Top regulatory trends for 2016 in Energy

Regulation is nothing new to the energy industry, but in 2016, scrutiny is on the rise. The Federal Energy Regulatory Commission (FERC) is taking a heightened interest in market manipulation and questionable hedging practices, and the US Commodity Futures Trading Commission (CFTC) is taking an assertive stance toward the recent addition of some 2,000 energy companies to its own oversight mandate.

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NFA reps say examinations vary, and cooperation is part of the answer

NFA reps say examinations vary, and cooperation is part of the answerPosted by Mike Prokop, Director, Deloitte & Touche LLP

On October 2, 2014, two representatives of the National Futures Association (NFA) — an independent self-regulatory organization for the futures industry — co-led a discussion on that body’s examination approach as part of Deloitte’s Dodd-Frank Compliance Leadership Academy.

Dale Spoljaric, managing director of NFA’s Compliance section, and Michael Brosius, director in NFA’s OTC Derivatives section, pointed out that the NFA has substantial authority. In addition to communicating information about violations to the CFTC, it can also bar an NFA member from doing business with other member firms, discipline members that violate its rules, and facilitate arbitrations between its members. In conducting examinations, the NFA can look at any activity covered by CFTC regulations.

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On SDR reconciliation, energy companies find reasons to exceed requirements

On SDR reconciliation, energy companies find reasons to exceed requirementsPosted by Mike Prokop, Director, Deloitte & Touche LLP

At a panel discussion I recently facilitated on swap data repository (SDR) reconciliation, fewer than half the energy industry attendees said they have a solution in place for that function. Still, at least one participant said reconciling data in the SDR is a good idea because it enhances end-users’ understanding of the information being reported and serves as an internal risk mitigation measure. Our October 3, 2014 discussion was part of Deloitte’s Dodd-Frank Compliance Leadership Academy.

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Energy companies eye compliance monitoring; panel advises close ties with business

Energy companies eye compliance monitoring; panel advises close ties with businessPosted by Paul Campbell, Principal, Deloitte & Touche LLP and Ron Chovanec, Specialist Leader

Trade surveillance is a rising concern in the energy industry, and regulators have an increasing expectation that companies in the industry will have trade monitoring solutions in place. At Deloitte’s Dodd-Frank Compliance Leadership Academy on October 2, 2014 we joined a group of industry representatives in a panel discussing where trends are headed.

Establishing a trade monitoring and surveillance program isn’t just to avoid regulatory scrutiny. Internally, it can also make the gathering, review, and presentation of trade data a lot easier. But there are challenges involved. When you gather more data, regulators may ask for more data. Compliance teams will need to partner with people on the operational side to review what they learn. Management buy-in, budget, and other resources can stand between the blueprint and the reality. And while a monitoring system may be simple in concept, applying it across multiple divisions can be less simple, especially in a global organization.

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In compliance data, quality rivals quantity

Energy companies eye compliance monitoring; panel advises close ties with businessPosted by Paul Campbell, Principal, Deloitte & Touche LLP and Howard Friedman, Director, Deloitte & Touche LLP

“Our best metric is still a gut feel.” That’s how one panelist summed up his company’s approach to making sure its compliance program provides the most useful feedback.

That comment was part of a panel discussion on compliance data benchmarks we facilitated on October 2, 2014 as part of Deloitte’s Dodd-Frank Compliance Leadership Academy. The participants were eager to get in front of compliance trends so they could apply the indicators today they’ll need to report on tomorrow. And while many of those indicators arise directly from the compliance function, we found it’s just as important to keep abreast of operations-related data, such as the management of physical assets.

But first, back to that “gut feel.” One theme that ran through our discussion was the need to take a broad view of what constitutes useful compliance data.

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CFTC commodity market moves take commercial end-users into account

CFTC commodity market moves take commercial end-users into account

Commissioners are not only signaling greater cooperation with the congressional intent of Dodd-Frank; they’re also cooperating with one another and with industry to get things done. Part of the collaborative mindset owes to the way new CFTC Chairman, Timothy Massad, has guided the business of the commission as he also works on the international scene to seek agreement on challenges involving OTC derivatives and the location of clearinghouses. The new era of cooperation could signify a big plus for the markets, in that it can help eliminate lingering questions and move regulatory matters in a direction that’s sensitive to the needs and the burdens of industry. And as the CFTC extends its cooperative approach directly toward industry, opportunities open up for more organizations to engage in discussions directly with commissioners. Of particular note are two recent proposals that the commission has addressed with a sympathetic ear toward commercial end-users in commodity markets.

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