US CFTC says NYSE Liffe should beef up enforcement

Wed Apr 25, 2012 2:31pm EDT

* CFTC calls NYSE Liffe's oversight "adequate"

* CFTC recommends tougher enforcement on automated trades

By Alexandra Alper

April 25 (Reuters) - NYSE Euronext's futures unit Liffe has an "adequate" trade surveillance program but needs to improve its enforcement, the U.S. Commodity Futures Trading Commission said on Wednesday.

NYSE Liffe should speed up its response time on investigations and force automated traders who may have violated trading rules to suspend trading until the issue is resolved, the CFTC said in a rule enforcement review.

"NYSE Liffe should reduce the amount of time it takes to review and take action with respect to completed investigations referred by NFA," the agency said in a release, referring to the National Futures Association, the U.S. self-regulatory organization which oversees the exchange.

The CFTC review covered the period from Nov. 1, 2009, through Nov. 1, 2010.

NYSE Euronext was forced to drop its $7.4 billion merger with Deutsche Boerse in February, after European antitrust authorities blocked the deal over concerns the combination of Liffe and Deutsche Boerse's Eurex would have a quasi-monopoly in European futures trading.

The same month, NYSE Liffe stepped up its drive to tighten regulation of its cocoa, robusta coffee, and other contracts, with a proposal for increased reporting requirements for large positions and position limits on delivery months.

European commodity markets are under pressure to tighten regulation as the United States pushes forward with plans to curb speculative activity, blamed by some for boosting food and energy prices to record highs in 2008.

NYSE Liffe has received particular attention since July 2010, when Armajaro Asset Management's hedge fund, CC+, took the largest delivery in 14 years on Liffe's cocoa market.

Prior to delivery, some European cocoa industry participants sent a letter to the exchange complaining about the extent of speculation in the London cocoa market and a lack of transparency.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article