Summary: GAO conducted a review of the programs of the Commodity Futures Trading Commission to assess whether the Commission's programs meet the objectives established by Congress and measure up to the Commission's own stated objectives. This review was conducted to assist Congress in evaluating the Commission's performance in conjunction with its reauthorization.
GAO stated that the Commission has made progress in developing a regulatory framework to protect commodities customers and that the principal federal programs for commodities futures regulation must continue if futures trading is to operate reasonably free from abuse. Even if the exchanges assume increasing responsibility for key aspects of regulating futures trading, the federal government must continue to monitor exchange performance to determine whether self-regulation is working. The Commission's program to review the exchanges' rule enforcement procedures and performance have not covered all aspects of exchange programs often enough and have not promptly followed up on previously identified deficiencies. The Commission more thoroughly analyzes information submitted to support contract approval than it previously did; however, it still needs to strengthen and clarify its approval requirements and devote more effort to existing contracts to determine if they are actually meeting their economic function. Weaknesses in the Commission's automatic data processing (ADP) programs prevent it from collecting and analyzing market data in a way that can effectively support its surveillance program. The Commission's efforts to register industry professionals and to identify and remove unfit individuals can also be improved. The reparations program is not meeting its objectives as it takes an average of 3 years to complete the reparations process, complainants have difficulty understanding the program, and the process is expensive.
