Risk-Based Examinations - Requests for Records and Documentation

During recent risk-based examinations, delays by clearing members in providing audit related records and documentation to CME Group’s Audit Department staff have resulted in significant delays in the performance and completion of examinations. Such delays impact the effectiveness and efficiency of not only Audit Department staff but staff of clearing member firms as well.

 

As a reminder, Chicago Mercantile Exchange Inc., Chicago Board of Trade, Inc., New York Mercantile Exchange, Inc. and Commodity Exchange, Inc. (collectively referenced as “Exchanges”) respective Rule 980. Required Records and Reports requires clearing members to prepare, maintain and keep current those books and records required by the Exchanges, the Commodity Exchange Act and the regulations. In addition, those books and records must be open to inspection and promptly provided to the Exchanges, including CME Group’s Audit Department, upon request. 

 

The Audit Department provides a list of required documentation at the time an examination is announced, providing the clearing member firm, in general, at least two weeks to gather the information before fieldwork begins. Further, during the course of an examination, additional requests will be made based upon our review of the documentation provided, for example follow-up inquiries on reconciliations and capital charge computations. We understand that firm personnel have other responsibilities, market events may dictate other priorities, and vacation and sick time occur. While we will work with clearing member firms on prioritizing information requests as needed, firms are required to provide the information as expeditiously as possible to ensure the audit progresses smoothly. 

 

The prompt submission of audit related records and documentation during fieldwork will allow us to complete our risk-based examinations more efficiently and effectively which is mutually beneficial to all involved.  In addition, failure to promptly provide these required books and records to CME Group’s Audit Department in a timely manner may result in disciplinary action. 

                  

Please contact CME Group’s Audit Department at (312) 930-3230 or at (212) 299-2120 if you have any questions.