Energy Trading Compliance

The energy trading landscape is undergoing a major redesign: enhanced authority by federal regulators; OTC derivatives reform; migration of many OTC contracts to regulated exchanges; and strong emphasis on centralized clearing. These are only some of the factors that will have a lasting effect on all market participants, no matter the size, corporate structure, or underlying business activity.

Kolobara Law Firm dedicates a large part of our practice to assisting our clients with their energy trading compliance needs. Our mission is to assist market participants with identifying and managing the evolving changes in energy markets. A comprehensive compliance program often starts with trading/risk management policies and procedures.

Kolobara Law Firm drafts trading or risk management policies and procedures with a particular emphasis on creating and maintaining a culture of compliance both internally and externally. Critical topics of the policies and procedures include: anti-manipulation rules and prohibited trading strategies, price reporting rules, generation and capacity rules, shipper-must-have rules, exchange position limit rules, large trader reporting requirements, and bona fide hedge definition. We assist our clients with the operational implementation of the policies and procedures, and we help structure management’s accountability with respect to the compliance of trading and exposure management activities in accordance with the policies and procedures.

Consistent with the best industry practices, Kolobara Law Firm helps market participants ensure that they have a clear segregation of duties on the trade floor. A comprehensive plan will also include a clearly defined appetite for risk, from a corporate viewpoint, including the exposure and position limits, stop loss limits, approved trading strategies and products, and geographic markets.

Additionally, we help our clients establish a clearly outlined sequence of events for entering into trades, including any prior review and approval by various groups—credit, risk, tax, or legal—verifying and confirming the trades, and following up with any further steps such as option exercise notifications, and calculation period resets for rate swaps.

In order to create and maintain a culture of compliance, Kolobara Law Firm helps market participants ensure that they have sufficient documentation to achieve consistent and adequate legal and contractual protections across their portfolios. We also assist our clients with identifying and implementing mandatory training requirements for all trading personnel, to be certain that the most current and appropriate regulatory requirements are timely communicated to everyone involved in the trading/risk management activities.