The CFTC’s Division of Market Oversight notified ICE Futures US of the results of a rule enforcement review. The review covered the period from June 1, 2007 through June 1, 2008. The Division assessed ICE Futures’ compliance with core principles relating to audit trail, trade practice surveillance, disciplinary and dispute resolution programs.
The Division found that the Exchange’s Compliance staff, although very experienced, has been reduced since the Division last conducted a comparable review in 2004. In addition, several significant events occurred during the target period that impacted the Compliance Department and required its attention. These events placed a notable strain on staff’s ability to fulfill important self-regulatory obligations in a timely manner. For example, the Exchange was unable to complete a saturation audit trail recordkeeping review during the target period and the Division identified several investigations that were open for excessively long time-periods. The Division recommended that ICE Futures hire additional Compliance staff and monitor the size and workload of the Compliance Department and increase the size of staff as appropriate based on changing circumstances.
The Division also identified some additional areas in which ICE Futures needs to make improvements and recommended that ICE Futures (1) ensure that open outcry saturation recordkeeping reviews are conducted annually; (2) re-examine its trading card compliance program and make adjustments to achieve a higher percentage of compliance, and ensure that the Compliance Department uses its enhanced authority with respect to issuing meaningful summary fines; (3) augment its audit trail compliance program to include a programmatic review of electronic audit and recordkeeping rules; (4) take appropriate measure to complete investigations in a timely manner; and (5) record the date on which completed investigative reports are approved by senior Compliance staff.