The CFTC Division of Market Oversight issued the results of a rule enforcement review of the New York Mercantile Exchange ("NYMEX") and the Commodity Exchange ("COMEX," and, collectively, the "Exchanges"). The review examined the Exchanges' market surveillance programs and their compliance with elements of Designated Contract Market Core Principles 2 (Compliance with Rules), 4 (Prevention of Market Disruption), and 5 (Position Limitations or Accountability).
The Division determined that the Exchanges maintain adequate market surveillance programs for the areas reviewed in accordance with the relevant Core Principles. The Division stated that while it did not identify any deficiencies, it recommended that the Exchanges "consider implementing a formal review process by which they can verify that a market participant who has a position larger than a position limit is, in fact, making use of an exemption, consistent with the strategy described in their exemption application." The review stated that "[w]ithout such a process, there is no way for the Exchanges to proactively verify that the strategy described on an exemption application is followed once the exemption is granted."
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