Jun 24, 2020
The regulatory function of a futures exchange
The futures exchange of the United States is a membership legal entity. It not only provides a futures trading venue, provides standardized futures contracts and options contracts, provides security and information services for futures trading through clearing, but also provides management functions for futures trading.
Futures exchanges mainly implement the internal management of the exchange, as well as the management of exchange members and floor traders to establish and enforce trading rules.
These management functions mainly include:
(1) The exchange shall conduct strict examination on applicants for membership.
The audit mainly investigates the credit status, financial responsibility scope and personal integrity of the member applicants.
(2) The exchange shall strictly supervise its members.
This is mainly to monitor the financial situation of members to always meet the strict requirements of the exchange, in order to avoid the occurrence of bankruptcy vicious events;
To supervise the trading activities of members, prevent illegal trading activities and protect the interests of investors.
(3) The exchange shall strictly supervise and manage floor traders or brokers.
Because floor traders carry out the futures orders received by exchange members, it is necessary to supervise floor traders strictly.
This kind of regulation basically is: it is quality to supervise, namely requirement floor trader must have good business ability and professional ethics.
2 it is to do not let floor trader violate trade rules, do not let the trader between floor privately buy and sell contract agreement, do not allow with other floor trader to manipulate market price for personal benefit, do not allow the client to postpone the execution of client order the contract that trades oneself above all.
According to regulations, floor traders should compensate customers for losses caused by human error.
Unethical trading can result in a $100,000 fine or a year in prison.