diverse group of commercial end-users, swap dealers, consumers, public interest groups, and the exchanges.  At the EEMAC meeting last month, we heard presentations on how the developments in the physical energy markets are generating an appetite for new risk management tools, and derivatives exchanges are creating new products to satisfy that demand.

For example, due to developments in shale oil production, the Permian Basin in the Southwest region now produces more crude oil than any other region in the country and that trend is projected to continue.[15]  With new pipelines opening up from West Texas to the Gulf Coast and the growth in U.S. crude oil exports, producers are increasingly delivering to export facilities on the coast.  The resulting need to hedge the price of crude on the U.S. Gulf Coast has led ICE and CME to introduce futures contracts for delivery of West Texas Intermediate (“WTI”) crude oil in Houston.[16]

Commercial end users seeking to reduce their environmental footprint also have access to a growing suite of products.  Futures exchanges are offering a growing suite of carbon allowance, renewable energy, and low sulfur gasoil contracts.[17]

In addition, as the U.S. exports a higher volume of crude oil to the rest of the world, the use of WTI futures has increased globally.  Today, 15% of the trading volume in CME’s energy products is executed during non-U.S. hours, compared with just 6% five years ago.[18]  Similarly, as U.S. gulf coast LNG reaches more destinations abroad, Henry Hub is increasingly seen as a global benchmark for natural gas.  And there are now at least six derivative contracts for LNG.  The most established is ICE’s Japan-Korea Marker (“JKM”),[19] which saw more than 17,000 contracts traded in December 2018—a ten-fold increase from the year before.[20]

We also see a shift in how market participants are using derivatives contracts to hedge risk.  The CFTC’s Market Intelligence Branch recently published a report on the impact of U.S. shale oil production on NYMEX WTI futures.[21]  This report noted that over the past ten years, the trading volume and open interest in NYMEX WTI futures contracts has doubled.[22]  However, despite this sharp increase in open interest, we see that it is concentrated over the first two to three years of the futures curve.[23]  Open interest in futures contracts for delivery five or more years into the future has markedly declined.[24]  The report concludes that the shortened production horizon for shale oil has reduced commercial end users’ need for longer dated contracts.[25]  This trend also indicates that there is less speculative interest in the back end of the futures curve, most likely due to abundant oil supply.[26]

The Role of Regulation in the Derivatives Markets

Over the past decade, the regulatory system for our financial and commodity markets has also undergone a remarkable transformation.  Following the collapse of global financial markets in September 2009, the G20 convened in Pittsburgh to establish the principles that the nations of the world would follow to safeguard the global financial system.  The core objectives established by the G20 leaders included raising bank capital standards, increasing central clearing and exchange trading for standardized derivatives, and fostering fair and transparent competition in our financial markets.[27]  Concurrently, the G20 leaders pledged to promote global energy security, the development of clean, sustainable energy supplies, and improved regulatory oversight of the energy markets.[28] 

In 2010, Congress passed the Dodd-Frank Act.[29]  This legislation created a new framework to regulate swaps, which had previously been unregulated.  Congress directed the CFTC to write rules to decrease risk and increase transparency in the swaps market, including the registration of and business conduct standards for the large swap dealers, mandating that certain standardized swaps be cleared and traded on regulated facilities, and requiring that all swaps be reported to a swap data repository.   In addition to broadening its jurisdiction to include swaps, Congress also gave the Commission new tools to prosecute fraud and manipulation.

As a result of this new framework and the CFTC’s implementing regulations, our financial markets are safer and more resilient than they were in 2008.  The mandates for swap dealer registration and swap clearing, trading, and reporting have been applied to large segments of the swaps market.  Today, 105 swap dealers and 23 swap execution facilities are now registered with the Commission.[30]  Almost 89% of interest rate swaps and 96% of broad index credit default swaps are cleared through a central clearinghouse.[31]  Nearly 98% of all swap transactions involve at least one registered swap dealer.[32]

Derivative markets do not always evolve naturally within a given industry.  Compared to the agricultural commodity markets, which date back to the time of the Civil War, our energy commodity markets are of recent vintage.  But this is not because the oil industry had less need to hedge its risks.  Rather it was the belief of John D. Rockefeller and his firm, Standard Oil, at the dawn of the age of oil, that commodity exchanges were a source of price volatility.

It did not take long after “Colonel” Drake drilled the first oil well in 1859, and the oil rush was on in Pennsylvania, for oil markets to develop.  At first, producers and buyers met regularly at specific locations to transact, and these gathering places soon evolved into exchanges.  The Titusville Oil Exchange opened in Pennsylvania 1871, and the National Petroleum Exchange in New York was founded in 1882.  Both exchanges offered oil spot and futures contracts.[33]  Like markets today, the exchanges thrived when prices were volatile. 

Yet the nascent exchanges developed some very powerful enemies.  Rockefeller and the oil producers believed that speculators who were short selling futures contracts were causing volatility and depressing the price of oil.  So Standard Oil and other members of the Producers’ Protective Association stopped buying or selling on the exchanges, choking off their liquidity.[34]  By the beginning of the twentieth century, the oil exchanges had collapsed.

As one contemporary described it, “the regulation of prices by the Standard has eliminated the speculation in certificates entirely.”[35]  For Rockefeller, it was not free markets, but rather firms acting together to avoid “ruinous competition” and prevent uncontrolled speculation, that stabilized prices and brought benefits to the consumer.  Futures markets for crude oil and refined products would not reappear for nearly a hundred years.

But Rockefeller’s view—that combination and control is preferable to competition and open markets—has been rejected in this country.  In 1890, in response to the prevalence of trusts in oil and other major industries, Congress passed the Sherman Antitrust Act, which prohibited contracts and combinations in restraint of trade.[36]  Soon after, President Theodore Roosevelt successfully brought suit under the Sherman Act to break up the Standard Oil Trust.  In a later antitrust case, the Supreme Court explained the rationale for the Act’s protection of competition:

[The Sherman Antitrust Act] rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conductive to the preservation of our democratic political and social institutions.  .  .  .  [T]he policy unequivocally laid down by the Act is competition.”[37]

It turned out that Rockefeller also was wrong about the value of the exchanges.  Suffocating the exchanges did not eliminate price volatility.  Boom and bust would continue to plague the oil industry throughout its existence.  But oil firms needed a way to manage this volatility.  Although it would take another 70 years before oil futures exchanges re-emerged, once trading began it did not take long for industry participants to see the utility of these risk-management tools and embrace these markets.        

Improving Competition in Financial and Energy Markets

Today, we recognize the value of competition and free markets.  Among the fundamental purposes of the Commodity Exchange Act, as well as the Dodd-Frank Act, is to foster robust and fair competition in the commodity and financial markets.  Although the Dodd-Frank Act has increased competition in certain markets, there are fewer competitors in several major derivative markets.  Fewer competitors leads to increasing concentration and less dispersion of risk throughout the system.  It also means fewer choices for commercial end users.  We must change this.

De Minimis Swap Dealing

Since joining the Commission, I have focused on promoting competition in our markets.

Last fall, the Commission unanimously voted to permanently set the swap dealer registration threshold at $8 billion.  Our data indicated that setting the threshold at a lower level of $3 billion—as contemplated in the original rule—would not materially increase the amount of swap activity covered by dealer regulation, but would result in fewer entities providing dealing services in amounts below $8 billion.[38]  Many of the smaller entities providing swap dealer services told us that they might stop dealing in swaps if they needed to register as dealers because their limited amount of dealing would not justify the cost of registration.[39]  That would likely leave many end users looking to hedge their risks with very few, if any, dealers to provide competitive pricing.  In other words, there would be less competition for swap dealing services for smaller end users.  I therefore voted to support keeping the swap dealer registration threshold at $8 billion.

Swap Trading Facilities

Last November, the Commission issued a proposal that would overhaul our regulations for swap execution facilities, or “SEFs” (“SEF Proposal”).[40]  I voted against the SEF Proposal.[41]

In my view, the proposed changes conflict with the principles of free and open competition that are embodied in the Commodity Exchange Act and the Dodd-Frank Act.  Among other defects, the SEF Proposal would eviscerate the requirement in the Dodd-Frank Act that SEFs establish rules that “provide market participants with impartial access to the market.”[42]  Authorizing discrimination based on the type of entity accessing a SEF will permit the largest bank dealers to trade exclusively with each other.  By denying other firms access to the lower prices in the interdealer market, bank dealers can prevent other traders from competing for customers.  This is inconsistent with one of the central purposes of the Commodity Exchange Act, which is to “promote . . . fair competition among boards of trade, other markets and market participants.”[43]  Permitting dealers to control the swaps marketplace will mean less favorable prices for commercial end users and other non-bank market participants.

The levels of dealer concentration in the swaps market are already very high.  The largest five dealing institutions are party to about 70% of all reported swap transactions and 80% of the notional amount traded.[44]  Our futures commission merchant data shows that five bank-owned futures commission merchants provide clearing for about 80% of cleared swaps.[45]  The SEF Proposal would lead to even higher levels of concentration, which would reduce competition and increase systemic risk.

I have urged the Commission to consider several other regulatory measures to foster competition and reduce concentration in swaps trading.  These measures include amending the floor trader provision in the swap dealer definition to permit proprietary traders who only trade swaps, and do not have customer relationships with counterparties, to register as floor traders rather than as swap dealers.

I also propose abolishing the practice of name give-up for standardized, cleared swaps.  Requiring non-dealers to disclose their identities— when this is not necessary to manage credit risk—has discouraged non-dealers from participating in exchange-style markets that currently serve only dealers.  Name give-up has contributed to the fragmentation of the swaps market into separate dealer-to-dealer and dealer-to-customer markets, to the detriment of end-users and overall market efficiency.

Finally, I believe the Commission should work with market participants and facilities to enable average pricing for swaps, which would encourage more participation by buy-side asset managers on SEFs.

The bottom line is that we need more diversity of participants in our swaps markets.  Commercial end users and other market participants should not have to go to Wall Street for their swaps services and should be able to access the most competitive prices.  Fixing floor trader registration, abolishing name give-up, and enabling average pricing are not new proposals, but they have languished for years. It is time for the Commission to act.

Clearing and Trading

At the EEMAC meeting last month, we also heard market participants talk about how the current and proposed capital requirements imposed on banks by the prudential regulators are affecting the ability of energy merchants, producers, and consumers to obtain clearing services and cost-effective swaps to hedge or mitigate their exposures.

Bank capital requirements are critical for financial stability and they reduce systemic risk.  But financial market regulation fosters other goals that also mitigate systemic risk, such as increasing the clearing of standardized derivatives and promoting competition in the derivative markets.  Regulators must ensure that their rules work together to support all of these goals.

Since the passage of Dodd-Frank, the CFTC and the prudential regulators have made great progress in consulting and coordinating with each other on financial regulatory issues.  We should continue to work together to ensure that we have strong capital requirements that do not discourage the provision of clearing and other vital risk-management services to end users.

Position Limits

Finally, turning to upcoming Commission rulemakings, our Chairman has indicated that he would like us to consider a position limits proposal by the end of the second quarter.   I look forward to addressing this important issue.

Although we do not yet have a proposal in front of us, I can tell you that I strongly support meaningful position limits to prevent excessive speculation in commodity markets.  The CFTC has a long history with speculative positions limits and the benefits of these limits are well-established.  Speculative position limits can help prevent corners, squeezes, and other forms of price manipulation.[46]

The Hunt brothers’ attempts to corner the silver market, the Ferruzzi squeeze of the soybean market, and the Amaranth hedge fund’s excessively large positions in the natural gas futures and swaps markets are clear examples of why position limits are needed to prevent price distortions that can result from excessive speculation.[47]  These price distortions ultimately harm the end-users and consumers of these vital commodities.

I am equally committed to crafting bona fide hedge exemptions that reflect the characteristics of the energy commodity markets.  The bona fide hedge exemptions in the current rules were based on the agricultural commodity markets.  We have received many comments on the prior proposals that the hedge exemptions in the new rules need to more effectively address how energy contracts are delivered, settled, and used to manage risk.  As the next position limits proposal moves forward, I will consider these comments and work to ensure that hedge exemptions are appropriately tailored to the characteristics of the energy markets.  I look forward to further comments you may have to help us craft effective hedge exemptions.

Conclusion

When I was here eleven years ago, I heard pessimism about the availability and cost of our energy resources, and cynicism about the fairness of our energy markets.  Today, we are optimistic about our future energy supplies.  And through new laws and regulations, we have bolstered the integrity of our energy markets.  Both the private and public sectors have come together to solve problems that once were considered intractable and debilitating.  Our progress should give us reason for confidence and optimism about the future of our energy industry and our markets.  I look forward to attending this conference in the year 2030 to marvel over the incredible things we will accomplish together over the next eleven years to further strengthen our energy industry and its markets.

 

[1] U.S. Energy Information Administration (“EIA”), Henry Hub Natural Gas Spot Price, available at https://www.eia.gov/dnav/ng/hist/rngwhhdD.htm.

[2] CFTC, Developments in the Natural Gas and Oil Markets, at 5 (Apr. 17, 2019), available at https://www.cftc.gov/system/files/2019/04/29/eemac041719_goodenow.pdf.

[3] Id.                                       

[4] EIA, The United States is now the largest global crude oil producer (Sept. 12, 2018), available at https://www.eia.gov/todayinenergy/detail.php?id=37053. 

[5] EIA, United States remains the world’s top producer of petroleum and natural gas hydrocarbons (May 21, 2018), available at https://www.eia.gov/todayinenergy/detail.php?id=36292. 

[6] Id.

[7] CFTC, Liquefied Natural Gas Developments and Market Impacts, at 4-5 (May 2018), available at https://www.cftc.gov/sites/default/files/2018-05/CFTC_LNG0518_1.pdf.

[8] EIA, U.S. liquefied natural gas exports quadrupled in 2017 (Mar. 27, 2018), available at https://www.eia.gov/todayinenergy/detail.php?id=35512.

[9] EIA, U.S. net natural gas exports in first half of 2018 were more than double the 2017 average (Oct. 1, 2018), available at https://www.eia.gov/todayinenergy/detail.php?id=37172.

[10] EIA, U.S. renewable electricity generation has doubled since 2008 (Mar. 19, 2019), available at https://www.eia.gov/todayinenergy/detail.php?id=38752.

[11] Risk.net, Energy transition: adapting to the unknown (Jun, 6, 2018), available at https://www.risk.net/comment/5667941/energy-transition-adapting-to-the-unknown.

[12] Int’l Renewable Energy Agency, A New World: The Geopolitics of the Energy Transformation, at 16 (Jan. 2019), available at http://geopoliticsofrenewables.org/Report.

[13] Jason Daley, Smithsonian.com, For the First Time, Green Power Tops Coal Industry in Energy Production in April (May 2, 2019), available at https://www.smithsonianmag.com/smart-news/green-power-estimated-produce-more-energy-coal-april-and-may-180972080/#xuGFXZWwcFjEmWXl.99.  Green energy is not at this time dominant over coal, which will likely generate more power during the summer months, but reliance on renewable sources of energy is only expected to increase.  Id.

[14] CFTC, Energy and Environmental Markets Advisory Committee Charter, available at https://www.cftc.gov/idc/groups/public/@newsroom/documents/file/charter021308.pdf.

[15] EIA, Drilling Productivity Report (Apr. 15, 2019), available at https://www.eia.gov/petroleum/drilling/#tabs-summary-2.

[16] In October 2018, ICE listed the Permian WTI Crude Oil futures contract, a physically settled contract that will be deliverable into the Magellan East Houston terminal.  See ICE, Permian West Texas Intermediate (WTI) Crude Oil Future, Product Specs, https://www.theice.com/products/69088330/Permian-West-Texas-Intermediate-WTI-Crude-Oil-Future.  In November 2018, CME listed the WTI Houston Crude Oil futures contact, offering physical delivery to the Enterprise Houston system.  See CME, WTI Houston Crude Oil Futures, https://www.cmegroup.com/trading/energy/light-sweet-crude-oil/wti-houston-crude-oil-futures.html.

[17] See, e.g., CME, Environmental Products, https://www.cmegroup.com/trading/energy/environmental.html; ICE, Environmental Futures & Options, https://www.theice.com/energy/environmental; see also ICE, CFTC Energy & Environmental Markets: Advisory Committee Meeting, at 4 (Apr. 17, 2019), available at https://www.cftc.gov/system/files/2019/04/29/eemac041719_jackson.pdf.

[18] CME Group, CME Energy Markets: CFTC Energy & Environmental Markets Advisory Committee, at 3 (Apr. 17, 2019), available at https://www.cftc.gov/system/files/2019/04/29/eemac041719_durkin.pdf.

[19] See ICE, JKM LNG (PLATTS) Future, Product Specs, https://www.theice.com/products/6753280/JKM-LNG-PLATTS-Future.

[20] Stephen Stapczynski and Dan Murtaugh, Bloomberg, The Future Is Now for LNG as Derivatives Trading Takes Off (Jan. 20, 2019), available at https://www.bloomberg.com/news/articles/2019-01-20/the-future-is-now-for-lng-as-derivatives-trading-takes-off.      

[21] Impact of U.S. Tight Oil on NYMEX WTI Futures: A Report by Staff of the Market Intelligence Branch, Division of Market Oversight, CFTC (Sept. 2018), available at https://www.cftc.gov/sites/default/files/2018-09/DMO_TightOilImpactNYMEX_WTI0818.pdf.

[22] Id. at 6, Ex. 1.

[23] Id. at 7, Ex. 2.

[24] Id. at 4, 7-8.

[25] Id. at 19.

[26] CFTC, Developments in the Natural Gas and Oil Markets, at 12, available at https://www.cftc.gov/system/files/2019/04/29/eemac041719_goodenow.pdf.

[27] G20, Leaders’ Statement: The Pittsburgh Summit (Sept. 24-25, 2009), available at https://www.treasury.gov/resource-center/international/g7-g20/Documents/pittsburgh_summit_leaders_statement_250909.pdf.

[28] Id.

[29] Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010).

[30] See CFTC, Provisionally Registered Swap Dealers (as of Apr, 11, 2019), https://www.cftc.gov/LawRegulation/DoddFrankAct/registerswapdealer.html; CFTC, Trading Organizations – Swap Execution Facilities (SEF), https://sirt.cftc.gov/SIRT/SIRT.aspx?Topic=SwapExecutionFacilities.

[31] ISDA, SwapsInfo Full Year 2018 and Fourth Quarter of 2018 Review, at 2-4 (Jan. 2019), https://www.isda.org/a/RNUME/SwapsInfo-Q1-2019-Review.pdf.

[32] Final Rule, De Minimis Exception to the Swap Dealer Definition (“De Minimis Adopting Release”), 83 FR 56666, 56683 (Nov. 13, 2018).

[33] Daniel Yergin, The Prize, at 33-34 (Simon & Schuster, 1990) (“By the time the Titusville Oil Exchange operated in 1871, oil was already on its way to becoming a very big business, one that would transform the everyday lives of millions.”); Wikipedia, New-York Mining Stock and National Petroleum Exchange, https://en.wikipedia.org/wiki/New-York_Mining_Stock_and_National_Petroleum_Exchange. 

[34]  U.S. Industrial Commission, Preliminary Report on Trusts and Industrial Combinations, Vol. I, at 449 (1900) (Testimony of P.C. Boyle).

[35] Id.

[36] 15 U.S.C. §§ 1-7.

[37] N. Pac. Ry. Co. v United States, 356 U.S. 1, 4 (1958).

[38] See De Minimis Adopting Release, 83 FR at 56674; see also Statement of Commissioner Dan M. Berkovitz, 83 FR 56666, 56691-93 (Nov. 13, 2018).

[39] See, e.g., De Minimis Adopting Release, 83 FR at 56671.

[40] Notice of Proposed Rulemaking, Swap Execution Facilities and Trade Execution Requirement, 83 FR 61946 (Nov. 30, 2018).

[41] See Dissenting Statement of Commissioner Dan M. Berkovitz, 83 FR 61946, 62144 (Nov. 30, 2018).

[42] 7 U.S.C. § 7b-3(f)(2)(B)(i).

[43] 7 U.S.C. § 5.

[44] CFTC staff analysis of swap data repository data.

[45] CFTC, Financial Data for FCMs, available at https://www.cftc.gov/MarketReports/financialfcmdata/index.htm.

[46] Notice of Proposed Rulemaking, Position Limits for Derivatives, 81 FR 96704, 96707 (Dec. 30, 2016).

[47] See Stephen Fay, Beyond Greed (The Viking  Press, 1982) (Hunt brothers); Craig Pirrong, Detecting Manipulation in Futures Markets:  The Ferruzzi Soybeans Episode, American Law and Economics Review, Volume 6, Issue 1, March 2004; Staff Report of the United States Senate Permanent Subcommittee on Investigations, Excessive Speculation in the Natural Gas Market, June 2007.