| CHICAGO, July 11
CHICAGO, July 11 CME Group Inc, the
world's largest futures exchange operator, has resubmitted to
U.S. regulators a plan to update its rules prohibiting wash
trades after pushing back the provisions' start date.
CME, in a letter this week, asked the Commodity Futures
Trading Commission to approve new guidelines for implementation
on Sept. 9.
The rules are "basically the same" as a previous plan CME
had proposed to start July 1, CME spokeswoman Laurie Bischel
said on Thursday. CME shelved the previous plan last month
following discussions with CFTC staff and criticism from Bart
Chilton, a member of the commission.
With the new submission, CME has abandoned its effort to
update its guidelines on wash trades without prior approval from
the CFTC. Exchanges can implement some non-material rule changes
without an in-depth review from the commission under a process
known as self-certification.
Wash trades occur when a trading firm engages in buying and
selling the same contract. The practice is barred under U.S.
regulatory and exchange rules because it can create the
appearance of an active market where there is none.
CME voluntarily resubmitted the rules for CFTC approval "to
give market participants certainty that the guidance in our
advisory is fully consistent with the Commodity Exchange Act and
CFTC regulations," Bischel said.
The CFTC, concerned about the frequency with which
high-speed traders engage in wash trades, has been reviewing the
banned self-dealing with an eye toward crafting new rules to
prevent it, Chilton told Reuters earlier this year.
The changes sought by CME draw a clearer line between
intentional and unintentional self-trading. The distinction is a
key point for high-frequency traders who say that some
self-dealing is inevitable given the speed and volume of their
CME earlier this month launched an optional feature on its
electronic trading platform designed to prevent wash trades by
allowing traders to block matching buy and sell orders.