Recent extreme energy price highs and volatility have brought worldwide attention to the regulation of commodity markets in the context of the broader global financial overhaul.As part of the DoddFrank Act,the U.S.government now mandates centralized clearing and margin and capital requirements.But commodity markets are globally integrated and international policy coordination is required for effective market regulation.Improved regulation and supervision of commodity markets has been highlighted in the G20 agenda.Essential details of the new global regulatory landscape still need to be fleshed out,particularly in five major areas:physical transparency;financial transparency;centralized clearing and standardized contracts;capital and margin requirements;and position limits.This paper presents energy policy options that achieve market efficiency by preventing market manipulation,manage systemic risk,and control excessive volatility.
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