CFTC - may invoke Rule 587 for Energy and Metals Futures - Due to "Phantom Orders"

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metalsinvestor's picture
metalsinvestor
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Joined: Sep 14 2010
Posts: 14
CFTC - may invoke Rule 587 for Energy and Metals Futures - Due to "Phantom Orders"

An article just came out, saying CFTC can invoke Rule 587 regarding Energy and Metals futures due to "phantom orders" placed.

 

The article is vague in many ways, but it implies that the CFTC could possibly null and void  the price action on metals due to what they believe is "phantom orders"

http://www.bloomberg.com/news/2010-09-14/cme-says-test-orders-were-inadv...

 

CME Group Inc., the world’s largest futures market, said it will treat inadvertently placed energy and metals trades yesterday as ‘phantom orders,’ though none of the transactions were canceled.

Over a six-minute period, test orders were “inadvertently” placed on the Globex electronic trading system into active energy and metals markets, the Chicago-based company said today in a statement. CME owns the New York Mercantile Exchange, where crude oil, natural gas, heating oil, gasoline, platinum and palladium trade, and the Commodity Exchange in New York, where gold, silver and copper change hands.

That rule governs “phantom trades,” which the exchange defines as transactions caused in error that aren’t authorized or that were made with altered terms such as contract month or price. If CME detects such trades its powers allow “including without limitation, closing the market, deleting bids and offers, and/or suspending new bids and offers,” according to Rule 587.

CME said in the statement. The U.S. Commodity Futures Trading Commission was also notified, the company said. CME will “address these transactions in accordance with its Rule 587,” according to the statement.

I will be watching what they do. 

Davos's picture
Davos
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Posts: 3620
Re: CFTC - may invoke Rule 587 for Energy and Metals ...

Fingers in Dikes.

metalsinvestor's picture
metalsinvestor
Status: Member (Offline)
Joined: Sep 14 2010
Posts: 14
Re: CFTC - may invoke Rule 587 for Energy and Metals ...

someone who had their futures broker call the CFTC and ask them what this was about.  They wanted an explanation of what the full meaning of this article was.  CFTC only said they are looking into it and will decide what to do.  The broker has put more feelers out to those who really know information. 

The broker said, mistake orders are put in everyday, but they are not publicized, so he feels this is suspicious and thinks they released it, to possibly fall back on it - for adjustment of prices later this week, if need be.   

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