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Highlights

GAO assessed the Securities and Exchange Commission's (SEC) and the Commodity Futures Trading Commission's (CFTC) oversight of automated futures and securities trading and post-trading systems.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Commodity Futures Trading Commission 1. The Chairmen, SEC and CFTC, should move to more aggressively establish the technical oversight capabilities to control the risk associated with automation. Such capabilities should include the needed technical expertise to establish policies governing the development and operation of market systems and perform and oversee technical reviews of automated trading and post-trading systems.
Closed - Implemented
CFTC is in the process of hiring a technical expert to perform and oversee automated market system reviews. CFTC issued a vacancy announcement in October 1991, but did not select a candidate and plans to issue another announcement in March 1992. The CFTC task force created to establish market systems development and operations policies has not met in a year, and CFTC questions its necessity.
United States Securities and Exchange Commission 2. The Chairmen, SEC and CFTC, should move to more aggressively establish the technical oversight capabilities to control the risk associated with automation. Such capabilities should include the needed technical expertise to establish policies governing the development and operation of market systems and perform and oversee technical reviews of automated trading and post-trading systems.
Closed - Implemented
In response to IMTEC-92-16, SEC replied that it has decided to increase substantially the size of its technical staff in the Office of Automation and International Markets. This expansion is intended to provide SEC with adequate resources to address its automation oversight responsibilities.
Commodity Futures Trading Commission 3. The Chairmen, SEC and CFTC, should provide timetables for developing their technical capabilities to their agencies' congressional oversight committees.
Closed - Implemented
CFTC is in the process of hiring technical staff to oversee exchanges' automated systems and does not intend to develop a timetable.
United States Securities and Exchange Commission 4. The Chairmen, SEC and CFTC, should provide timetables for developing their technical capabilities to their agencies' congressional oversight committees.
Closed - Implemented
SEC has not decided to develop such a timetable.

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