The CFTC Division of Market Oversight (the "DMO") released the results of a rule enforcement review of several exchanges: the Chicago Board of Trade (CBOT), the Chicago Mercantile Exchange (CME), the Commodity Exchange, Inc. (COMEX), and the New York Mercantile Exchange, Inc. (NYMEX) (collectively, the "exchanges"). The exchanges are all wholly owned subsidiaries of CME Group, Inc. The DMO assessed the exchanges' compliance with Core Principle 13 under CEA Section 5(d) ("Disciplinary Procedures") and related regulations. The DMO reviewed compliance for a one-year target period.

The DMO determined that the exchanges maintain sufficient, experienced enforcement staff, and have adequate disciplinary rules and procedures for demonstrating compliance with Core Principle 13. However, the DMO also made several recommendations for improving disciplinary procedures, including:

  • The Market Regulation Department should enhance documentation and explanation procedures for instances in which it recommends or supports a suspension of direct access to a trading floor or electronic trading or clearing platform.
  • The exchanges should monitor prohibited trading activity by suspended individuals or firms, or institute a rule requiring futures commission merchants to monitor such activity.
  • The exchanges should document and explain their determinations when they conclude that a respondent's financial condition justifies a lesser financial penalty.
  • The exchanges should take disciplinary action instead of issuing warning letters in certain specified instances.

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