Release: 4910-04
For Release: April 7, 2004

CFTC SEEKS COMMENT ON HOW SELF-REGULATORY EXAMS OF FUTURES FIRMS ARE COORDINATED

Washington D.C. – In connection with its ongoing review of the self-regulatory system for futures markets, the Commodity Futures Trading Commission (Commission) has issued a Request for Comment (Notice) on proposed amendments to a cooperative agreement among various futures self-regulatory organizations (SROs). The Commission announced in February that it would review how the exams of futures commission merchants (FCMs) are coordinated among the various SROs.

CFTC rule 1.52 permits cooperative agreements among SROs -- whereby compliance examinations of FCMs are coordinated so that each FCM is assigned a primary examiner (designated self-regulatory organization or DSRO) with respect to certain financial integrity, financial reporting, sales practices, recordkeeping, and other requirements -- because the Commission recognizes that such a system can help to avoid the burden for both SROs and FCMs of redundant exams, can make more effective use of SRO resources, and can foster important information sharing, including examination findings, across markets. Rule 1.52, does however, reserve for the Commission a role in approving and monitoring the system to ensure that it remains appropriate to serve the public interest.

A voluntary, cooperative agreement (entitled the Joint Audit Agreement) among the SRO members of the Joint Audit Committee (JAC) was originally implemented in 1984 following review, comment, and approval by the Commission. In view of changes to the agreement that have recently been proposed by the JAC and changes in the structure of the futures markets, particularly the entrance of new SROs, the Commission is issuing a Notice requesting public comment on the proposed changes and on the DSRO system as a whole. The Commission is also currently reviewing, as it does each year, the actual examination programs utilized by the members of the JAC.

Links to the 1984 agreement, 1984 Commission approval letter, and proposed changes can be found under Related Documents. Interested parties may submit comments no later than 45 days after the publication of the Notice in the Federal Register. All comments received will be posted on the Commission’s website.

Media Contacts
Alan Sobba (202) 418-5080
R. David Gary (202) 418-5085
Office of External Affairs

Related Documents
Correction to the Federal Register
1984 Agreement
1984 Commission Letter
Proposed Agreement