Release:             #4501-01
For Release:     March 28, 2001

CFTC Releases Rule Enforcement Review of the Cantor Financial Futures Exchange

    WASHINGTON- The Commodity Futures Trading Commission (Commission) has notified the Cantor Financial Futures Exchange (CX) of the results of a rule enforcement review completed by the Commission’s Division of Trading and Markets (T&M). The purpose of the review was to evaluate CX’s market and trade practice surveillance, audit trail, and disciplinary programs. The target period for the review was September 1, 1999 through August 31, 2000.

    On September 4, 1998, CX became the first entirely electronic exchange designated by the Commission. The Exchange lists futures contracts on financial products, such as U.S. Treasury Bonds and Treasury Notes, and is wholly-owned by the New York Cotton Exchange (NYCE) division of the New York Board of Trade. NYCE has contracted to provide all of CX’s regulatory services, including compliance, surveillance, and disciplinary programs.

    In its review, T&M found that NYCE, with respect to CX contracts, maintains adequate market and trade practice surveillance and audit trail programs. NYCE monitors CX price changes, settlement prices, spreads, and volume and open interest, and conducts computer surveillance of trading activity on a real-time basis. CX maintains a complete electronic record of details of every trade, including any changes thereto, which is fully available to NYCE staff. In addition, NYCE conducts adequate investigations, and completes most CX investigations in a timely manner. Because no investigations were considered for disciplinary action by regulatory committees during the target period, the Division was unable to evaluate the effectiveness of CX’s disciplinary program.

    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 Commodity Futures Trading Commission website.