CFTC EXTENDS DEADLINE FOR DUAL TRADING COMMENTS

CFTC EXTENDS DEADLINE FOR DUAL TRADING COMMENTS

The Commodity Futures Trading Commission has extended the comment period for its proposed rules to curb dual trading.

The comment period, which was set to end April 11, has been extended for 60 days, the CFTC said. Futures exchanges and others asked for the extension to comment on the controversial proposal because they wanted more time to study the plan.The CFTC proposed the rules last January in the aftermath of a federal probe into alleged fraudulent trading practices. Curbs on dual trading - the practice that allows a floor broker to trade for a customer account and his own account on the same trading day - are also contained in House and Senate bills to reauthorize the CFTC.

If approved, the CFTC proposal initially will apply to one or two of the most actively traded contracts on the seven largest exchanges. During a 12- month pilot program the CFTC will analyze data on the effect of the restrictions and expand or refine the program based on that information.

The two largest exchanges - the Chicago Board of Trade and the Chicago Mercantile Exchange - will have to select one of their three most active agricultural contracts and one of their two most active financial contracts for the dual-trading ban.

The smallest exchanges will be exempt from the proposed ban.

The CFTC proposal goes one step further than the congressional proposals, which prohibit dual trading in contracts with an average daily volume in excess of 7,000 contracts unless the exchange can prove that its audit trail can detect abuses associated with dual trading.

The CFTC proposal does not allow that exception. Previously, Wendy Gramm, CFTC chairman, has said that there are other abuses associated with dual trading that would not be detected by an audit trail.