For Release: October 30, 2007
Washington, DC – The Commodity Futures Trading Commission (Commission) has notified the Chicago Board of Trade (CBOT or Exchange) of the results of a rule enforcement review completed by the Commission’s Division of Market Oversight (Division). The Division assessed CBOT’s compliance with the core principles that relate to market surveillance. The target period for the review was October 1, 2005 to September 30, 2006.
The Division found that CBOT maintains an adequate market surveillance program. Exchange staff use information gathered from the daily review of futures and cash market prices, market news, volume, open interest, deliveries, clearing member, large trader and options positions relating to each Exchange contract, and position concentrations in connection with routine surveillance of market activity and contract expirations.
The Division also found that the Exchange’s large trader reporting system provides staff with adequate capabilities to monitor CBOT’s markets. In addition, the Exchange has adequate procedures to review hedge exemption applications and to monitor for speculative limit violations and accounts which exceed position accountability thresholds.
The Division also reviewed CBOT’s oversight of exchanges of futures for related positions (EFRPs), which include exchanges of futures for physicals, exchanges of futures for swaps, and exchanges of futures for risk. The Division found that the Exchange’s monthly EFRP reviews were thorough, well documented, and included appropriate analysis to determine whether the EFRPs examined were bona fide transactions that satisfied the Exchange’s requirements.
Based on these findings, the Division made no recommendations for further improvements to CBOTs self-regulatory program.
Copies of the report are available from the Commission’s Office of External Affairs, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581, 202-418-5080, or by accessing the Commission’s website at www.cftc.gov.
R. David Gary
Last Updated: October 31, 2007