For Release: April 13, 1999
CFTC Notifies the Minneapolis Grain Exchange of
of a Rule Enforcement Review
The Commodity Futures Trading Commission (Commission) has notified the
Minneapolis Grain Exchange (MGE) 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 MGE's
trade practice surveillance and disciplinary programs for compliance with
the Commodity Exchange Act and Commission regulations. The target period
for the review was July 1, 1997 to June 30, 1998.
T&M found that MGE generally maintains an adequate trade practice surveillance program. Compliance investigators review daily MGE's trade register and other computerized reports, and conduct floor surveillance at various times during the trading session to identify potential violations. However, T&M found unduly lengthy delays in completing investigations, some of which were open more than two years. T&M attributed the delays, in large part, to the very high turnover rate among investigators that MGE experienced during the target period, which severely impacted the overall level of staff expertise.
As a consequence of the high staff turnover and the resultant inability to complete investigations in a timely manner, there were no trade practice investigations referred to disciplinary committees during the target period. Therefore, T&M was unable to evaluate fully the effectiveness of MGE's disciplinary program. T&M did find, however, that MGE issued multiple staff reminder and warning letters to three members who repeatedly violated the same rule, rather than issuing monetary or other sanctions to deter recidivism. In this regard, T&M recommended that MGE establish written guidelines or promulgate rules which would severely limit the number of disciplinary letters that can be issued to members before meaningful sanctions, such as monetary penalties or suspensions, are assessed against repeat offenders.
MGE will have 60 days to respond to T&M's recommendations. Copies of the report are available from the Commission Office of Public Affairs, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5080, or by accessing the Commission's website at www.cftc.gov.