CFTC MOVES TO CLARIFY DOCUMENT RETENTION RULES

CFTC MOVES TO CLARIFY DOCUMENT RETENTION RULES

The Commodity Futures Trading Commission Tuesday said it would require that futures exchanges retain documents for five years on their automated ''transaction-related" systems.

The legal interpretation applies to all types of automated systems including electronic trading systems, order routing systems, surveillance systems and hand-held trade entry terminals, the CFTC said.The CFTC action clarifies the rules for document retention, and in part, is designed to highlight any vulnerability in exchange systems along with what steps the exchanges are taking to correct the weaknesses.

According to the CFTC, the exchanges have extensive documentation on these systems. The data create a historical record of these systems and can be used to ensure the system's technical accuracy, reliability and ability to operate as intended.

The records also will allow the CFTC to ascertain the exchange system's compliance with federal commodity laws and CFTC rules.

This action underscores the importance of computers to the efficiency of the futures markets, CFTC Chairman Wendy Gramm said.

The interpretation is the first of three steps the CFTC is taking to improve the computer systems' efficiency. The CFTC also is forming a task force of government and private sector experts to advise the commission on automated systems. The task force is scheduled to meet in mid-May.

The CFTC later intends to propose rules outlining more exact rules the automated systems must meet regarding maintenance, operation and supervision.