Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The Board of Governors of the Federal Reserve System (Board) has extended the date – until April 16, 2014 – to comment on whether additional restrictions should be imposed on the physical commodities activities of financial holding companies.

On January 16, 2014, the Board issued for comment an advanced notice of proposed rulemaking, a precursor to a more formal rulemaking process, on whether to impose such additional restrictions to ensure “that physical commodities activities of financial holding companies are conducted in a safe and sound manner and do not pose a threat to financial stability” (read Board’s news release). Because additional restrictions on financial holding companies could reduce liquidity in FERC wholesale gas and electric markets, energy market participants have urged caution in making such changes. For example, the Electric Power Supply Association, representing competitive wholesale generators, recently recommended, “carefully analyz[ing] the impact of any potential changes as to bank activities in commodities markets on sectors such as competitive wholesale power. Competitive power suppliers rely on hedging strategies to manage and mitigate the price risk and volatility associated with fuel procurement and power output. Competitive suppliers require robust commodity markets that provide access to a variety of credit-worthy counterparties, including banks, that can reliably make markets, provide risk-management services, extend credit, and engage in other activities that support commodity trading.” EPSA on Bank Role in Commodity Markets for Energy End-Users, January 14, 2014, available at

The original comment date was March 15, 2014. But the Board extended the comment period for 30 days, until April 16, saying, “[d]ue to the range and complexity of the issues addressed in the advance notice of proposed rulemaking, the Board has determined that an extension of the public comment period until April 16, 2014, is appropriate. This action will allow interested persons additional time to analyze the notice and prepare their comments.”