The Commodity Futures Trading Commission (CFTC) study of self-regulatory organisations (SROs) is provoking strong reactions from industry participants and exchanges.
Exchanges say SROs are not only needed, but they are the first and last line of defence of an exchange's integrity. But some in the industry say there is a perception problem for SROs, especially in the wake of the transitions by exchanges from member-owned entities toward for-profit or publicly traded companies.
At issue is whether those for-profit exchanges have an inherent conflict of interest when it comes to policing their own markets. Some argue exchanges may impose fines to pump up their revenues or look the other way in the name of profits if a large-volume customer breaks rules. Exchanges, however, vehemently defend self-monitoring and say their mandate to maintain fair markets is even more important now, than when they were member-owned...