The Commodity Futures Trading Commission has given traders on the nation's 10 futures exchanges more time to comply with a major procedural regulation requiring time stamping of market orders.
The five-member commission extended until Dec. 1 a rule requiring all exchanges to bracket market orders within 30 minute intervals. For example transactions completed between 10.30 and 11 a.m. would be time stamped or otherwise seqjuentially verified together.
Low-volume commodities on the Chicago Mercantile Exchange whose trades are recorded on chalk boards rather than by electronic market systems, must bracket or time stamp to one-minute intervals by Dec. 1, the commission decided.
Low-volume commodities on other exchanges with daily volumes of about 100 contracts a day or less will have to time stamp orders to one-minute intervals by Feb. 1 in order to comply with the new regulations.
Time stamping will permit the CFTC and exchanges to monitor trading and reconstruct trading patterns, which is essential to prevent manipulation of prices and trading violations, a CFTC staffer explained.
Under regulations approved last winter, the CFTC had set the implementation date for April 1977. The extension in effect acknowledged that the industry in general - especially in the large-volume markets traded on the Chicago Board of Trade - has failed to complywith the regulations.
Commissioner Gary Seevers, who is an agricultural economist, told the commission in an open hearing Tuesday that bracketing to 30-minute intervals would provide the agency with the information it needs and would permit accurate time sequencing by brokers and clerks on the exchanges.
Requiring bracketing to smaller intervals at this point in the agency's rule development would be a burden on traders in such large-volume markets as the Chicago soybean pit and probably would not be done accurately, he said.
Four of the nation's exchanges already are complying with the CFTC time rules, a commission spokesman said. They are the Kansas City Board of Trade, the Minneapolis Grain Exchange, the New York Cocoa Exchange and the New York Mercantile Exchange.
The commissioners indicated at Tuesday's hearing that they will move increasingly toward imposing tighter time-stamping regulations - a position dreaded by the futures industry. Exchange officials and brokers view time stamping and other verification techniques as costly and burdensome.
The four commodity exchanges which moved into single quarters in New York earlier this year, however, now utilize a sophisticated electronic market system and a single ticker which facilitates accurate time verification of market orders. Those four exchanges are the New York Mercantile Exchange, Inc., New York Cotton Exchange and New York Coffee and Sugar Exchange.
The CFTC also ruled that exchanges which applied for new commodity contract designations prior to Tuesday's hearing will have 90 days from the start of trading to initiate time stamping to 1-minute intervals. New contracts proposed after Tuesday must include a plan to implement time stamping to 1-minute intervals.