The head of the U.S. Commodity Futures Trading Commission on Tuesday again made a pitch for granting his agency authority to oversee the nascent carbon markets if Congress enacts new climate change legislation.

"As Congress moves forward, I believe it should fully regulate the expanded carbon markets--including the futures market, the [over the counter] market and the cash market--without exception," CFTC Chairman Gary Gensler said in prepared remarks before the Natural Gas Roundtable.

"While other regulators would be in charge of the 'cap' part of 'cap-and-trade,' the CFTC has broad experience regulating the 'trade' part of existing emissions markets. To get the most benefit from a cap-and-trade program, it is essential that the trading markets are fair and orderly and that the price discovery process instills confidence," he added.

The move by the CFTC to regulate a portion of the carbon market raises some jurisdictional questions because the Federal Energy Regulatory Commission, or FERC, has traditionally policed for manipulation in the spot markets. Gensler has said the spot contracts should fall to the CFTC if they are trading in a centralized market.

Recently the FERC chairman has raised some concerns in an interview with Dow Jones Newswires about the CFTC's decision to look into various electricity and natural gas contracts traded on electronic energy platforms as part of the CFTC's new authority in the 2008 farm bill to expand its reach beyond the traditional futures exchanges.

Gensler said he was unaware of the FERC chairman's comments, adding that both agencies have met at the staff and chairmen levels to discuss a range of topics.

"I think we have a very good relationship with other regulators," he said.

The CFTC had already angled to get a slice of the carbon market earlier this year after it said it was scrutinizing the Chicago Climate Exchange's carbon spot contract for potential heightened regulations as part of that new authority. The CFTC has not yet ruled on whether it may start regulating the carbon spot contact, but IntercontinentalExchange Inc. (ICE) has raised objections, saying the CFTC may exceed its jurisdiction.

The CFTC currently oversees the trading and clearing of futures and options contracts in the emissions allowance markets for things like sulfur dioxide.

If Congress votes to create a cap-and-trade program for greenhouse gases, the move is likely to create a large new derivatives market for carbon.

"The commission has abundant experience in the regulation of centralized marketplaces," Gensler said in his prepared remarks. "Should Congress seek to regulate cash markets for emission instruments, the commission is well-suited to carry out that function."

Although the CFTC will need to wait for Congress to act in order to carry out some of its regulatory initiatives, Gensler has said he plans to press forward on areas where the agency already has authority.

That includes the likelihood that the CFTC will move to impose new buying limits on energy futures products traded by speculators - a move Gensler says would limit concentration in the markets by big players.

One CFTC commissioner, Democrat Bart Chilton, has said he would support imposing high limits at first and then ratcheting them down if problems with excessive speculation arise. Gensler declined to say if he supports this view, telling audience members to "stay tuned."

-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; sarah.lynch@dowjones.com