Presentation to the CFTC 

Technology Advisory 

Committee 

Bryan Durkin, Chief Operating Officer
© 2012 CME Group. All rights reserved

Any Breach of Trust Related to Customer 

Funds is Unacceptable

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•Since MFG and PFG, we have all been working 

toward one goal – restoring customer confidence in all 

aspects of our industry by ensuring appropriate 

protections are in place at every point in the system.

•Though the firms may be at fault, it is our problem as 

an industry. To regain trust, every link in the chain 

must be as strong as the next.

•Technology is the key to better detecting potential 

issues, preventing future fraud, and making our 

regulatory system even stronger.
© 2012 CME Group. All rights reserved

Strengthening Protections that 

Guard Customer Property

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Technology-Based Reviews
© 2012 CME Group. All rights reserved

Limited Daily Reviews

• Material cash-at-bank will be 

confirmed utilizing the new 

electronic confirmation service (as 

available) or in-person (on-line) 

review of daily bank statements

• CME may confirm additional 

balances as deemed necessary

• Confirmations will be obtained for examinations 

currently in fieldwork and for any new examinations.

• All confirmations will be included in the workpapers.

Electronic Confirmation

Yearly Risk Based Examinations

• Confirmations will be sent in audit areas where full testing is performed

• Material asset balances will be confirmed utilizing an electronic confirmation service 

(as available)

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© 2012 CME Group. All rights reserved

Electronic Confirmation

Capital Confirmation Inc. (CCI – www.confirmation.com)

• Provides secure and electronic services for over 10,000 accounting firms (more 

information available on https://www.confirmation.com/about.aspx)

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• Allows CME to effectively and 

efficiently confirm bank balances 

directly with a third party depository

• Provides secure electronic 

confirmation services for auditors that 

allows for electronic audit 

confirmation requests to be sent 

directly to the intended responder

• In addition, CME will work with other 

DCOs in order for DCOs to provide 

confirmation for listing of deposits 

maintained for common clearing 

member firms on a regular basis
© 2012 CME Group. All rights reserved

Technology-Based Review 

Daily Reporting 

• Effective May 1, 2012, all FCM clearing members are 

required to submit customer segregation daily 

statements electronically to CME and CME uses an 

internally developed software application for 

monitoring

Rules Requiring SRO Access to Depositories

• The SRO Committee is working on developing rules 

to require all FCMs to provide their DSRO with direct, 

read-only online access to their depositories to 

confirm segregation funds balances

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© 2012 CME Group. All rights reserved

Technology-Based Review 

Semi-monthly Investment Reports (SIDRs)

FCM clearing members are required to electronically submit semi-monthly reports of 

investments reflected in customer segregated funds where the funds are held

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• For SIDR Reports submitted as of July 16, 

2012, CME initiated a limited review of 

material customer cash balances held at 

bank depositories. As part of this review, 

CME is confirming material cash balances 

at banks utilizing the new electronic 

confirmation service

• In addition to confirmations, CME is also 

performing a limited review of daily bank 

statements and reconciliations for material 

cash balances at banks

• For current and future SIDR reports 

submitted, CME will perform a limited 

review of customer investments to ensure 

compliance with requirements of CFTC 

Rule 1.25
© 2012 CME Group. All rights reserved

Additional CME Review

• CME is using confirmation.com to perform reviews of FCM clearing member 

firms’ customer segregation statements on a surprise basis including review of 

material differences, in addition to the regular risk-based examinations

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• CME is performing a review of material differences between daily and month-end 

submitted customer segregation statements as part of the on-going monthly 

statement review process and risk-based examinations

• CME will perform limited review, as 

deemed necessary, for newly 

instituted customer enhancement 

protections including review of 

additional reporting requirements, 

disbursements approvals and SIDR 

reports to ensure compliance with new 

requirements
© 2012 CME Group. All rights reserved 9

Futures trading is not suitable for all investors, and involves the risk of loss. Futures are a 

leveraged investment, and because only a percentage of a contract’s value is required to trade, 

it is possible to lose more than the amount of money deposited for a futures position. Therefore, 

traders should only use funds that they can afford to lose without affecting their lifestyles. And 

only a portion of those funds should be devoted to any one trade because they cannot expect to 

profit on every trade.

The Globe Logo, CME®, Chicago Mercantile Exchange®, and Globex® are trademarks of 

Chicago Mercantile Exchange Inc. CBOT® and the Chicago Board of Trade® are trademarks of 

the Board of Trade of the City of Chicago. NYMEX, New York Mercantile Exchange, and 

ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of 

Commodity Exchange, Inc. CME Group is a trademark of CME Group Inc. All other trademarks 

are the property of their respective owners.

The information within this presentation has been compiled by CME Group for general purposes 

only. CME Group assumes no responsibility for any errors or omissions. Although every attempt 

has been made to ensure the accuracy of the information within this presentation, CME Group 

assumes no responsibility for any errors or omissions. Additionally, all examples in this 

presentation are hypothetical situations, used for explanation purposes only, and should not be 

considered investment advice or the results of actual market experience.

All matters pertaining to rules and specifications herein are made subject to and are superseded 

by official CME, CBOT, NYMEX and CME Group rules. Current rules should be consulted in all 

cases concerning contract specifications.