Customer protection and the financial integrity of the exchanges/clearing organizations are the foremost goals to be achieved through the review of futures commission merchants (FCMs). These goals are achieved by monitoring and enforcing Commodity Futures Trading Commission (CFTC) regulations and exchange rules covering minimum financial, segregation/secured, recordkeeping, and reporting requirements.
The CFTC has oversight responsibility of the United States commodity industry. The exchanges and National Futures Association (NFA) have primary responsibility for ensuring market participants are adhering to rules and regulations. The Joint Audit Committee (JAC) was formed to enhance uniformity among participants as well as lessen the regulatory burden for FCMs that are members of multiple exchanges.
To ensure the financial integrity of its clearing members, CME Group participates with other United States futures exchanges in the JAC. The JAC is a representative committee of the Audit and Financial Surveillance departments of U.S. futures exchanges and regulatory organizations. Because many clearing members are members of other exchanges, the JAC assigns a "lead regulator" to common members to reduce regulatory duplication. The lead regulator, or Designated-Self Regulatory Organization (DSRO), is primarily responsible for the financial surveillance of its allocated members.
The DSRO will perform a risk-based examination upon its allocated members which is designed to meet the goals of customer protection and exchange financial integrity. Such examinations are conducted in accordance with the JAC Examination Program, which is reviewed by the CFTC. The CFTC may, at its discretion, perform its own examination of an FCM.