On July 22, the Commodity Futures Trading Commission released the Division of Market Oversight’s rule enforcement review of ICE Futures U.S. The rule enforcement review included the following recommendations:
- The exchange should ensure that its market surveillance department maintains staffing sufficient to perform all of its surveillance responsibilities, including timely completion of surveillance investigations.
- The role of exchange staff in enforcing clearinghouse requirements regarding open interest reporting should be formalized in the procedures manual of the exchange. If the exchange intends to continue to sanction misreporting of open interest, the exchange’s rulebook should set forth specific rules stating that open interest misreporting represents a violation of exchange rules. The exchange should also maintain records of any sanctions issued by the clearinghouse so that it may properly account for recidivist behavior and impose sanctions that are sufficient to deter recidivism.
- The exchange should require market participants to resubmit detailed information on at least an annual basis to support single-month and all-month hedge exemptions.
- Prior to granting a hedge exemption, the exchange must ensure that an applicant complete each question in its exemption application. The exchange must also ensure that an applicant provides sufficiently detailed information to allow the exchange to analyze the underlying reasons for the request, and whether those reasons are consistent with the requirements for the exemption sought.
More information is available here.