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Audit Trail & Recordkeeping Requirements For Open Auction Trading

As the Chicago Board of Trade continues to extend the deployment of new and more efficient technology to support the open auction trading environment, it is important that all members and member firms ensure that accurate audit trails are maintained consistent with Exchange and CFTC requirements.

Members Utilizing Hand Held Technology

Members who utilize a hand held device to record their trades must record their trades on the device in the exact sequence in which they were executed and must ensure that the correct time bracket is entered.

Members who record their trades on trading cards and subsequently have the data entered into a handheld device must ensure that the party entering the data enters the trades from their cards in exact chronological sequence and that the proper execution brackets are designated. As the trading cards represent the original record of the transaction, members are required to maintain their trading cards for five years, pursuant to Exchange and CFTC regulations.

Members Utilizing Electronic Clerk Technology

Members who utilize electronic clerk technology are reminded that documents, including brokerage cards or other documents, on which original trade information is recorded, must be retained for five years pursuant to CBOT Regulation 332.07 and CFTC Regulation 1.31. Members must also ensure that the correct bracket is designated for each transaction that is endorsed on the electronic clerk.

Member Firms Utilizing Electronic Order Routing Systems

Member firms that use an electronic order routing system are responsible for maintaining a complete record of each order. Generally, the electronic record of orders transmitted to the trading floor via the API and the associated electronic fill reports are sufficient to meet the audit trail requirements. However, any other records created by the member firm that represent original source documents must also be maintained by the member firm.

Member firms that enter orders via flash or headset and utilize electronic order routing for endorsement purposes must ensure that a proper audit trail is maintained for each order. The entry time stamp submitted for such orders must reflect the time at which the order was received.

Questions regarding this notice may be directed to any of the following individuals in the Office of Investigations & Audits:

Terry Quinn, (312) 435-3753, tquinn@cbot.com; Jennifer Baum, (312) 341-3124, jbaum@cbot.com; Melissa Kemp, (312) 435-3681, mkemp@cbot.com; Shelly Goodwin, (312)347-4123, sgoodwin@cbot.com

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