The $2 billion (1.59 billion euros) loss at US giant JPMorgan Chase on risky derivatives trades could prompt regulatory changes affecting energy markets where banks have been major players, the IEA said on Wednesday.
Announcing the losses in May, JPMorgan Chase chief executive Jamie Dimon said the bank had been "stupid," and attributed the loss to a change in the risk assessment made in its highly complex trading models.
The scheme, which originally aimed to hedge risk, evolved into a big, aggressive and complex bet on the direction of the economy that went spectacularly wrong, sparking a slew of investigations by regulators.
Reforms after the 2008 collapse of Lehman Brothers set off the global financial crisis were meant to minimise the potential damage caused by such complex, automated trading programmes.
The International Energy Agency said the JPMorgan case had put the focus back on proprietary trading -- when a bank or financial house trades on its own account for direct profit, often in volatile and high-risk markets.
While the JPMorgan trades were not related to energy derivatives, regulators could look again at the new rules introduced after 2008 because of the losses the bank incurred, it said.
This would "certainly affect the energy markets where banking institutions have been the biggest liquidity providers through their hedging, market-making and speculative activities," the IEA said in a special section of its latest monthly report on the oil market.
Traders have increasingly resisted tighter regulation on the grounds it will increase costs and undercut market efficiency but they will face a harder time making this argument in light of the JPMorgan case, the IEA said.
This would be especially so if "a narrower interpretation of hedging and market-making activities gains momentum," it added.
The White House and members of the US Congress have stepped up pressure for tighter regulation of the banks, including a broad ban on the speculative proprietary trade that has hurt many of them in the derivatives markets.