On December 4, the Commodity Futures Trading Commission released a report of the results of its Division of Market Oversight’s (Division) Rule Enforcement Review of the Chicago Board of Trade, Chicago Mercantile Exchange, Commodity Exchange, Inc. and New York Mercantile Exchange, Inc. (collectively the CME Group).
The review covered a one-year target period and evaluated the exchanges’ compliance with Core Principal 13 and related regulations. Core Principle 13 requires each designated contract market (DCM) to “establish and enforce disciplinary procedures that authorize [DCM] to discipline, suspend, or expel members or market participants that violate” its rules. In connection with the review, the Division interviewed compliance officials and staff from the CME Group’s Market Regulation Department (MRD). Further, the Division also analyzed responsive documents produced by the exchanges’ staff.
The Division found that the exchanges maintain experienced enforcement staff and a generally adequate disciplinary program to demonstrate compliance with Core Principal 13 and CFTC regulations 38.700-709 and 38.711. However, the Division did make four recommendations relating to compliance with CFTC regulation 38.710 (two regarding improved documentation, one regarding the monitoring of suspensions and one regarding warning letters) and one recommendation relating to improved documentation for compliance with CFTC regulation 38.712. The report clarifies that a recommendation concerns an area where the CFTC believes the exchange should improve its compliance program.
The report is available here.