NCJ Number
119514
Date Published
1989
Length
44 pages
Annotation
This document examines how the Commodity Futures Trading Commission (CFTC), Chicago Board of Trade (CBT), and Chicago Mercantile Exchange (CME) oversee futures market trading practices.
Abstract
CME and CBT trade futures contracts through a competitive system called open-outcry where floor participants verbally make bids and offers to each other at centralized locations in the exchange. Several kinds of trade practice abuses can occur in this type of trading system, however, and the CFTC is responsible for monitoring the system. There are three indicators to measure the intensity of the effort to detect and punish trade practice abusers: the adequacy of CFTC and exchanges' framework of controls, the number and nature of disciplinary actions taken, and the effectiveness with which oversight results are used. Findings indicate that CFTC and exchange oversight programs are being strengthened through improved computerized audit trail and evaluation systems; and that the number of disciplinary actions at CME increased while the number at CBT remained relatively constant between 1984 and 1988.