[Federal Register Volume 68, Number 210 (Thursday, October 30, 2003)]
[Notices]
[Page 61807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E3-00135]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. AD03-7-002]


Natural Gas Price Formation; Supplemental Notice of Staff 
Workshop on Market Activity and Price Indicators

October 23, 2003.
    As announced in the Notice issued October 15, 2003, the 
Commission's staff will hold a workshop from 10 a.m. to 5 p.m. on 
Tuesday,November 4, 2003, at the Federal Energy Regulatory Commission, 
888 First Street, NE., Washington, DC 20426. This supplemental notice 
discusses the nature of the issues to be discussed at the workshop and 
provides information on how to participate by teleconference.

Issues for Discussion at Workshop

    In its Policy Statement on Natural Gas and Electric Price Indices, 
Docket No. PL03-3-000, the Commission stated that price indices used in 
natural gas pipeline tariffs must ``reflect adequate liquidity.'' The 
purpose of the workshop is to discuss how the Commission should weigh 
market activity and the reliability of natural gas and electric price 
indicators for use in Commission tariffs. The following highlights some 
of the issues to be discussed at the workshop.
    Many factors need to be considered in determining whether a market 
is liquid. A market is generally more liquid the less time it takes to 
complete a transaction and the lower the cost of making the 
transaction. In addition, a market is considered more liquid the 
smaller the price effect of any particular transaction. The empirical 
determination of liquidity is difficult, given the information and 
measures available.
    Measures commonly used to assess the liquidity of a market include: 
the bid-ask spread, the price effect of a change in volatility in the 
market, the price effect of large-volume trades, the number of trades, 
the time between trades, the time it takes to sell an asset, and 
others. However, some of the information necessary for using many of 
these measures is not always readily available, not public, or not 
recorded. In sum, it can prove quite difficult to develop practicable 
measures of the degree to which a particular market is liquid. In place 
of more direct measures of liquidity, natural gas and electric markets 
have begun to use measures of market size and activity.
    Following is a list of questions that give a sense of what the 
workshop discussion should address:
    1. How do market participants define and measure liquidity?
    2. What data are and are not available to measure liquidity?
    3. What is the relationship between the level of activity in a 
market and its liquidity?
    4. How should the Commission decide if a particular market (or 
index point) sustains sufficient activity?
    5. How can and should minimum levels of market activity required to 
support a reliable index be measured?
    6. What level of liquidity/reliability is necessary for use in 
jurisdictional tariffs?
    7. How should the liquidity of a pricing point that is very active 
on average but has very little activity on occasion be evaluated?
    8. Is there a difference between the liquidity of daily and monthly 
indices?
    9. Can the liquidity of a pricing point be demonstrated by 
aggregating transactions that take place on multiple transaction 
facilities?
    10. Can liquid points be used to price illiquid ones?

Access by Teleconference

    The workshop is open to the public, and we would like to hear from 
as many as possible on these important price formation issues. For 
those unable to attend in person, teleconferencing will be available 
during the workshop.
    Toll-free dial-in number: 1-888-809-8967.
    Leader's name: Jolanka Fisher.
    Pass code: Fisher.
    For additional information please contact Jolanka Fisher, 202-502-
8863 or by e-mail at [email protected].

Magalie R. Salas,
Secretary.
 [FR Doc. E3-00135 Filed 10-29-03; 8:45 am]
BILLING CODE 6717-01-P