Strengthening Trade Practice Oversight

T-GGD-89-39: Published: Sep 8, 1989. Publicly Released: Sep 8, 1989.

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GAO discussed how the Commodity Futures Trading Commission (CFTC) and four of the exchanges it regulated could better deter, detect, and punish floor trade practice abusers in the futures markets. GAO noted that: (1) exchanges generally did not precisely time trade activities, although such audit trail information could help them to prevent floor participants from altering trading records and concealing execution of noncompetitive trades; (2) CFTC did not technically assess the exchanges' planned automated systems for tracking trade activities, although the systems could introduce risks to accurate transaction processing, responsive operations, and secure and continuous service; (3) CFTC used investigatory and disciplinary action information to monitor exchanges' rule enforcement, but could not use that information to formally analyze trends and compare results among exchanges, since no uniform definitions existed for classifying investigations and disciplinary actions; and (4) the number and severity of disciplinary actions varied among the exchanges, with the total number of penalized participants at each exchange ranging from 17 to 177, total fines ranging from $300,000 to $4.5 million, and total suspensions ranging from 300 business days to 14,000 business days.

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