September 9, 2013
Washington, DC – The Commodity Futures Trading Commission (Commission) today notified CBOE Futures Exchange (CFE) of the results of a rule enforcement review completed by the Commission’s Division of Market Oversight (Division). The review covered the target periods from November 1, 2009 to November 1, 2010 (first target period) and November 1, 2010 to August 1, 2012 (second target period). The Division evaluated the Exchange’s compliance with Core Principles 10 (Trade Information) and 17 (Recordkeeping), which relate to an exchange’s audit trail program for the recording and safe storage of trade information in a manner which enables prevention of customer and market abuses and enforcement of exchange rules.
The Division found that CFE maintains an adequate audit trail program, and commends the Exchange for substantial improvements during the second target period, including the development of a comprehensive new audit trail exam program and a significant increase in staffing.
Although the Division found that the Exchange’s overall audit trail program was adequate, it also identified specific areas in which CFE should improve. Specifically, the Division recommended that all logs maintained by CFE contain accurate and meaningful dates, including the dates on which staff began and completed its work on a matter. Similarly, the Division recommended that CFE include in its case reports the date on which the report was approved by senior compliance staff and the signature of the approving compliance official.
The Division also recommended that the Exchange reduce the time it takes to complete audit trail investigations, and that it continue to focus on reducing the time taken to complete annual audit trail exams of trading privilege holders.
Lastly, the Division found the quality and documentation of CFE’s investigations and examinations work to be thorough and complete, with one exception. Accordingly, the Division recommended that the Exchange take prompt disciplinary action when it identifies violations of its audit trail or recordkeeping requirements by persons subject to CFE’s rules.
Copies of the report are available from the Commission’s Office of Public 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.
Last Updated: September 9, 2013