In its recent plans to centralize and increase oversight of derivative energy trading, the Commodity Futures Trading Commission began workshop-like meetings for information gathering September 16. Regulators\u2019 idea is to rein in possible manipulation from a cap-and-trade market in greenhouse gases. \u201cThe top seven energy contracts are worth over $700 billion in the futures market,\u201d noted CFTC chair Gary Gensler of the magnitude of energy trading in the economy. \u201cWe are working with Congress to ensure that the \u2018trade\u2019 part of cap-and-trade legislation is effectively regulated,\u201d he added in addressing the CFTC\u2019s Energy & Environmental Markets Advisory Committee. Financial traders are against the plan to consolidate trades into one market regulated by the CFTC. They say it will increase the cost of energy. The new trading regime would call for more collateral to be posted for trades, said Skip Horvath, president, Natural Gas Supply Association. \u201cDon\u2019t force consumers to [underwrite] energy prices,\u201d he said. Traders, however, may \u201cengage in disruptive or manipulative activity,\u201d said Stephen Sherrod, CFTC action director, market surveillance. A process that came up a couple times in the hearing spotlighted what is called \u201cbanging the close.\u201d That is when traders wait until the last minute of closing markets to transfer positions and then at close they take the settlement price. The move by the commission is causing ripples in Washington\u2019s and New York\u2019s financial bureaucracy. The Federal Reserve is reportedly skeptical of the CFTC\u2019s centralization plans. The New York Mercantile Exchange\u2019s parent company issued a white paper September 16 maintaining it should retain the power of regulation and setting trading position limits on the amount of trading \u201cposition.\u201d Meanwhile, the IntercontinentalExchange supports CFTC\u2019s energy trade regulation. In related news, crossing the Beltway with California grid operations is the California Independent System Operator\u2019s plan for \u201cvirtual\u201d or \u201cconvergence\u201d bidding. The CFTC is expected to treat this trading option as something it should regulate as a derivative. California Public Utilities Commission counsel Elizabeth Dorman urged a slowdown September 11 to the CAISO board in approaching this particular trade. Dorman said it would \u201cleave ratepayers holding the bag.\u201d Convergence bidding allows sales and buys in the grid operator\u2019s day-ahead market--with the caveat that bidders have to buy or sell back in the real time market. The idea is to reduce the bets that the real time markets could offer better prices once the energy is scheduled in the day-ahead market, moving more electricity into the more-predictable day-ahead market. The Federal Energy Regulatory Commission required California\u2019s grid operator to implement convergence bidding as a part of its approval of CAISO\u2019s massive market redesign.