Financial Markets: Active Oversight of Market Automation by SEC and CFTC Needed
IMTEC-91-21
Published: Apr 02, 1991. Publicly Released: Apr 02, 1991.
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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.
Recommendations
Recommendations for Executive Action
| Agency Affected Sort ascending | Recommendation | Status |
|---|---|---|
| United States Securities and Exchange Commission | 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. |
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.
|
| United States Securities and Exchange Commission | The Chairmen, SEC and CFTC, should provide timetables for developing their technical capabilities to their agencies' congressional oversight committees. |
SEC has not decided to develop such a timetable.
|
| Commodity Futures Trading Commission | 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. |
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.
|
| Commodity Futures Trading Commission | The Chairmen, SEC and CFTC, should provide timetables for developing their technical capabilities to their agencies' congressional oversight committees. |
CFTC is in the process of hiring technical staff to oversee exchanges' automated systems and does not intend to develop a timetable.
|
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Topics
Brokerage industryIndependent regulatory commissionsInformation systemsInternal controlsSecurities regulationStock exchangesData automationSecuritiesFinancial marketsFutures markets