Summary: In 1989, the Justice Department, along with the Commodity Future Trading Commission (CFTC), conducted an undercover investigation at the Chicago Board of Trade and the Chicago Mercantile Exchange. The investigation revealed illegal trading practices designed to enrich participants. In a report that year to Congress (GAO/GGD-89-120), GAO concluded that most of the illegal practices uncovered could have been detected with improved audit trails--the physical records of the price and time of each trade. Congress incorporated the then existing audit trail standards, as well as heightened standards, in the Futures Trading Practices Act of 1992. The act required that CFTC report to Congress within two years on the progress that U.S. futures exchanges had made in meeting the audit trail standards and include recommendations on the appropriateness of extending the October 1995 deadline for meeting the standards or for modifying them. This report discusses the status of exchange compliance with the existing and heightened standards as well as CFTC actions to enforce the act's audit trail provisions.
