22 June 2010
Statement of Craig S Donohue, CEO of CME Group, Before the Joint CFTC-SEC Committee on Emerging Regulatory Issues
Since May 6, 2010, CME Group has engaged in a detailed analysis regarding trading activity in its markets on that day. Our review indicates that our markets functioned properly. We have identified no trading activity that appeared to be erroneous or that caused the break in the cash equity markets during this period. Moreover, no market participant in our markets reported that trades were executed in error nor did the CME Exchanges cancel ("bust") or re-price any transactions as a result of the activity on May 6th. Moreover, the CME markets provided an important price discovery and risk transfer function on that day and served as a moderating influence on the markets.
In the following sections, we discuss: (1) the functioning of and the role played by our markets on May 6th, 2010, (2) the existing circuit breaker rules, the need for consistent and transparent rules across markets, and our comments on recent circuit breaker rules implemented subsequent to May 6, and (3) CME electronic functionality, particularly CME Stop Logic functionality and price banding, among others, which serve to protect our markets. Finally, we have also included certain recommendations as to changes that could avoid a recurrance of this type of event in the future.
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