Correspondence: Ian Cuillerier, White & Case LLP, 1155 Avenue of the Americas, New York, NY 10036-2787, USA. Tel: 212 819 8713; Fax: 212 345 8113; E-mails: ian.cuillerier@whitecase.com, www.whitecase.com

¹Ian Cuillerier is a partner in the New York office of White & Case LLP and a member of the firm's Structured Finance and Derivatives practice. He has extensive experience in representing investment and commercial banks, corporations and hedge funds in derivative transactions and structured investments. He also has extensive experience in representing issuers, investors and lenders in US and cross-border debt and equity financings. He advises users in a number of commodity derivatives, rate derivatives, fixed income and equity derivative transactions.

²Katrina Fleitas is an associate in the New York office of Hunton & Williams LLP. Her practice focuses on corporate representation with emphasis on Derivatives and Asset Securitisation and has counseled parties in hedging and risk management structures involving derivatives.

Abstract

The 'Commodity Futures Trading Commission' (CFTC) has changed Amaranth Advisors, LLC ('Amaranth') and its former head trader with manipulation of the natural gas futures market. On the same set of facts, the 'Federal Energy Regulatory Commission' (FERC) has issued an order to show causes asserting that Amaranth intentionally manipulated the price of natural gas futures contacts. One issue at the centre of these proceedings is whether the FERC has the authority to issue the order to show cause on the facts present in the Amaranth case or whether it has overstepped its authority. This paper will provide a brief overview of the natural gas markets and explain the relationship between the physical gas market and the futures gas market. The scope of the CFTC's jurisdiction and the FERC's jurisdiction over the natural gas market is addressed as well as whether the FERC should have jurisdiction over Amaranth and its traders who were trading exclusively on the futures market.