Banks ask FERC to exclude hedging from stockholding limit

Two large U.S. banks that want to trade wholesale power requested that FERC exclude some hedging activities from an agency utility stockholding limit.

FERC raised the utility-ownership limit in June on Swiss-based UBS AG and Bank of America Corp. to five percent from one percent as a condition for approving the companies to trade wholesale power.

The two banks asked FERC in late August to exempt from the five percent calculation utility stocks and bonds held for hedging purposes, as long as the holdings are consistent with existing bank regulatory rules.

Bank of America and UBS contended that the original one percent limits would make it nearly impossible for them to enter U.S. power trading.

UBS last year bought bankrupt Enron Corp.’s online energy trading platform.

Investment banks Morgan Stanley and Goldman Sachs are already active in the U.S. wholesale electricity trading market. FERC has also approved German-based Deutsche Bank’s entry to the market.

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