For Release: August 31, 2009
Washington, DC – The Commodity Futures Trading Commission (Commission) has notified the Minneapolis Grain Exchange (MGEX) of the results of a rule enforcement review completed by the Commission’s Division of Market Oversight (Division). The review covered the period from October 1, 2006, to June 30, 2008, (target period). The Division assessed MGEX’s compliance with those core principles relating to market surveillance, audit trail, trade practice surveillance and MGEX’s disciplinary and dispute resolution programs. The review also evaluated the adequacy of MGEX’s resources to effectively perform its self-regulatory functions during volatile periods.
The Division found that high staff turnover of MGEX’s compliance staff and the need to focus on market surveillance due to unprecedented volatility and volume strained MGEX’s ability to perform all of its self-regulatory functions. The Division recommended that MGEX increase its compliance staffing level and examine the underlying reasons for the large number of staff departures.
The Division found that MGEX maintains an adequate market surveillance program and adequate dispute resolution procedures. Because there were no requests for arbitration filed during the target period, the Division was unable to evaluate the adequacy of MGEX’s dispute resolution program. The Division also found that MGEX generally maintains adequate audit trail and trade practice surveillance programs and adequate disciplinary procedures. However, the Division identified some areas in which MGEX needs to make improvements and recommended that MGEX (1) augment its audit trail compliance program to include a programmatic review of electronic audit and recordkeeping rules; (2) take appropriate measures, including hiring additional staff, to ensure that interviews are conducted promptly after a potential trading violation is identified and that investigations are completed in a timely manner; (3) ensure that disciplinary committees issue penalties of a sufficient magnitude in all disciplinary cases and review a member’s complete disciplinary history when determining appropriate sanctions; and (4) ensure that no member receives more than one reminder letter and one warning letter for the same type of violation in a rolling 12-month period.
Copies of the report are available from the Commission’s Office of External Affairs, Three Lafayette Centre, 1155 21st Street N.W., Washington, DC 20581, 202-418-5080, or by accessing the Commission’s website at www.cftc.gov.
R. David Gary
Last Updated: October 17, 2009