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 a speech 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.

Recently the FERC chairman has raised some concerns 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.

Already the CFTC 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. "Should Congress seek to regulate cash markets for emission instruments, the commission is well-suited to carry out that function."

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