SINGAPORE (Reuters) - Oil price agency Platts' move to temporarily bar Lehman Brothers from its trading window has highlighted its delicate dual role as the de facto regulator of the world's physical energy markets.
Platts, whose physical price assessments are the cornerstone for most of the world's energy markets, has put Lehman "under review", which means it will not take the Wall Street bank's bids, offers or deals into account when it assesses end-of-day cash market prices, industry sources told Reuters on Monday.
Such reviews, which are not uncommon, are normally reserved for companies that breach Platts' rules of engagement during its daily half-hour trading "window", failing to deliver on a contract, for instance. But market sources said they saw nothing to suggest that this was the case for Lehman Brothers.
Instead, they said, it appeared that Platts was acting in response to counterparty concerns about the No. 4 Wall Street bank's credit condition after multibillion-dollar write-downs and ongoing fears about the fall-out of the subprime debacle.
But for some, Platts' action itself was as great a concern.
"It's a bit worrying," said Gerard Rigby, a former Singapore-based oil trader who now runs Fuel First Consultancy in Sydney.
"Are they (Platts) a reporting agency or a pricing platform? They can determine who can trade on their own system. This is unusually powerful," he added.
Platts is owned by McGraw Hill, which owns Standard & Poor's who states that they "are a global leader in credit ratings and credit risk analysis."
Maybe it isn't such an unreasonable move.
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