The Cleanup In Chicago Is Moving Plenty Fast
Members of the Chicago Board of Trade take exception to "Cleaning up Chicago's pits: Don't stop now" (Finance, Aug. 1). We remain strongly committed to development of an electronic trading card for strengthening our open outcry system of trading. Contrary to the mistaken impression given in the article, such electronic technology is not required under the guidelines of the Futures Trading Practices Act of 1992.
Our current audit trail capability has not been equaled or even attempted by the U.S. securities industry or by our competition in foreign and OTC markets. Testing of recent enhancements to our computerized trade reconstruction system reveals a 92% accuracy rate in timing of trades to the nearest minute. We are working to improve it even further.
However, in our view, a full and immediate deployment of the electronic trading card presumably would produce only a 3% to 4% improvement (assuming that no audit trail ever will be perfect), while generating a cost of countless millions of dollars over our current investment of $12 million shared with the Chicago Mercantile Exchange. We believe that marginal improvements in market surveillance should not come at a price that potentially could render our markets unable to compete.
We plan on continuing our development of the electronic trading card. However, by asking the Commodity Futures Trading Commission to look favorably on an extension for the full, across-the-board implementation of a card, we seek the latitude necessary to exercise mur business judgment in determining the best method of compliance under the requirements of the 1992 Act.
Patrick H. Arbor, Chairman
Thomas R. Donovan, CEO
Chicago Board of Trade