Commodity Futures Trading Commission
Office of External Affairs (202) 418-5080
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581

Release: #5136-05
For Release: November 8, 2005

CFTC Releases Rule Enforcement Review of the New York Board of Trade

Washington, D.C. - The Commodity Futures Trading Commission (Commission) has notified the New York Board of Trade (NYBOT) of the results of a rule enforcement review completed by the Commission’s Division of Market Oversight (DMO). DMO assessed NYBOT’s compliance with the Commission’s core principles that require exchanges to monitor trading to prevent manipulation and price distortion, and to maintain and enforce speculative position limits and position accountability levels. The target period for the review was January 1, 2004 to December 31, 2004.

DMO found that NYBOT maintains an adequate market surveillance program. NYBOT staff use information gathered from the daily review of futures and cash prices, volume, open interest, large trader positions, deliverable supplies and market news in connection with routine surveillance of market activity and contract expirations. DMO also found that NYBOT appropriately heightens surveillance of expiring contracts well in advance of last trading day. In addition, DMO found that NYBOT has adequate procedures in place to monitor for speculative position limit violations and accounts that exceed position accountability levels.

DMO also reviewed NYBOT’s oversight of exchange of futures for physicals (EFP) and exchange of futures for swaps (EFS) transactions. DMO found that NYBOT’s monthly examinations of selected EFPs and EFSs for compliance with NYBOT rules and procedures were thorough and well documented. However, DMO found that certain EFP investigations were not conducted in a thorough manner because NYBOT did not request documentation to determine the existence of an underlying cash transaction and to verify the transference of the physical commodity. Consequently, DMO recommended that NYBOT request such documentation for all EFPs under review to evaluate fully compliance with NYBOT’s EFP rule. Finally, DMO found that members and their customers may not fully understand NYBOT’s requirement that affiliated parties engaging in an EFP transaction be under separate control. Therefore, DMO recommended that NYBOT issue a notice reminding members of this requirement and how it can be satisfied, and request that members share this information with their customers who engage in EFPs.

NYBOT will have 60 days to respond in writing to DMO’s recommendations. 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

Media Contacts
Alan Sobba (202) 418-5080
R. David Gary (202) 418-5085
Office of External Affairs

Related Documents
Rule Enforcement Review of the New York Board of Trade