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Market Oversight at the Commodity Futures Trading Commission

Explore the vital role of market oversight at the Commodity Futures Trading Commission in ensuring proper market design, product integrity, and enforcement of exchange rules to prevent manipulation. Learn about surveillance methods and regulatory practices.

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Market Oversight at the Commodity Futures Trading Commission

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  1. Market Oversight at the Commodity Futures Trading Commission Mike Gorham Director Division Of Market Oversight February 5, 2003 FERC/CFTC Joint Technical Conference on Credit Issues in the Energy Markets

  2. Market Oversight Market & Product Review (14)* Market Compliance (36)* Market Surveillance (47)* • Is the market designed properly? • Are the products designed properly? • Are exchanges enforcing their rules? • Are there signs of an impending manipulation or congestion? *Number of staff

  3. Is the Market Designed Properly? • Trading • Protection of Market Participants • Fair and Equitable Trading • Secure and Robust Trading Systems • Daily Dissemination of Trading Information • Administration • Financial Integrity of Transactions • Effective Compliance and Disciplinary Programs • Fair, Objective and Representative Governance • Adequate Recordkeeping

  4. Are Products Designed Properly? Core Principle 5 Use position limits (or accountability) to reduce potential threat of manipulation Core Principle 3 Contracts not readily susceptible to manipulation General Oversight Ensure markets serve economic functions of managing and assuming price risk

  5. Are the Exchanges Enforcing their Rules? Trade Practice Investigations Rule Enforcement Reviews

  6. Market Surveillance Goal Detect and deter manipulation and market congestion!

  7. How? • Market Monitoring • Positions • Deliverable supply • Price relationships • Market intelligence • Position limits • Dealing with Problems • Jawboning • Warning letters • Emergency action • Referrals to Enforcement Division

  8. Bottom Line • Properly Designed Markets • Properly Designed Products • Enforcement of Exchange Rules • Stop Manipulation in its Tracks

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