U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 

Division of 

Market Oversight 

Ms. Dee Blake 

Director of Regulation 

ICE Futures Europe 

International House 

1 St. Katherine's Way 

LondonE1W 1UY, UK 

1155 21st Street, NW, Washington, DC 20581 

Telephone: (202) 418-5260 

Facsimile: (202} 418-5527 

.June 17, 2008 

Re: Amendment to No-Action Letter Issued to the International Petroleum Exchange 

of London (now ICE Futures Europe) 

Dear Ms. Blake: 

On November 12, 1999, the Division ofTrading and Markets of the Commodity Futures 

Trading Commission (Commission or CFTC) granted to the International Petroleum Exchange 

of London (IPE) permission to make its electronic trading and order matching system, known as 

Energy Trading System II (ETS), available to IPE members in the United States. 1 Specifically, 

the Division of Trading and Markets stated that it will not recommend that the Commission 

institute enforcement action against IPE or its members solely based upon IPE's failure to obtain 

contract market designation under Sections 5 and 5a ofthe Commodity Exchange Act (Act),2 if: 

(1) IPE members trade for their proprietary accounts through ETS in the United States; (2) IPE 

members who are registered with the Commission as futures commission merchants (FCM) or 

who are exempt from such registration pursuant to Rule 30.10 (Rule 30.10 Firms) submit orders 

from United States customers for submission to ETS; and/or (3) IPE members who are registered 

with the Commission as FCMs or who are Rule 30.10 Firms accept orders through United States 

automated order routing systems from United States customers for submission to ETS.3 The 

November 12, 1999 IPE no-action letter was amended by the Division four times between July 

26, 2002 and April 14, 2003 as trading of the contracts was transitioned from the ETS to the ICE 

Platform operated by IntercontinentalExchange, Inc., in Atlanta, Georgia and trading hours were 

1 Letter from John C. Lawton, Acting Director, Division of Trading and Markets, to Arthur W. Hahn, Esq., Katten 

Muchin & Zavis, dated November 12, 1999. 

2 The November 12, 1999 letter referred only to contract market designation because at that time there was no 

provision in the Act or rules thereunder governing a derivatives transaction execution facility. 

3 The Division of Market Oversight (Division) assumed responsibility for foreign terminal no-action letters in a 

reorganization of Commission functions following enactment of the Commodity Futures Modernization Act of 

2000. 
Ms. Dee Blake 

Page 2 of4 

extended (the November 12, 1999 Letter, together with its amendments, being hereinafter 

referred to as the "Prior No-Action Letters"). 

On January 17, 2006, ICE Futures Europe notified the Division of its intent to launch a 

West Texas Intermediate Light Sweet Crude Oil Futures Contract (WTI Contract) on February 3, 

2006 that cash-settled on the price of a physically-settled Light Sweet Crude Oil Futures contract 

traded on the New York Mercantile Exchange (NYMEX), a U.S. designated contract market 

(DCM). The notification was provided pursuant to the Commission's Statement ofPolicy4 

regarding the listing of new futures and option contracts by foreign exchanges that are operating 

electronic trading devices in the U.S. pursuant to a foreign terminal no-action letter. Subsequent 

to that notification, the Commission and the UK Financial Services Authority (FSA), ICE 

Futures Europe's regulatory authority, entered into a memorandum of understanding to share 

information with the goal of providing information to help to detect and deter any attempts to 

manipulate the market. On April12, 2006, ICE Futures Europe notified the Division of its intent 

to launch the ICE Futures New York Harbour Heating Oil Futures Contract and the ICE Futures 

New York Harbour Unleaded Gasoline Blendstock (RBOB) Futures Contract on April21, 2006, 

each of which is cash-settled on the price of physically-settled contracts traded on the NYMEX. 

A foreign board of trade listing for trading a contract which settles on the price of a 

contract traded on a CFTC-regulated exchange raises very serious concerns for the Commission. 

Such linkages can create a single market for the subject contracts consisting of both the 

underlying contract at the CFTC-regulated exchange and the cash-settled "look-alike" contract 

traded on the foreign board of trade. In the absence of certain preventive measures at the foreign 

board of trade, this circumstance could compromise the Commission's ability to carry out its 

market surveillance responsibilities, as well as the integrity of prices established on CFTCregulated exchanges. As you are also aware, and as stated in the IPE November 12, 1999 noaction letter, "the Division retains the authority to condition further, modify, suspend, terminate, 

or otherwise restrict the terms of the no-action relief provided herein, in its discretion." 

Accordingly, the Division is amending ICE Futures Europe's no-action relief as 

described in the Prior No Action Letters by adding certain conditions with respect to _any ICE 

Futures Europe contract which settles against any price, including the daily or final settlement 

price, of (1) a contract listed for trading on a DCM or derivatives transaction execution facility 

(DTEF), or (2) a contract listed for trading on an exempt commercial market (ECM) that has 

been determined to be a significant price discovery contract (collectively, "IFE Linked 

Contracts"). The purpose of these conditions is to ensure that ICE Futures Europe applies to any 

IFE Linked Contract comparable principles or requirements regarding the daily publication of 

trading information and the imposition of position limits or accountability levels for speculators 

4 Notice of Statement of Commission Policy Regarding the Listing of New Futures and Option Contracts by 

Foreign Boards of Trade that Have Received Staff No-Action Relief to Place Electronic Trading Devices in the 

United States 65 Fed. Reg. 41641 (July 6, 2000). That Statement ofpolicy was rescinded and replaced by the 

Commission's Notice ofRevision of Commission Policy Regarding the Listing ofNew Futures and Option 

Contracts by Foreign Boards of Trade that have Received Staff No-Action Relief to Provide Direct Access to their 

Automated Trading Systems from Locations in the United States. 71 Fed. Reg. 19877 (Aprill8, 2006); corrected at 

71 Fed. Reg. 21003 (April24, 2006). 
Ms. Dee Blake 

Page 3 of4 

as apply to the DCM, DTEF or ECM contract against which the IFE Linked Contract settles. 

The conditions will also ensure that ICE Futures Europe provides the Commission with 

information regarding the extent of speculative and nonspeculative trading in IFE Linked 

Contracts that is comparable to the information provided to the Commission by DCMs, DTEFs 

or ECMs for publication ofthe Commitments of Traders Reports. 

Those conditions are: 

1. ICE Futures Europe will impose on IFE Linked Contracts, by rule or otherwise, 

position limits or position accountability levels (including related hedge 

exemption provisions) that are comparable to the existing position limits or 

position accountability levels (including related hedge exemption provisions) as 

adopted by: (i) the DCM, DTEF or ECM for the contract against which the IFE 

Linked Contract settles or (ii) the DCM, DTEF or ECM for a financially-settled 

equivalent of such contract; 

2. ICE Futures Europe will inform the Commission in a quarterly report of any 

member that had positions in an IFE Linked Contract above the applicable ICE 

Futures Europe position limit, whether a hedge exemption was granted, and if not, 

whether a disciplinary action was taken; 

3. ICE Futures Europe will publish daily trading information (e.g., settlement prices, 

volume, open interest, and opening and closing ranges) that is comparable to the 

daily trading information published by the DCM, DTEF or ECM for the contract 

against which the ICE Futures Europe contract settles; and 

4. ICE Futures Europe will provide to the CFTC, through the FSA, a daily report of 

large trader positions in each IFE Linked Contract for all contract months in a 

form and manner that: 

• can be fully integrated into the CFTC's market surveillance systems, 

including full identification of each position's beneficial owner 

comparable to the reporting that is provided by the DCM, DTEF, or ECM; 

• can, subject to the Memorandum of Understanding between the CFTC and 

FSA, be fully integrated into the CFTC's Commitments of Traders Report, 

including appropriate categorization of traders and their positions. 

The Commission recognizes the need for ICE Futures Europe to adopt rules and 

implement system changes to implement the foregoing, and to take such actions in consultation 

with the FSA; in addition, the Commission understands that future rule and system changes are 

subject to approval by the FSA. Subject to ICE Futures Europe's satisfaction of these conditions 

within 120 days of the date of this letter and continuing to satisfy the other terms and conditions 

included in the Prior No-Action Letters, the Division hereby confirms that it will not recommend 

that the Commission institute enforcement action against ICE Futures Europe or its members 

solely based upon ICE Futures Europe's failure to seek contract market designation or 

registration as a DTEF under Sections 5 and Sa of the Act. The Division's no-action position 

does not extend to any other provision of the Act, any other Commission regulations or orders, or 
Ms. Dee Blake 

Page 4 of4 

to any registered futures association rules and does not excuse ICE Futures Europe or its 

members from compliance with any applicable requirements thereunder. 

The no-action position taken herein is taken by the Division only and does not necessarily 

reflect the views of the Commission or any other unit or member of the Commission's staff. 

Finally, as with all no-action letters, the Division retains the authority to condition further, 

modify, suspend, terminate, or otherwise restrict the terms of the no-action relief provided 

herein, in its discretion. 

If you have any questions regarding this correspondence, please contact David Van 

Wagner, Chief Counsel, at (202) 418-5481, or Duane C. Andresen, Senior Special Counsel, at 

(202) 4"18-5492. 

Very truly yours, 

Richard A. Shilts, Director