Futures industry developing alternative to CFTC surveillance

Washington, D.C. – Oct. 11, 2010 - The futures industry is working on an ownership and control reporting system that will serve as a practical and cost-effective alternative to the OCR system proposed by the Commodity Futures Trading Commission, the Futures Industry Association said in comments submitted to the agency on Oct. 7.

“We recognize and support the CFTC’s need to develop a more robust trade practice and market surveillance program,” said FIA President John Damgard. “The FIA OCR Working Group has devoted considerable time to developing an industry solution that we hope will meet the Commission’s goal, but CFTC feedback is critical to the progress of the initiative.”

The FIA working group, comprised of 16 firms and all the U.S. exchanges, is actively involved in designing an industry-wide reporting solution that is expected to be submitted to the CFTC by the end of this month. The industry solution is designed to use data currently available in existing systems. It is also designed to be less costly and less time-consuming to implement, and have less impact on small entities.

The FIA comment letter reiterated the need for the CFTC to work with the industry and highlighted the significant costs and major structural changes that would need to take place to implement the CFTC’s current proposal. Members of the working group participated in a CFTC roundtable last month, outlining the challenges that the industry would face in collecting the data as proposed.

In July, the CFTC proposed the new ownership and control rules. The proposed rule requires “reporting entities” such as exchanges to collect ownership and control data from root data sources such as FCMs and correlate the data to the trade register on a daily basis. The CFTC included 28 different data items in the proposed rulemaking to help identify a customer. The CFTC is proposing to collect this information to enhance, among other things, its trade practice and market surveillance capabilities.

The Futures Industry Association is a principal spokesman for the commodity futures and options industry. The FIA's regular membership is comprised of approximately 30 of the largest futures commission merchants in the U.S. FIA's associate members include representatives from virtually all other segments of the futures industry, both national and international.

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