Futures Markets: Use of Automation to Detect Trade Abuses
IMTEC-90-81
Published: Aug 24, 1990. Publicly Released: Sep 25, 1990.
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Highlights
Pursuant to a congressional request, GAO reviewed information on: (1) automation initiatives at 14 U.S. futures exchanges that recorded accurate trade times; (2) risk assessments of two automated trading systems that were being developed by the Chicago Board of Trade and the Chicago Mercantile Exchange (CME); and (3) steps taken by the Commodity Futures Trading Commission (CFTC) to assess automation initiatives.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Commodity Futures Trading Commission | The Chairman, CFTC, should ensure that exchanges maximize, to the extent practicable, the potential of automated systems to accurately record trade times. |
Closed – Implemented
CFTC requirements for enhanced audit trails and trade surveillance systems were designed to encourage use of automation at exchanges. In addition, CFTC has been supportive of the Chicago exchanges' efforts to develop and test hand-held trade recording terminals that, if successful, could provide instantaneous information on trading activities.
|
| Commodity Futures Trading Commission | The Chairman, CFTC, should ensure that the Chicago Board of Trade and CME strengthen the security and other internal controls GAO identified in its limited risk assessments before their systems become operational. |
Closed – Implemented
The CBOT/CME Globe System is still not operational. CFTC, however, has continued to actively oversee development and testing of the system. The final third-party review report on corrective actions is due to CME and CFTC prior to the system becoming operational.
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Topics
Brokerage industryCommodities exchangesEthical conductFuturesInformation systemsInternal controlsManagement information systemsSecurities regulationData automationAutomation