The U.S. Commodity Futures Trading Commission announced Thursday it plans to impose additional regulatory oversight on ICE Futures Europe in exchange for allowing it to continue offering traders access to its electronic trading terminals in the U.S.

The new conditions are designed to help the agency better oversee contracts that ICE offers which are linked to the prices of futures contracts traded on the New York Mercantile Exchange.

Under the new arrangement, IntercontinentalExchange Inc.'s (ICE) ICE Futures Europe must provide the CFTC with audit trail data for all contracts it offers that are tied to U.S. contracts.

It also must grant CFTC staff access to the exchange through on-site visits to ensure compliance and provide staff with other things including advanced copies of all rules and disciplinary notices.

Additionally, if the CFTC takes emergency action to suspend trading on a Nymex contract, ICE Futures Europe must also take emergency action if it offers a similar look-alike contract.

CFTC Chairman Gary Gensler also said Thursday in a related announcement that he has ironed out a deal with the U.K.'s Financial Services Authority to enhance cross-border surveillance of the oil markets. The FSA is the primary regulator for ICE Futures Europe, which is in London.

"The CFTC must ensure that U.S. commodity markets operate fairly and efficiently and are free from fraud, manipulation and other market abuses," CFTC Chairman Gary Gensler said. "Today's action further ensures that the CFTC has the tools necessary to carry out its surveillance and enforcement mission while promoting market integrity in the energy markets."

The CFTC's arrangements with ICE Futures Europe in the past have been heavily criticized by U.S. lawmakers like Sen. Maria Cantwell, D-Wash. Cantwell asked Gensler several months ago to revoke ICE Futures Europe's permission to offer trading terminals in the U.S. amid fears the CFTC was relying too heavily on European regulators to oversee the look-alike contracts.

ICE Futures Europe, which has been providing data about its U.S.-linked contracts to the CFTC now since 2006, reacted positively to the latest regulatory changes.

"We welcome the CFTC-FSA statement and will continue to work closely with regulators around the world to ensure the effective operation of global oil markets," said David Peniket, the president and chief operating officer of ICE Futures Europe.

"ICE Futures Europe has a 30-year track record as a regulated futures exchange performing rigorous surveillance, regulatory and compliance functions. We will continue to work with the FSA and CFTC to ensure full compliance with all terms," he added.

For years now, the CFTC has allowed ICE Futures Europe to offer U.S. traders access to its electronic terminals. The arrangement was granted to ICE in the form of a "no-action letter," which considers ICE Futures Europe to be a foreign board of trade. No-action letters are granted by CFTC staff and allow firms who request them to get around certain regulations without fear of enforcement action. But the agreement came under fire in 2006 after ICE Futures Europe began offering several futures and options contracts that were cash-settled based on the prices of several U.S. contracts, such as Nymex's West Texas Intermediate crude oil.

Critics feared the look-alike contracts could be used to manipulate or excessively speculate on oil prices. Additionally, critics claimed ICE Futures Europe didn't deserve a designation as a foreign board of trade because its parent company, IntercontinentalExchange, is based in Atlanta.

ICE and the FSA agreed at the time to start providing the CFTC with large trader data on the contracts on a weekly basis, but criticism of the deal surfaced again last year when oil prices sky-rocketed.

The CFTC again struck another deal with ICE Futures Europe and the FSA last summer to beef up oversight of the contracts. That agreement allowed the CFTC to receive the data on a daily basis and it imposed speculative trading limits on ICE's contracts that were equivalent to Nymex's trading limit restrictions.

When Gensler became chairman of the CFTC earlier this year, he vowed to review the entire no-action process and scrutinize every letter that has been granted over the years for everything from registration exemptions to exemptions granting speculative traders permission to legally exceed buying limits on agricultural commodities.

This latest agreement with ICE aims to give the CFTC a more hands-on approach to regulating the contracts and allows the CFTC to conduct on-site investigations as needed. In the past, the agency only made informal visits to the exchange.

The CFTC's latest news comes just one day after Gensler stunned the markets with a major announcement that the CFTC is revoking two other no-action letters that gave Deutsche Bank AG (DB) and Gresham Investment Management permission to bypass trading limits.

The agency is also contemplating imposing market-wide trading restrictions on energy products.

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