The CFTC released the results of a rule enforcement review by the Division of Market Oversight ("DMO") of the compliance of the CBOE Futures Exchange, LLC ("CFE") with CFTC Core Principles 2 ("Compliance with Rules") and 12 ("Protection of Market Participants"), as well as CFTC regulations relating to the trade practice surveillance programs of exchanges.
The DMO found that the CFE maintains an adequate trade practice surveillance program, and that both the exchange and its third-party regulatory service provider, the NFA, employed adequate surveillance tools for detecting rule violations. In addition, the DMO found the CFE's investigatory work to be thorough and complete. However, the DMO also found a number of deficiencies relating to the CFE's compliance department with respect to that department's retention of staff and its timely completion of investigations. The DMO also pointed out areas in which it said the CFE should improve its compliance procedures. Additionally, the DMO recommended that the CFE (i) update its compliance manual to ensure that certain investigative procedures are well documented, and (ii) supervise the quality and effectiveness of the services provided by the NFA.
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