CME Group's procedures for monitoring Exchange for Related Position (EFRP) transactions are "inadequate" and should be beefed up quickly, says the Commodity Futures Trading Commission,
In a review of the group's CME and Chicago Board of Trade exchanges' market surveillance programmes, the CFTC calls for "significant and prompt improvement" in the oversight of EFRP transactions.
The CFTC says that the exchanges' market surveillance team should make sure that the factors and procedures it uses to identify EFRPs that warrant the opening of case files are adequately targeting problematic transactions.
Meanwhile, parties and clearing firms involved in trades should be made to maintain relevant documents pursuant to the exchanges' rules and the bona fides of more EFRPs should be checked.
Finally, although the review found an "adequate and highly skilled" market surveillance staff at CME Group, it suggests that more people can be brought on board.
Separately, the CFTC is reviewing trades that caused a brief trading halt at CME's treasury futures market last Friday before the US government was supposed to release important jobs market data.