Release: #4659-02
For Release: June 21, 2002

CFTC Issues Report on its Intermediaries Study

Washington, D.C. -- The Commodity Futures Trading Commission (CFTC) has delivered to Congress a report on its study of potential regulatory relief for the futures commission merchants, introducing brokers, commodity pool operators (CPOs), and commodity trading advisors (CTAs) that serve as intermediaries in the commodity futures and options markets. The study was mandated by the Commodity Futures Modernization Act of 2000.

As delivered to the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition and Forestry, the report addresses: (1) whether any provisions of the Commodity Exchange Act or Commission rules should be replaced with core principles; (2) which of its rules the Commission may consider modifying or eliminating; and (3) whether any regulatory functions currently performed by the CFTC can be delegated to a registered futures association.

In carrying out the study, the Commission sought the input of market participants by inviting written comments through the Federal Register; by interviewing intermediaries, attorneys and accountants with futures industry practices, and representatives of exchanges, clearinghouses, and self-regulatory organizations; and by holding a public meeting of the Commission.

The Commission plans to host a series of roundtables with industry representatives in coming months to discuss further such issues as the rules on allocating bunched orders, overlapping jurisdiction over CPOs and CTAs, oversight for derivatives clearing organizations, and other issues, such as common clearing and fungibility of products, that were raised by market participants during the course of the study.

CFTC Chairman James Newsome noted that, “A common theme of the letters, interviews, and public testimonies was that greater flexibility is needed and that there are different ways in which the Commission can help to provide that flexibility. Intermediaries are key to both the integrity and efficient operation of the futures markets, and they should be able to expect from the CFTC the kind of rule modernization effort that exchanges and clearinghouses benefited from last year.”

The study can be accessed at Copies of the report may also be obtained by contacting the Commission’s Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100.

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