NCJ Number
120761
Date Published
1989
Length
68 pages
Annotation
This analysis of the effectiveness of the Commodity Futures Trading Corporation (CFTC) and the exchanges it regulates in controlling abuses of trade practices focuses on the adequacy of oversight controls, the number and nature of disciplinary actions taken, the effects of high-technology trading systems, and the use of management information.
Abstract
The analysis also compared controls in the futures markets with those in the securities markets. Data came from official records, reviews of policies and procedures, and interviews with officials of the organizations studied. Disciplinary cases from January 1984 through June 1989 were also reviewed. Findings showed that weaknesses in controls permitted dishonest individuals to cheat customers by noncompetitively executing orders and to conceal this cheating. The actions proposed or taken to improve controls are important interim measures. In addition to requiring improved timing information, CFTC needs to expand its review of automated surveillance systems and to improve its use of management information. Although the adequacy of the disciplinary programs is unknown, the increased penalties since an FBI investigation was made public appear to indicate an increased commitment by the exchanges to deterring, detecting, and punishing abusers of trade practices. Appended background analyses and glossary.