Looking to gain a more thorough picture of what goes on in the electronically traded futures markets, the Commodity Futures Trading Commission (CFTC) has proposed a rule that would allow the government organization to collect on a weekly basis certain ownership, control and other information for all trading accounts active on U.S. futures exchanges and other reporting entities.

The information will be collected via an account ownership and control report (OCR) submitted periodically to the CFTC by reporting entities.

“The CFTC is committed to effective and efficient market oversight to best protect the American public,” said Gary Gensler, chairman of the CFTC. “OCR data will increase market transparency and strengthen the CFTC’s surveillance of the futures marketplace.”

Specifically, OCR data will include trading account numbers, the names and addresses of accounts’ owners and controllers, owners’ and controllers’ dates of birth and other information necessary to uniquely identify owners and controllers to identify related trading accounts.

The proposed rulemaking was published in the Federal Register and will have a 60-day comment period. First brought up almost exactly one year ago (see Daily GPI, July 1, 2009), the OCR would achieve four CFTC objectives. That includes identifying:

In an attempt to protect against market manipulation and increase transparency, the CFTC has taken a number of steps over the past few years. Just last month the inspector general of the CFTC initiated an independent inquiry of the agency’s market surveillance operations, aimed at dealing specifically with the informal communications between agency staff and traders with large open positions approaching expiration, which was motivated by concerns voiced by agency staff as well as the United States Government Accountability Office (see Daily GPI, June 4). In cases where a trader provided a reasonable explanation for a large trading position and a reasonable delivery or liquidation strategy, staff said no further action would be required, but typically no formal record would be made of the inquiry, the CFTC found. Without that data, the inspector general said CFTC management might miss opportunities to both identify trends in activities or markets and better target its limited resources.

Currently, a broad financial regulatory reform bill is winding its way through Congress. In addition to adding oversight to the largely opaque over-the-counter markets (see Daily GPI, July 2), one provision in the bill would make it easier for the CFTC to prove manipulation in commodity and derivatives markets (see Daily GPI, May 11).

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