2nd Update: CFTC: CME Needs More Compliance Staff
August 31 2011 - 5:30PM
Dow Jones News
The Commodity Futures Trading Commission reiterated Wednesday
that CME Group Inc. (CME) needs to add more compliance staff to
oversee its commodity exchanges.
"The compliance staff dedicated to the exchange was unchanged
since the division's last review, despite a significant increase in
trading volume and products traded," the CFTC said in a
statement.
The CFTC made the same recommendation a year ago during its
routine rule-enforcement review of the Chicago Mercantile Exchange
and the Chicago Board of Trade. The CFTC did not say what would
happen if CME does not add more compliance staff.
Former CFTC Commissioner Sharon Brown-Hruska said the agency was
delving much further into the day-to-day workings of the exchanges
than it has in the past. She said the review is in keeping with the
new "micromanagement mood with regard to markets" at the
agency.
"The relationship between the exchanges and the CFTC is not as
collegial as it used to be," said Brown-Hruska, a Republican who
was on the Commission from 2002-2006.
Congress gave the CFTC broader oversight and stronger
enforcement power over derivatives markets with the passage of the
Dodd-Frank financial overhaul bill in July 2010.
This current CFTC review looked at trading in 2009 at the New
York Mercantile Exchange and the Commodity Exchange, which both
merged with CME in 2008. Each exchange maintains independent
exchange status, but both are policed by one central compliance
department at the CME.
The CFTC's Division of Market Oversight recommended that CME add
compliance staff because of an increase in trading volume as well
as types of products traded.
CME had done a good job of harmonizing trading rules at its four
exchanges, the commission added.
CME said that the CFTC's findings "reflect our ongoing
commitment to effectively fulfill our self-regulatory
responsibilities."
"CME Group has increased its market regulation staffing by more
than 20 percent in the past two years, and we continually ensure
that our human resources and regulatory technology fully support
our industry-leading regulatory programs," a CME spokeswoman said
in a statement.
The CFTC also recommended that CME issue disciplinary decisions
promptly after a hearing and better document those decisions. The
commission also urged CME to impose "meaningful" sanctions on
members to discourage repeat offenses.
-By Jamila Trindle, Dow Jones Newswires; 202-862-6684;
jamila.trindle@dowjones.com
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