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NCJRS Abstract

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NCJ Number: 120880 Find in a Library
Title: Futures Markets: Automation Can Enhance Detection of Trade Abuses but Introduces New Risks
Corporate Author: US Government Accountability Office
Information Management and Technology Division
United States of America
Date Published: 1989
Page Count: 18
Sponsoring Agency: National Institute of Justice/
Rockville, MD 20849
NCJRS Photocopy Services
Rockville, MD 20849-6000
US Government Accountability Office
Washington, DC 20548
Publication Number: GAO/IMTEC-89-68
Sale Source: National Institute of Justice/
NCJRS paper reproduction
Box 6000, Dept F
Rockville, MD 20849
United States of America

NCJRS Photocopy Services
Box 6000
Rockville, MD 20849-6000
United States of America
Document: PDF
Type: Issue Overview
Language: English
Country: United States of America
Annotation: This study examines potential benefits in using the Chicago futures exchanges' planned automated systems to detect or prevent trade practice abuses, potential vulnerabilities associated with using automated systems in conjunction with or in place of the current open-outcry trading process, and Commodity Futures Trading Commission's activities in assessing automated exchange systems.
Abstract: The study involved a review of documentation and interviews with officials at the Commission, the Chicago Board of Trade, and the Chicago Mercantile Exchange. The Chicago Board of Trade and the Chicago Mercantile Exchange are studying and developing automated order routing systems to increase the efficiency of the open-outcry trading process and to better handle larger trading volumes. To better detect trade practice abuses in the open-outcry process, the exchanges recently announced a joint effort to develop an electronic audit trail system to record each trading transaction using hand-held terminals. In addition, the exchanges are developing after-hours trading systems, which will be used instead of the open-outcry process to expand operations outside normal trading hours. If properly implemented, these planned automation initiatives can better detect trading abuses, because they can provide improved trade timing data. Because these systems are still in the planning stage, however, the extent to which the technology can be used to control trading abuses is uncertain. This report recommends a technical assessment of the systems, including analyses of proposed technical solutions and alternatives to ensure that the systems maximize their potential to control trade practice abuses. Appended supplementary information.
Main Term(s): Securities fraud
Index Term(s): Automation; Investigative techniques
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