U.S. CFTC tightens oversight of ICE

WASHINGTON (Reuters) - Top regulators in London and Washington moved on Thursday to tighten oversight of global oil trading, a market criticized as prone to excessive speculation and wild price swings.

Under fire from the U.S. lawmakers, the Commodity Futures Trading Commission announced a series of steps including a new audit trail to gain a better view of energy trading on the IntercontinentalExchange Inc's (ICE.N) London exchange.

The CFTC said it was revising its no action letter with ICE Futures Europe to require the exchange to provide trade execution and an audit trail.

Under the modified agreement, the exchange would also have to provide CFTC staff on-site visits and give the CFTC copies of disciplinary notices on certain contracts.

"The CFTC must ensure that U.S. commodity markets operate fairly and efficiently and are free from fraud, manipulation and other market abuses," CFTC chairman Gary Gensler said in a statement.

"Today's action further ensures that the CFTC has the tools necessary to carry out its surveillance and enforcement mission while promoting market integrity in the energy markets," he added.

The new provisions would apply to all ICE Futures Europe contracts currently linked to CFTC-regulated exchange contracts and those listed in the future.

Analysts welcomed the news, with many saying it might not immediately affect trading.

"This will bring a little more transparency to the system, which is always welcome," said Barclays Capital Analyst Amrita Sen.

Added Peter Beutel, President Cameron Hanover: "This seems like intelligent stuff, this market was not designed to have one or two players to enter the poker game and bluff everyone else out."

Lawmakers have complained repeatedly that the lack of oversight on the ICE exchange allows oil traders to dodge U.S. rules causing volatile oil price swings.

Oil, which soared to a record above $147 a barrel last July, was at $72.20 a barrel on Thursday, off 22 cents.

The U.S. benchmark West Texas Intermediate crude oil contract trades on ICE, although the volumes are relatively small compared with trade on the New York Mercantile Exchange, which is owned by the CME Group Inc (CME.O).

In addition to the revised letter, the CFTC also said it has reached an agreement with its British counterpart, the Financial Services Authority, to increase information sharing and cooperation in surveillance of oil markets.

The two regulators said they will work together to enhance direct access rights to trade execution data and to implement a framework to consider the coordination of taking emergency action.

"We welcome the CFTC-FSA statement and will continue to work closely with regulators around the world to ensure the effective operation of global oil markets," said David Peniket, president of ICE Futures Europe.

This agreement follows a deal reached last year between the CFTC and FSA with ICE to place more limits on trading of the U.S. benchmark WTI contract on the London exchange.

(Reporting by Ayesha Rascoe; Editing by Lisa Shumaker and Russell Blinch)